The qualified Medicaid income trust is a legal instrument which meets criteria in 42 United States Code 1396 (p) (d) (4) (B) and which allows individuals with income over the institutional care program limits to qualify for institutional care services or for home and community based services assistance.
The trust must have a grantor and a trustee. The grantor is the person setting up the trust (this would be the individual, the individual’s spouse, or someone acting on behalf of the individual or the individual’s spouse). The trustee is any individual, individuals, or entity that manages the trust and has the responsibility for the income in the trust account.
The individual or someone acting on behalf of the individual must set up an income trust bank account into which only the individual’s income is deposited. Income deposited into the trust account in the month it is received is not counted when determining income towards the program income limit. The account must be appropriately titled as an income trust account for the individual with a trustee listed on the account. Sufficient income must be deposited into the income trust account in the month in which the income is received to reduce the individual’s countable income (the income outside the trust) to within the program income limits. Deposits into the trust account must be made during and for each month that eligibility is requested.
All income (including the money deposited into the trust account) is counted in determining patient responsibility. An allowance for personal needs and for a community spouse may be made. When the person dies, any income remaining in the trust upon death goes to the state (up to the amount Medicaid paid on the persons behalf). The trustee has full discretion over the money in the trust account.
A Medicaid trust may take various forms and laws vary by state. There are differing requirements under state laws regarding what assets may be counted or reached for recovery upon death.