Qualified Income Trusts (QITs) were established by the Omnibus Budget Reconciliation Act of 1993 and found in the Social Security Act at Section 1917 (d)(4)(B). (42 U.S.C. § 1396p(d)(4)(B)). The State of New Jersey is adopting the use of QITs.
When an individual's monthly income above 300% of the Federal Benefit Rate (FBR) is placed in a QIT, it is not counted when determining Medicaid financial eligibility. Applicants that may consider using a QIT must be in need of an institutional level of care and can be living in a nursing facility, an assisted living facility or in their home. Costs of care vary according to these living arrangements.
QITs must meet certain conditions such as:
- They must contain only income of the individual;
- They must not contain resources such as income from the sale of real or personal property or money from a savings account;
- They must be irrevocable;
- They must have a trustee to manage administration of the Trust and expenditures from the Trust as set forth in federal and state law;
- New Jersey must be the first beneficiary of all remaining funds up to the amount paid for Medicaid benefits upon the death of the Medicaid recipient; and,
- Income deposited in the QIT can only be used for the specific Post-eligibility Treatment of Income and to pay for the cost of care.
The use of QITs will replace the Medically Needy eligibility program used for nursing facilities. Individuals receiving benefits through the Medically Needy program prior to the QIT effective date will be grandfathered. It is important to note that Medicaid eligibility resource limits will be $2,000 for an individual and $3,000 for a couple.
QITs are usually established for an individual by a lawyer. However, the Division of Medical Assistance and Health Services provides a QIT template and Frequently Asked Questions (FAQs) that may be used by individuals.
All QITs established for Medicaid recipients must be initially approved by the eligibility determining agency and will be reviewed annually by the Division of Medical Assistance and Health Services.
Any funds remaining, after payments are made under the Post-eligibility Treatment of Income, must stay in the Trust until the beneficiary's time of death. Failing to do so will impact the individual's Medicaid eligibility. Estate recovery rules still apply.