An official State of Texas website.
Revision 16-4; Effective December 1, 2016
When an applicant is income ineligible in an institutional setting, see Section B-2500, Explaining Policy vs. Giving Advice, to determine the appropriate actions to take and the actions to avoid. See Appendix XXXVI, Qualified Income Trusts (QITs) and Medicaid for the Elderly and People with Disabilities (MEPD), for more information concerning a QIT and a sample QIT document.
Although the use of a QIT can overcome the special income limit for MEPD eligibility for institutional or Home and Community-Based Services waiver programs, it is not available to individuals in Community Attendant Services (CAS) who are income ineligible.
If a QIT is received, a legal review of the instrument, device, or arrangement that establishes the trust is necessary. Contact with regional legal staff is based on regionally established procedures. Check with your supervisor for regionally established procedures. Send a copy of the QIT documents to the regional attorney for review. See Appendix XVI, Documentation and Verification Guide.
Qualified income trust (QIT):
A QIT is an irrevocable trust established for the benefit of an individual and/or the individual's spouse, the corpus of which is composed only of the individual's income (including accumulated income). The trust must include a provision that the state is designated as the residuary beneficiary to receive, at the individual's death, funds remaining in the trust equal to the total amount of funds Medicaid paid on the individual's behalf. Use Form H1210, Subrogation (Trusts/Annuities/Court Settlements), to report to the Provider Holds and Recoupment Unit any potential paybacks to the state as the residuary beneficiary of QITs.
The following lists the characteristics of a QIT.
- The trust must be irrevocable.
- The trust must contain only the individual's income.
- If resources are placed in the trust, it is not a QIT.
- Some banks may require nominal deposits, $10 to $20, to establish a financial account to fund the trust.
- Nominal amounts of an individual's resources, or another party's funds, may be used to establish the account without invalidating the trust or being counted as gift income to the individual. Once the trust account is established, however, only the individual's income can be directed to the trust account.
- The income does not have to be directly deposited into the trust.
- The income for which the trust is established must be deposited into the trust during the month it is received by the individual.
- The trust may be established with any or all sources of an individual's income, but an entire income source must be deposited. For example, the trust may be established for an individual's private pension income, but not the individual's Social Security income. If the trust document indicates only half of the pension income must be deposited, it is not a valid QIT.
F-6810 Treatment as Resource
Revision 09-4; Effective December 1, 2009
The trust is not counted as a resource.
F-6820 Treatment as Income
Revision 16-4; Effective December 1, 2016
Income directed to the trust is disregarded from countable income when testing eligibility for institutional or Home and Community-Based Services (HCBS) waiver programs. Income must be directed to the trust account during the calendar month in which it is received. Any source of non-exempt/non-excludable income which is not directed to the QIT account during the calendar month of receipt is countable income for that month.
For the initial month that a QIT is established, a partial deposit of the income for which the trust is established will not invalidate the trust and the entire amount of the income source(s) will be disregarded from countable income for that month. An individual may have used some of the monthly income to pay expenses prior to the date the QIT is established so the entire source(s) may not be available to open the QIT account. If only a partial deposit is made in the initial month, prior to certification, staff must verify that the entire amount of the income source(s) for which the QIT is established is being deposited into the QIT account subsequent month or the QIT is considered invalidated.
If countable income exceeds the institutional income limit, the individual is income-ineligible for the month. Applicants may not be certified for any calendar month(s) in which they are income-ineligible. For active individuals, restitution is requested in the amount of the vendor payment for any calendar month(s) in which they are income-ineligible.
Notes:
- When an individual does not pay a full month's co-payment due to hospitalization or because Medicare covered 100% of the cost of a partial month, the accumulated funds in the QIT trust are not a countable resource, and transfer of assets is not involved.
- An individual receiving HCBS waiver services who establishes a QIT covering all waiver costs is not denied. In a waiver program, the applicant with a QIT is receiving the benefit of the contracted Medicaid rates for waiver services as opposed to the private rates.
Examples:
- The applicant entered the nursing facility and applied for Medicaid in July. Income totals $3,600. The QIT calls for all income to be directed to the trust account. However, the trustee did not deposit the July income checks to the trust account until August 23. The entire $3,600 is countable income for July, and the applicant is ineligible for that month.
- The individual was certified for Medicaid in September. The QIT calls for all income (totaling $3,600) to be directed to the trust account. During the redetermination in August of the following year, the eligibility specialist learns that income checks for June were not deposited to the trust account until July. Because the person was ineligible for June, the eligibility specialist requests restitution for that month in the amount of the vendor payment.
Income directed to the trust is not disregarded in determining eligibility for SSI or non-institutional medical assistance programs: Qualified Medicare Beneficiaries, Special Low-Income Medicare Beneficiaries, or Community Attendant Services.
Income paid from the trust for co-payment for institutional or Home and Community-Based Services waiver services or to purchase other medical services for the person is not countable income for eligibility purposes. Income paid from the trust directly to the person or otherwise spent for his benefit is countable income for eligibility purposes.
Examples of countable income include cash distributions directly to the individual and direct payments (disbursements) from the trust for the individual's hair salon services. These distributions do not invalidate the trust; however, they are countable income in the month of distribution. If countable income exceeds the institutional limit, the individual is income ineligible for that month. Eligibility specialists may not certify applicants for any month(s) in which they are income ineligible. For active individuals, the eligibility specialist requests restitution for any month(s) in which the individual was ineligible. The eligibility specialist must test for ongoing eligibility.
The individual cannot use income from the trust to purchase eligibility for any HCBS waiver program. If the trustee directs to the trust account different sources of income other than those identified in the QIT document, but the entire income source(s) is deposited and countable income remains within the institutional income limit, eligibility is not affected.
Example: The individual's income totals $3,600, consisting of $600 Social Security and $3,000 private pension. The QIT calls for all income to be directed to the trust account. At redetermination, the eligibility specialist learns that the trustee is directing only the private pension to the trust account. Since the individual's countable income totals $600, the individual remains income-eligible.
If the trust instrument requires that the income placed in the trust must be paid out of the trust for institutional or HCBS waiver services provided to the individual, there is no transfer of assets because the individual receives fair market value for the income that was placed into the trust. However, if there is no such requirement or the income is not used for the individual's care, transfer of assets provisions apply. The income must be paid out by the end of the month following the month funds were placed in the trust to avoid transfer provisions. Because transfer of assets is not imposed for transfers of assets between spouses, QIT provisions that allow payments to or for the benefit of the individual's spouse do not result in a transfer of assets penalty.
Institutional care co-payment and community-based care co-payment calculations are based on the individual's total income (income directed to the trust as well as income not directed to the trust), less the standard co-payment deductions. Costs of trust administration are not deducted in the co-payment calculation; however, legal and accounting fees necessary to maintain the trust can be paid from the trust without incurring a transfer penalty.
VA aid-and-attendance benefits, housebound allowances and reimbursements for unusual or continuing medical expenses are exempt from both eligibility and co-payment calculations. However, if an individual deposits these payments into a QIT account, they are countable for co-payment calculations. If an individual receives a VA pension that includes aid-and-attendance benefits, housebound allowances or reimbursements for unusual or continuing medical expenses, the individual may separate the aid-and-attendance benefits, household allowances or reimbursements for unusual or continuing medical expenses from the VA pension before depositing the VA pension into the QIT account. Aid-and-attendance benefits, housebound allowances or reimbursements for unusual or continuing medical expenses are not income for Medicaid eligibility determinations.
The income placed in a QIT will be disregarded for eligibility purposes for the first month that the individual has a valid signed trust and enough income is placed in the account to reduce the remaining income below the eligibility limit. For the initial month that a QIT is established, even if only a partial payment of the income for which the trust is established is deposited, the entire income source is disregarded for that month.