Having professionally assisted families to navigate through the Medicaid application process for over 25 years, new regulations are considered an annual event. Private experts like CARENET, Inc. roll with the punches, analyzing the new rules and adjusting our approach to ensure that every application is processed until final approval is received.
On December 1, 2014, private case managers were hit with a new “old” rule. Medicaid decided to bring back what many years ago was denoted as a “Miller Trust”, but is, in essence, a “QIT or Qualified Income Trust”. The original purpose of this trust was to protect assets for families, i.e. to preserve assets legally, while still qualifying for Medicaid. Not surprisingly, the new regulations are “not designed” to help families protect assets. Rather, these rules are designed to eliminate one of the Medicaid programs, i.e. Medically Needy.
The average individual has generally believed all these years that Institutional Medicaid was one singular program, financing individuals in nursing homes, and as of 1996, in assisted living facilities. That has never been the case since the 1970’s. There have always been three programs, Jersey Care for low income applicants (below $ 973 in 2015), Medicaid for average income, and Medically Needy for high income individuals ( $ 2197 or more in 2015). However, the Medically Needy program has always had a major defect in the program. High income individuals could not qualify for “Assisted Living Medicaid”. The new regulations will now allow individuals with incomes over the income cap ($2197), to finally qualify for Medicaid as long as their income does not exceed Medicaid reimbursement to assisted living facilities.
For new Medicaid applicants who require skilled nursing care, this new regulation is an undue burden. There is no benefit that is recognizable at all. Applicants will forced to set up a new account, arrange with the Social Security Administration and various pension plan administrators to transfer these direct deposits from current personal accounts to the new QIT.
With every new regulation, there are going to be problems with implementation. In order to set up a QIT, which is essentially a bank account with a trustee, local banks have to be on board. In 2014, the State of New Jersey held a webinar for Eldercare attorneys, banks, and other Medicaid experts, in order to disseminate information on the proper procedures to be used to establish a QIT. They also sent out information packets to banks, explaining the procedures. Unfortunately, the average bank manager and/or platform person apparently was too busy soliciting customers to pay attention. We have yet to encounter one banker who was up to speed on the procedure to establish a QIT.
A second issue is that one of the new parameters is in direct conflict with banking procedures. A QIT must be an “irrevocable” trust. Under banking protocols, irrevocable trusts must have a federal tax ID number. However, the new regulations clearly state that the State of New Jersey mandates banks to set up the trust with the applicant’s Social Security number. In trying to set up a trust, each banker with whom we worked had to first obtain clearance from their in-house legal department to set up this trust with the Social Security number.
When trying to explain this new regulation to clients, we have an extremely difficult time explaining the process and a more difficult time convincing them why it is necessary. Our fallback position is always the same: “We don’t make the regulations; we just assist you with complying with them”.
The bottom line is as follows. If an individual’s total monthly income exceeds $2197, a QIT (Qualified Income Trust) must be established in order to qualify for Medicaid benefits in a health care facility. A professional case manager or Eldercare attorney should be able to assist with the process and solicit cooperation from the local banks. This regulation is mandatory; i.e. all new applicants must comply. For current Medicaid recipients, there is no retroactivity, i.e. no necessity to set up a QIT at this time.