Does Your Power of Attorney allow the Agent to establish a Qualified Income Trust?

Several times a year I will meet with clients that have a Power of Attorney that does not specifically provide authorization for the Agent to establish a Qualified Income Trust or any other type of trust.  Unfortunately for those clients whose income is greater than the monthly income limit we often have to petition the court for authorization to establish a Qualified Income Trust or a self-settled Special Needs Trust (typically a Pooled Trust).

Each year the Income and Asset limits are updated for all types of Medicaid programs.  Any individual applying for Long Term Care Medicaid must have a monthly gross income of less than $2,250 in 2018 (gross income cannot exceed 300 percent of the SSI federal benefit rate). F.A.C. 65-1.713 (1)(d).

Unrestricted monthly income in excess of $2,250 will disqualify a person from receiving Long Term Care Medicaid benefits.  However, a Qualified Income Trust (“QIT”) or joining a Pooled Trust prepared in accordance with the Omnibus Budget Reconciliation Act of 1993 provides a solution for the problem of excess income.  In essence, Medicaid will allow income in excess of the limit, provided that such income is paid into a QIT or Pooled Trust and disbursed in accordance with Medicaid rules.  The QIT or Pooled Trust is the vehicle used to enforce this arrangement.

The Qualified Income Trust is designed to receive only current monthly gross income.  The trust is not funded with assets such as stocks and bonds. The Pooled trust may receive income and as well as assets. Beginning with the month Medicaid benefits commence and each month thereafter, the Trustee must make sure the QIT or Pooled Trust is funded with the applicant’s gross income and that only permissible disbursements are made.  The QIT is permitted to pay (1) the $105 per month personal needs allowance of the patient; (2) the monthly premium on the patient’s Medicare Supplemental Insurance and other unreimbursed medical expenses; (3) a community spouse resource allowance, if applicable; and (4) the patient’s responsibility to the long-term care or assisted living facility.  The Pooled Trust is allowed to make all of the disbursements listed above as well as any other payment requested for the sole beneficiary of the beneficiary.  The Department of Children and Families is very strict regarding the operation of the Qualified Income Trust and the Pooled Trust.  If the QIT or Pooled Trust is not funded correctly each month, the applicant’s Medicaid benefits will be denied. There are no exceptions.  It is important that the Trustee of the Qualified Income Trust or Pooled Trust understand the duties and responsibilities of this Trust.  If any income/assets are left in the QIT or Pooled Trust upon the death of the beneficiary, they are payable to the State of Florida up to the total amount of benefits paid by the State for medical expenses.

You should include separate specific enumerations of authority to establish a Qualified Income Trust or Pooled Trust in the Power of Attorney document you draft.  It may state the following:

_______ Create, fund and maintain an Income Trust pursuant to 42 U.S.C. 1396p(d)(4)(B) in order to qualify me for Medicaid or any other public assistance benefits.

_______ Establish a separate account for my benefit and to fund this separate account with a Pooled Trust for the Disabled pursuant to 42 U.S.C. 1396p(d)(4)(C) to qualify me for Medicaid or any other public assistance benefits.

Utilizing this language enables your client’s Agent to establish Medicaid eligibility when income is greater than Medicaid allows without having to petition the court.  Thus, saving your client additional court and attorney fees at a time of their life when every dollar is crucial for their well-being.