A qualified income trust (QIT) established in New Jersey for the benefit of an individual applying for Medicaid is valid if:
- the trust is composed only of pension, Social Security, and other income payable to an individual (and accumulated income in the trust),
- the State will receive all amounts remaining in the trust upon the death of such individual up to an amount equal to the total medical assistance paid on behalf of the individual.
New Jersey adopted QITs in 2014. Since that time, New Jersey has offered QIT’s continuously. In 2017 and 2018, New Jersey issued MedCom’s 17-10 and 18-10, which explained “Medicaid does not cover room and board for individuals living in assisted living (AL) facilities, the room and board amounts must be paid for through the Medicaid recipient’s income.” However, New Jersey recently explained, “QITs allow clinically eligible individuals to have their income be disregarded for eligibility purposes. Income above the maximum monthly income limit must be deposited into a QIT bank account each month in order to be disregarded. Individuals receiving Medicaid benefits in a nursing home or assisted living facility must contribute to their monthly cost of care. The monthly amount is determined by adding all sources of income minus allowable expenses such as personal needs allowances, community spouse maintenance and dependent allowances, room and board, and state approved uncovered medical expenses. The monthly cost of care may be paid out of the QIT account. New Jersey’s Medicaid laws do not limit room and board expenses in any way. Moreover, New Jersey’s policies must be interpreted consistent with federal laws.
Legal Analysis
Medical expenses are defined in the Medicaid State Manual to include expenses for nursing care and home care. Transfer of assets penalties do not apply to income placed in a QIT to the extent that the trust instrument provides that the income placed in the trust will, in turn, be paid out of the trust for medical care provided to the individual, including nursing home care and care under a home and community-based waiver which includes assisted living. When such payments are made, the individual is considered to have received fair market value for the income placed in the trust, up to the amount actually paid for medical care provided to the individual and to the extent that the payments purchased care at fair market value.
Even if an applicant’s income exceeds his or her medical expenses, the Medicaid States Manual permits income to accumulate in a QIT, stating “income generated by the trust which remains in the trust is not income to the individual.” It states, “The trust may contain accumulated income, i.e., income that has not been paid out of the trust.
New Jersey’s Medicaid policies must be interpreted consistently with the guidance provided by the Medicaid States Manual. The manual explicitly includes room and board as an allowable medical expense, and defines room and board paid out of a Qualified Income Trust as care for fair market value for a home and ALF.
New Jersey’s denial of eligibility cannot be supported by the “over income” argument they seek to present.
To discuss NJ Medicaid and applying for Medicaid, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at fniemann@hnlawfirm.com. Please ask us about our video conferencing or telephone consultations if you are unable to come to our office.
By Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold Township, Monmouth County, NJ Medicaid Attorney