by Thomas D. Begley, Jr., Esquire, CELA
For purposes of Medicaid long-term care services, New Jersey has always been an income cap state. That means that an individual’s income must not exceed 300% of the Federal Benefit Rate (FBR). Beginning January 1, 2015 that means that an individual’s monthly income cannot exceed $2,199. Historically, individuals in nursing homes were able to qualify for a “Medically Needy” program to spend their income down and qualify for Medicaid. Individuals requiring care in assisted living or at home were not eligible for the Medically Needy program and could not become eligible for Medicaid, if their income exceeded the cap.
New Jersey has obtained a waiver from the federal government whereby the state will abolish the Medically Needy program and individuals will be authorized to establish “Miller Trusts.” Miller Trusts are legal fiction. Under that program, individuals may deposit their excess income into a trust, and that income is not counted for income eligibility purposes. The money in the trust must be distributed for very limited purposes. These Miller Trusts are also known as Qualified Income Trusts (QITs).
QIT must meet certain conditions:
- 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 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 specific post-eligibility treatment of income and to pay for costs of care.
There will no longer be a Medically Needy program even for nursing home Medicaid recipients, although current recipients will be grandfathered. Funds must be deposited in a trust bank account. Bank charges cannot exceed $20 per month. The Social Security Number of the beneficiary of the trust is used not an EIN.
The trust can be established by the trust beneficiary or someone acting under a power of attorney or legal guardianship acting on behalf of the trust beneficiary.