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Effective December 1, 2014, New Jersey’s Institutional Medicaid Program underwent a major change. Prior to December 1st, Institutional Medicaid had two major programs: “Medically Needy” and “Medicaid Only.” The determination of which program a beneficiary was enrolled in, was based on whether or not the beneficiary’s income exceeded the “income cap.” The income cap is $2,163 for 2014. The Medicaid Only program, available to individuals whose income is below the income cap, paid for long term care in the home/community, assisted living facilities, and nursing homes. The Medically Needy program, available to individuals whose income exceeds the income cap, only paid for long term care in the nursing home. The consequence of this system was that if an individual’s income exceeded the income cap, he or she could be forced to enter a nursing home prematurely, in order to receive Medicaid.

As of December 1st, New Jersey is eliminating the Medically Needy program. Individuals with income in excess of the $2,163 income cap will now be able to qualify for Medicaid in the home/community, assisted living facilities, and in the nursing home, by establishing a “Qualified Income Trust,” or QIT (also known as a “Miller Trust”). A QIT is an irrevocable trust designed to be used as a pass through vehicle for the income in excess of $2,163. By passing the excess income through the trust, the income is no longer counted in determining financial eligibility for Medicaid. Once the income is in the trust, it can only be used to pay certain expenses related to the cost of care, and allowable medical expenses. The trust itself must meet strict requirements, including naming the State of New Jersey as first named beneficiary to the extent that Medicaid benefits were paid on behalf of the recipient. In order to ensure that the income is not counted, the trust must be established prior to the date of eligibility sought.

Establishing a QIT, selecting a Trustee, setting up the account, and diverting the income to the QIT is a complicated process. The elder law department of Meyerson, Fox, Mancinelli, Conte & Bern, PA, is fully prepared to answer your questions and assist you.

About the Author: Beth L. Barnhard is an attorney with Meyerson, Fox, Mancinelli & Conte, P.A. in Montvale, New Jersey.  A Certified Elder Law Attorney as recognized by the National Elder Law Foundation (NELF), Beth concentrates her practice on representing elder law clients with Medicaid applications and administrative Fair Hearings, asset preservation planning, guardianships, protective arrangements, estate planning, estate administration, and estate litigation.