Applying for Medicaid for yourself or a loved one can be a difficult process. Many people believe they have successfully navigated all clinical and financial criteria, only to discover that the applicant requires a Qualified Income Trust, or QIT.

Prior to December 1, 2014, all Medicaid applicants in the State of New Jersey with a monthly income in excess of the annual income limit, $2,382.00/month in 2021, were ineligible for the benefit. The creation of QITs has allowed for a wider range of applicants but has further complicated the Medicaid application process. Improper use of a QIT can result in the denial of your Medicaid application.

What is a QIT?
Although a QIT is a “trust,” it is a basic checking account that is opened using the Medicaid applicant’s Social Security number. The QIT document establishes a trustee, usually a trusted friend or family member, who is appointed to open the account and manage the income deposits and medical expenses. The QIT document is a template created by the State’s Division of Medical Assistance and Health Services and contains specific provisions for holding the Medicaid applicant’s income. More information about a QIT, as well as the QIT template, can be found by clicking here.

When do I need a QIT?
QITs were established to expand coverage to New Jersey Medicaid applicants with income that exceeds the annual income limit, which is currently $2,382.00/month in 2021. If you are applying for Managed Long-Term Services and Supports to assist with costs at an assisted living facility, nursing home, or for home and community-based services, and your gross income exceeds the annual income limit, then the Medicaid Caseworker will require that a QIT be established. The QIT will need to be opened and funded during the month you are seeking Medicaid eligibility. For example, if you need Medicaid coverage beginning August 1, the QIT account will need to be opened at the bank and funded with your income source before August 30th. However, it is not recommended to wait until the last day of the month to open your QIT account. You or your trustee will need to take the original signed and notarized QIT document to the bank, allow for the bank’s legal processing time, open this new account, and transfer the funds into the account, all before the last day of the month.

What should I deposit into my QIT?
An individual can direct all of their income sources or just their income source that exceeds the annual limit into the QIT, but it must be the full amount from that source. For example, if the applicant chooses to deposit their pension into the QIT, the exact and full amount of that pension must be deposited. Income should be deposited into the QIT in the month that it is received. No funds except for the applicant’s income should be deposited into this account.

How do I use my QIT?
The use of QIT funds is limited to medical expenses that are for the benefit of the applicant. For example, caregivers, nursing home or assisted living bills, prescription co-pays, and health insurance premiums are all allowable expenses. Please keep in mind that funds in the QIT are still countable towards the $2,000 asset limit for Medicaid applicants applying for the long-term care benefit, so most QIT balances will be zero or close to zero at the end of each month. As long as an individual remains on Medicaid benefits, they must continue to use their QIT each month or their benefits will be terminated.

What happens to my QIT after I pass away?
The State of New Jersey is the primary beneficiary of a QIT, as per the QIT document. Therefore, any funds remaining in the QIT on the Medicaid recipient’s date of death are payable to the State.

While the above information can help you to learn QIT basics, this requirement has many pitfalls and can further complicate an already convoluted process. It is always good to consult with a professional to ensure that you are meeting all requirements in order to avoid a stressful and costly Medicaid denial.