Managing a Qualified Income Trust, month by month

The monthly routine

1. 1Every income source, Social Security, pension, annuity, VA, deposits to the person's own checking account, as it always has.
2. 2One automatic recurring transfer moves the set amount from checking to the QIT account, scheduled for the day the last income of the month arrives. Same bank for both accounts is simplest.
3. 3From the QIT, the trustee pays the patient responsibility to the nursing home, the provider the plan designates, or the PACE organization, and any other allowed payments such as health insurance premiums or a spouse's allowance.
4. 4Before the month ends, the trustee checks the balance in the person's own accounts. Income not spent in the month becomes an asset the next month, and everything counted must stay at or under the asset limit.
5. 5Keep every QIT bank statement. DCF can ask for proof that each month was funded.

Setting up the account

The QIT account is opened at a bank under the trust's name, with the trustee signing. The account uses the applicant's Social Security number, not a separate employer identification number. Choose an account with no interest and no monthly fee where possible.

Social Security cannot be deposited directly into the QIT. Federal law treats that as an assignment of benefits. Social Security goes to the person's own account, and the transfer moves the money in the same month. A pension or private annuity may be able to deposit directly if the payer allows it.

Mistakes that cost eligibility

A missed month. If the transfer fails, is late, or is short, Medicaid will not pay for long-term care that month, and the trust cannot be funded later to fix it.

Using net income. The transfer has to be based on gross income, before the Medicare premium is withheld. Families who work from the bank deposit come up short.

Paying the person from the trust. Money paid from the QIT to the person counts as their income.

Checking that creeps up. In home and assisted living cases especially, small unspent amounts add up month after month until the person is over the asset limit.

Not resetting the transfer. Social Security and pension amounts change each January, and DCF notices change the patient responsibility. Recompute the transfer each January and after every DCF notice, VA change, admission, or discharge.

A balance building up in the QIT

The trust does not have to be emptied each month, and a small cushion for timing is fine. A growing balance is a warning sign. In a nursing home it usually means the patient responsibility is not being paid. At home or in assisted living it usually means the transfer is too large. Whatever accumulates goes to the State at death, so fix the cause rather than letting it grow, and never move it back to the person's account.

Questions

Does the QIT need its own tax ID number?

In our practice the QIT account uses the applicant's Social Security number, not a separate employer identification number. Ask us if a bank tells you otherwise.

Can Social Security be deposited straight into the QIT?

No. Social Security must be paid to the person's own account. Set up an automatic transfer to the QIT in the same month.

What if we missed a month?

Call us. A missed month usually cannot be fixed by depositing late, but what to do next depends on the program and the DCF notices, and it should be handled before the next month closes.