Even when John has used up all his resources he still won't qualify for help from Medicaid in his state. At about $4,000, his monthly income is much too high for him to qualify because the Medicaid program in his state limits income to slightly over $2,000 per month. His $4,000 has been enough to live on at home, but it is far less than the cost of care in a nursing home.

|image2|What do people do when they have too much income to qualify for Medicaid, and not enough income to pay for care, which can exceed $10,000 per month in some places?

Some states, called "Income Cap States," place a limit on the allowable monthly income of Medicaid recipients. In these states, people like John with too much/not enough income are said to be "trapped in the gap" between the cost of care and their ability to pay.

The Qualified Income Trust
(QIT or Miller Trust)

In many cases, a Qualified Income Trust (also sometimes known as a Miller Trust) may solve John's problem.

John's attorney prepares documents to create a special Qualified Income Trust account at a local bank. John or his authorized representative then directs that his income be deposited directly into this bank trust account. Now, because the monthly income is no longer going to John, he effectively has no income (on paper). He now meets the income guidelines to qualify for Medicaid in his state.

Each month the Trustee of this special Qualified Income Trust uses the money in the QIT account to pay certain authorized bills (such as John's Medicare premiums) and John's nursing home. Because the money in the QIT account is not enough to pay the full cost of John's care, Medicaid then makes up the balance to the nursing home.

If John has a spouse who will be remaining at home, Medicaid laws may also permit him to divert some of his income directly to her so that she has enough income to live on while he is in care. This depends on your individual state regulations and the amount of income John's wife has in her own name.

A Qualified Income Trust is not appropriate for everyone. You won't know whether a QIT is appropriate for you and your elder without getting good legal advice from someone who knows the Medicaid laws in your state. Never take legal advice from a website (like this one), or from a friend or anyone who works for a care facility. Their intentions may be good, but actions you take on bad advice may not be "fixable," so don't take the chance. You usually have one opportunity to do these things right, so get the best advice you can. It will save you bundles of money and stress in the long run.