New Jersey’s Qualified Income Trust Template

For many years, Medicaid programs available to elderly and disabled New Jersey residents to help pay for long-term care costs have been quite limited. The Medicaid-Only Medicaid program pays the care costs of nursing home residents. A companion program, Global Options for Long-Term Care, pays care costs for residents of assistant living facilities and for home health aides who assist home-bound residents.

Both the Medicaid-Only Medicaid program and the Global Options program have an “income cap,” or limit on the monthly income program participants may receive. Currently, the income cap is $2,163 per month. If a program applicant receives monthly income in excess of the income cap, he or she is ineligible for Medicaid under both programs.

Fortunately, nursing home residents who receive monthly income exceeding the income cap may qualify for Medicaid under the Medically-Needy Medicaid program. Medically-Needy Medicaid pays long-term care costs for nursing home residents with monthly income in excess of the income cap. Importantly, however, Medically-Needy Medicaid pays for long-term care ONLY for nursing homes residents with excess income, NOT for New Jersey residents with excess income who reside in assisted living facilities or at home. New Jersey residents who need long-term care but reside in an assistant living facility or at home and receive monthly income in excess of the income cap can NEVER be eligible for Medicaid at present. As a result of the income cap, many needy residents with excess income are forced into nursing homes. (I blogged about the limitations of the Medicaid programs available in New Jersey due to the “income cap” here.)

This is all about to undergo a radical change. Beginning on November 1, 2014, the Medicaid-Only Medicaid, Global Options and Medically-Needy Medicaid programs will be combined and renamed as Medicaid Managed Long Term Services and Supports (MLTSS). Among other changes to the State’s Medicaid program, the income cap will be eliminated. Instead, Medicaid applicants with income in excess of the income cap of $2,163 per month will be permitted to transfer excess income each month to a special type of trust called a Qualified Income Trust (QIT). Excess income placed in a QIT trust will not disqualify an individual applying for Medicaid benefits. All other program eligibility requirements, such as resource limits, medical requirements, transfer of asset rules, and residency rules, also must be met by applicants.

Medicaid has established a number of requirements for QITs. Only the Medicaid beneficiary, the beneficiary’s legal guardian or power of attorney can establish a QIT. All QITs must be irrevocable. Only income received by the Medicaid applicant may be deposited into a QIT. Resources such as cash, proceeds from the sale of real estate, savings and investment accounts and the like cannot be transferred to a QIT. Deposits from an applicant’s spouse or any other person’s income or resources cannot be transferred to a QIT. Income received by the Medicaid applicant such as Social Security benefits, pension, rental income and the like must be deposited into a QIT in the month that the income is received. All income from any single source must be transferred to a QIT. For example, the applicant cannot direct only half of his or her pension benefits to the QIT. Income deposited into a QIT can be used only to pay for the Medicaid applicant’s share of the cost of facility care or home health care, for prescription and over-the-counter drugs and other costs, as approved by Medicaid. Upon the death of the Medicaid recipient, the State of New Jersey must be first beneficiary of all funds remaining in the QIT up to the amount paid by Medicaid for the recipient’s care.

Applicants are not required to hire a lawyer to create a QIT, although lawyers may be retained to assist applicants in obtaining eligibility. New Jersey’s Medicaid agency, the Division of Medical Assistance and Health Services, has posted a QIT template, Frequently Asked Questions (FAQs), and a powerpoint presentation on its website to assist Medicaid applicants. Applicants may not use excess income deposited into QITs to pay legal fees or administrative expenses.

QITs may be used by Medicaid applicants with excess income who reside in nursing homes, assisted living facilities or at home to qualify for Medicaid benefits. As a result, the number of New Jersey residents who can receive assistance through Medicaid will increase. This is a positive development for the elderly and disabled in New Jersey who need long-term care.

A link to New Jersey’s website with information about the new Medicaid program and QITs can be found here –

The State’s template for a QIT can be found here – Qualified Income Trust Template

FAQs prepared by the State about QITs are here – Qualified Income Trust FAQs

A powerpoint presentation prepared by the State to explain the use of QITs can be found here – QIT Overview

UPDATED ON OCTOBER 15, 2014:  The very latest on New Jersey’s plan to abolish the income cap and expand Medicaid eligibility: Implementation of the use of Qualified Income Trusts is delayed at least to December 1, 2014, and possibly longer. In addition, there is a lot of uncertainty on how the expanded Medicaid program will work in situations where an applicant has excess income, a Qualified Income Trust is necessary but there either is no family member to serve as trustee or no family member agrees to serve as trustee.

UPDATED ON NOVEMBER 18, 2014: Cathy Chin, the Government Affairs Representative for the National Academy of Elder Law Attorneys – New Jersey Chapter, has confirmed with the New Jersey Department of Human Services (DHS) that Qualified Income Trusts (QIT) for those Medicaid applicants with income over the income cap will be effective as of December 1, 2014. Look for updates to information about QITs at the DHS website at

For additional information concerning Medicaid applications and appeals, visit: