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In the State of Tennessee, managing a Qualified Income Trust (QIT) is a crucial task for those acting as trustees for beneficiaries in need of Medicaid assistance for long-term care costs. A QIT, often referred to as a "Miller trust," plays a pivotal role in qualifying individuals whose incomes exceed the Medicaid eligibility threshold. This arrangement ensures that those in need can access vital health care services by aligning their income within the permissible limits, specifically aimed at supporting adults requiring nursing home care or those under home-and-community-based services. The primary beneficiary, usually the same individual as the grantor, along with the State of Tennessee as the secondary beneficiary, benefits from this fiduciary arrangement. Trustees bear the responsibility of carefully managing the QIT bank account, which should only contain the income of the grantor, as stipulated by the guidelines provided by the Department of Human Services (DHS) and Medicaid's regulatory framework. These accounts are distinct, not only in their purpose – facilitating Medicaid eligibility – but also in their operational aspects, with strict rules prohibiting the commingling of funds, outlining permissible payments, and detailing the termination process of the trust. Given the complexity of these trusts, the guidance of professionals, such as attorneys or Certified Public Accountants, is often sought to ensure compliance with both state and federal regulations, thereby securing the intended Medicaid benefits for the grantor.

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QUALIFIED INCOME TRUST (QIT):

A GUIDE FOR THE TRUSTEE

You have agreed to serve as the Trustee for a Qualified Income Trust (QIT). This guide tells you more about the Qualified Income Trust.

Definitions:

Beneficiary – The person who benefits from a trust arrangement. With a QIT, the grantor and primary beneficiary is the same person. The State of Tennessee is the secondary beneficiary.

Department of Human Services (DHS) – This department is part of the State of Tennessee’s government. DHS workers handle Medicaid applications and determine if the applicant is eligible for Medicaid.

Grantor – A person who puts money in a trust. With a QIT, the grantor is a person who needs Medicaid to help pay the costs of long term care.

Medicaid – Medicaid is a government program that helps some people with medical costs. In Tennessee, Medicaid is also called “TennCare.”

Patient Liability – Patient liability is the amount of money that the grantor must pay the nursing home each month for care. Sometimes, persons in the Medicaid Home-and- community-based program must pay patient liability as well.

Qualified Income Trust (QIT) - This kind of trust is also called a “Miller trust.” This trust helps a person qualify for Medicaid even if his income is too high. The trust makes it possible for that person to get Medicaid help for long term care.

Trust document – This is the document that sets up the trust arrangement, gives the trust a name and gives the trustee the instructions that he or she must follow. The trust document must be signed by the grantor and the trustee in front of a notary.

Trustee – A trustee is a person who handles money for another person, based upon the duties outlined in trust document. As a trustee, you are a fiduciary. A fiduciary is a person who has a special duty to protect the beneficiary, the person who benefits from the trust. That duty is a strict duty, similar to the duty of a conservator or guardian.

The Qualified Income Trust (QIT) is part of the Medicaid eligibility process.

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Tennessee is now one of the states using an “income cap” for Medicaid eligibility. That cap limits Medicaid assistance for long term care to adults with monthly incomes below $2020.00. Any one who has monthly income above that amount cannot qualify for Medicaid benefits to pay for nursing home care. This rule also applies to the home-and- community-based “waiver” services.

However, the law allows income to be placed in a Qualified Income Trust (QIT). This kind of trust is also called a “Miller trust.” The trust arrangement helps a person qualify for Medicaid even if his income is too high. This trust allows that person, when he is otherwise qualified for Medicaid, to meet the income limit and get Medicaid help.

The Qualified Income Trust (QIT) deals only with income.

The QIT bank account will hold only the income of the grantor. The grantor is the person who needs Medicaid. Savings or other assets cannot be held in this trust account. Income for another person, even a spouse, cannot be put in the trust account.

You cannot open the QIT bank account until the QIT document has been prepared and properly signed. If the grantor still has assets to “spend down,” you can use those assets to pay an attorney to prepare this document for you and give you individual advice. Once the document is signed, you must take it to the bank in order to open the QIT account.

A QIT bank account is opened when the Grantor is ready to get Medicaid coverage.

You should open the QIT bank account during the month in which the grantor would first become eligible for Medicaid benefits. A certain amount of money must be placed in the QIT before Medicaid eligibility can begin. Your advisor or the Medicaid eligibility worker will tell you how much money goes into the trust account. You should wait to fund the QIT until the grantor’s assets are below the Medicaid asset limit. Then, be prompt about setting up the arrangement. Medicaid cannot be approved until the trust is set up and has the right amount of income in it.

The QIT Bank Account is not like other bank accounts.

These types of trusts are fairly new in Tennessee. (Tennessee began using them in May 2005, and the regulations came out in October 2005.) So, your bank may not have handled one of these trusts before. Give the bank a copy of this handout if the bank needs more information.

The QIT bank account should be titled as a trust account. For example, “The Qualified Income Trust of John Doe.” In this example, John Doe is the person who is about to apply for Medicaid. He is also called the grantor and primary beneficiary of the trust. The State of Tennessee is the secondary beneficiary.

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The QIT bank account operates more like a “representative account,” set up for the payment of a disabled person’s expenses, rather than as a typical trust fund. There are none of the usual trust management issues because there are no significant assets kept in the QIT account.

A QIT is a “grantor trust” which means that, for tax purposes, the trust finances are the same as the grantor’s finances. Therefore, the bank should use the Social Security Number of the grantor (John Doe) for this account.

As Trustee, you are the only person authorized to sign checks on the account. No other person can write checks on the trust account, not even the grantor. Checks are imprinted with the account title. As trustee, you will receive the monthly statements. You must keep these statements, along with an itemized account of how John Doe’s money is spent, for Medicaid to review.

The State of Tennessee allows you to pay bank service charges, of no more than $20.00 per month, to cover the costs of keeping the account at the bank. If the charges are more than $20 per month, you will need to get advance approval from the Department of Human Services to pay the charges out of the trust account.

Do not get a bank cash card or credit card for the QIT account.

You must save all records about the QIT account and transfer the records to any successor trustee. These records are needed to prepare accountings and to respond to inquiries from the county Department of Human or the Bureau of TennCare.

The grantor or you will want to consult with an attorney or Certified Public Accountant at the end of the calendar year to be certain that all IRS reporting requirements are met. If the grantor cashed out IRAs, pension plans or other tax-deferred savings instruments, a tax return may need to be filed. Make sure that the tax preparer is aware of the trust and all other accounts.

The Grantor may need to have both a regular bank account and the QIT account.

There are good reasons for having two bank accounts for the grantor (John Doe). John Doe’s income is deposited into a general account first. Then some or all of the income is transferred to the QIT account. Your adviser can tell John Doe or you how much to transfer. The right amount of money should be transferred to the QIT account early in the month. The bills should be paid from the account before the end of the month.

Remember, the QIT deposits must consist of the grantor’s income and only that income.

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Qualified Income Trust funds may be used for approved payments only.

After John Doe’s income is moved into the QIT account, you may write checks out of the QIT account. The funds in the trust may be used only for the expenses allowed by the Medicaid rules. One or more of these expenses may be paid out of the trust:

•Medicare premium (if not paid automatically);

•Medicare Supplemental insurance premium;

•A dependent or spousal allowance (only if approved by the Medicaid eligibility worker);

•The money that is owed each month to the nursing home (called patient liability);

•The grantor’s personal needs allowance. It is usually a good idea to deposit this money in the grantor’s Patient Trust Account at the nursing facility. You can also deposit the Personal Needs Allowance in his regular checking account.

•Medical costs, which are not covered by Medicaid, Medicare or insurance, can be paid from the trust account, only if approved by the Medicaid eligibility worker;

•The costs to administer the trust and bank account, up to a maximum of $20 per month.

There are some other expenses that can be paid from the trust, but only if the Medicaid eligibility worker approves them. You should never make payments from the trust unless either the grantor’s attorney advises payment, or the Medicaid eligibility worker (at the Department of Human Services) has expressly approved the payment.

Co-Mingling is prohibited.

Never put any money -- other than grantor’s countable income -- into the QIT bank account. None of the trustee’s other funds should be placed into the QIT account. Never place any savings or other assets owned by John Doe in the account.

Check with the attorney if John Doe’s patient liability is expected to change substantially. For example, you should check with your advisor if the Grantor (John Doe) spends some time in the hospital, in a rehabilitation setting that is funded by Medicare. This may change the amount of money that is paid to the nursing facility. You will want to check with the attorney or the Medicaid eligibility worker about how the money should be handled during that time.

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You cannot charge for your services as Trustee.

You should never pay QIT money to yourself for services rendered. However, if you are both the trustee of the QIT and the grantor’s spouse, you may receive a community spouse allowance payment. Your Medicaid eligibility worker will tell you if you are to receive a community spouse allowance. In that case, it is appropriate for you to write a check to yourself. The attorney advising you will help you with this.

You must account for the trust receipts and disbursements.

You must keep records (cancelled checks, receipts, tax returns, bank statements) and do regular accountings to the grantor (if the grantor is interested and able to understand the information). More importantly, you must account to the county Department of Human Services and the Bureau of TennCare. If the grantor is under a conservatorship, the accounting requirements for the conservatorship must be followed as well. The accounting must provide verification of adequate monthly deposits to the QIT, bank statements, and cancelled checks. In Tennessee, conservators are required to produce all cancelled checks written for the ward. You will want to talk to the bank about the best, and most economical, way to get those copies.

When to close the QIT bank account

The QIT ends when one of these things happens:

1.The grantor (John Doe) passes away; or

2.Medicaid is no longer needed; or

3.The Department of Human Services gives you express written authorization and approval to end the Trust. This usually happens when the grantor’s income is no longer above the Medicaid Income Cap.

Any money left in the QIT is paid to the State of Tennessee up to the total amount of Medicaid benefits paid on behalf of the grantor for medical care. Any remaining funds are paid to the remainder beneficiaries as specified in the QIT document. Funds cannot be paid to the remainder beneficiaries until the State of Tennessee gives you a written statement that their payment amount satisfies the debt owed to the state.

When the time comes to end the QIT, you must:

1.Stop the deposit of funds into the QIT.

2.Notify the county Department of Human Services, and the Bureau of TennCare of the reason the trust should end.

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3.Wait until all expected expenses have cleared the account before you close it. Also, return any checks that may have been sent in error after the grantor’s death.

4.You will receive instructions from your Medicaid eligibility worker about sending the money left in the account to the state. The money is sent to:

TennCare Third Party Liability Unit 310 Great Circle Road

Fourth Floor, West Nashville, TN 37243

Phone: 615-507-6344

If you call the Third Party Liability Unit, expect to leave a message.

5.Generally, the state will allow three months for you to end the trust, but you can request more time if it is needed. Write a check for the balance of the trust fund as instructed by the state. A copy of the bank statement should be enclosed to confirm that balance. Send a cover letter or memo and include a brief explanation that the enclosed check is from a QIT. The cover letter and check should clearly identify the grantor by name, Social Security number and Medicaid number.

No other checks should be written from the QIT account after the grantor’s death, unless the state tells you that the Medicaid debt is satisfied and there is still money left in the account.

Legal authorities: 42 U.S.C.§ 1396p(d)(4)(B); See, Miller v. Ibarra, 746 F.Supp. 19 (D. Colo. 1990); Tennessee Rule 1240-3-3-. 03-(7); DHS Policy Bulletin MA-06-15, issued July 28, 2006; Bulletin 44 MA-05-10, issued November 30, 2005; IRS Opinion Letter (Austin, TX) to Texas Department of Human Services re: Taxpayer Identification Number, Dec. 2, 1996.

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Download Tennessee Qit

Document Data

Fact Number Fact Name Description Governing Law(s)
1 Trust Purpose The QIT helps individuals qualify for Medicaid by allowing them to meet income limits for long-term care assistance. Tennessee Medicaid Law
2 Beneficiary and Grantor In a QIT, the grantor and primary beneficiary are the same person, while the State of Tennessee is the secondary beneficiary. Tennessee Medicaid Law
3 Trustee Responsibilities The trustee manages the QIT based on the trust document's instructions, with a fiduciary duty to protect the beneficiary. Tennessee Trust Law
4 Income Cap Rule Tennessee uses an income cap for Medicaid eligibility, affecting those with incomes over $2020.00 per month. Tennessee Medicaid Law
5 Financial Operations The QIT bank account operates with the grantor's Social Security Number and is strictly for the grantor's income. Tennessee Medicaid Regulations
6 Accounting and Records The trustee must maintain detailed records of the QIT account and report to the Department of Human Services and Bureau of TennCare. Tennessee Medicaid Regulations
7 Prohibited Actions Co-mingling funds, charging for trustee services, and using the QIT for unapproved expenses are strictly prohibited. Tennessee Medicaid Regulations
8 QIT Bank Account The QIT bank account must be opened with the proper trust document and used only for the grantor's income. Tennessee Banking Regulations
9 Eligible Payments Funds in the QIT can be used for specified expenses such as patient liability, Medicare premiums, and medical costs not covered by Medicaid. Tennessee Medicaid Law
10 Ending the QIT The QIT ends upon the grantor's death, Medicaid ineligibility, or explicit DHS authorization, with residual funds paid to the state or remainder beneficiaries. Tennessee Medicaid Law

Detailed Guide for Using Tennessee Qit

Filling out the Tennessee Qualified Income Trust (QIT) form is a critical step in managing the financial aspects of Medicaid eligibility for long-term care. This document helps trustees understand their roles and responsibilities while offering essential guidelines on how to properly manage the trust. The steps outlined below are designed to help trustees navigate this process smoothly, ensuring they meet the legal requirements and support the beneficiary's needs effectively.

  1. Gather all necessary information, including the grantor's personal details, income sources, and monthly income amounts. This information is essential for accurately setting up the QIT.
  2. Download or request a copy of the QIT document template from the Department of Human Services or your legal advisor to ensure you are using the correct and updated form.
  3. Review the definitions and roles provided in the guide carefully to fully understand your obligations as a trustee. This includes understanding terms like beneficiary, grantor, and Medicaid, among others.
  4. Fill out the trust document with the grantor’s name, your name as trustee, and the necessary financial information. Ensure all sections are completed accurately to prevent issues with Medicaid eligibility.
  5. Sign the document in front of a notary alongside the grantor to validate the document. This step is crucial for the QIT to be legally recognized.
  6. Open a QIT bank account in the grantor's name, titled appropriately as a trust account, following the guidelines provided. Use the Social Security Number of the grantor for the account.
  7. Consult with your advisor or the Medicaid eligibility worker to determine the initial amount of money to be deposited into the Qit account. This amount is critical for the grantor's Medicaid eligibility.
  8. Deposit the determined amount into the QIT bank account. Ensure this task is performed promptly to avoid delays in Medicaid approval.
  9. Manage the QIT account according to the guide, paying approved expenses and maintaining accurate and complete records of all transactions for Medicaid review.
  10. Regularly consult with an attorney or Certified Public Accountant to ensure all IRS reporting requirements are met, especially if there are changes in the grantor's finances.
  11. Prepare for the eventual closure of the QIT account by understanding the conditions under which the trust can be terminated and the steps required for termination.

After completing these steps, you have successfully set up and managed a QIT for the grantor. It's important to continuously monitor the account, ensuring all payments are made in accordance with Medicaid rules and that records are kept up to date. Regular consultations with legal or financial advisors can provide guidance and help address any changes in the grantor's situation. Remember, as a trustee, you play a crucial role in helping the grantor secure necessary Medicaid benefits while adhering to state and federal laws.

Important Questions on This Form

What is a Qualified Income Trust (QIT) in Tennessee?

A Qualified Income Trust (QIT), also known as a Miller Trust, is a type of trust designated to help individuals whose income is too high to qualify for Medicaid under normal circumstances. It allows them to meet the Medicaid income eligibility requirements by placing their excess income into the trust. This arrangement makes it possible for them to receive Medicaid benefits for long term care. The State of Tennessee is the secondary beneficiary of a QIT, after the primary beneficiary, who is the grantor of the trust.

Who can benefit from a QIT?

The primary beneficiary of a QIT is the grantor, who is someone in need of Medicaid for long term care and has monthly income above the Medicaid eligibility cap. This typically includes older adults or individuals with disabilities who require nursing home care or home-and-community-based services.

What can the QIT funds be used for?

Funds within a Qualified Income Trust can be used for several approved expenses, including:

  • Medicare and Medicare Supplemental insurance premiums
  • A dependent or spousal allowance, with Medicaid eligibility worker approval
  • Patient liability payments to the nursing home
  • The grantor's personal needs allowance
  • Medical costs not covered by Medicaid, Medicare, or insurance, with eligibility worker approval
  • Trust and bank account administration costs, up to $20 per month

Before making any disbursements, it's crucial to have the payment approved by either a legal advisor or the Medicaid eligibility worker.

How is a QIT set up?

To set up a QIT, a trust document must be prepared and properly signed by both the grantor and the trustee in the presence of a notary. The document will stipulate the name of the trust and outline the trustee's responsibilities. Once the document is signed, the trustee must open a QIT bank account, ideally during the month the grantor first becomes eligible for Medicaid benefits, to start the funding process as instructed by a Medicaid eligibility worker or financial advisor.

What are the trustee's responsibilities?

The trustee, who has fiduciary duties towards the beneficiary, is responsible for managing the QIT's finances in accordance with the trust document and Medicaid rules. This includes:

  1. Opening and managing the QIT bank account
  2. Depositing the grantor's income into the QIT account
  3. Making approved disbursements
  4. Keeping detailed records and statements for review
  5. Ensuring no commingling of funds occurs
  6. Meeting all IRS reporting requirements

The trustee is also prohibited from receiving payment for their services unless they are the grantor's spouse and eligible for a community spouse allowance.

What happens if the grantor's situation changes?

If the grantor's income or patient liability changes significantly, such as due to a hospital or rehabilitation stay, the trustee should consult with an attorney or Medicaid eligibility worker. This consultation will ensure that funds are handled appropriately during these changes.

When should a QIT be closed?

A QIT should be closed when:

  1. The grantor passes away
  2. Medicaid is no longer needed
  3. The Department of Human Services authorizes its termination, typically when the grantor's income falls below the Medicaid cap

Upon closing, any remaining funds in the QIT are paid to the State of Tennessee up to the amount of Medicaid benefits provided to the grantor. Any funds remaining after this payment are distributed to remainder beneficiaries as outlined in the QIT document.

Common mistakes

Filling out the Tennessee Qualified Income Trust (QIT) form can be daunting. Some crucial mistakes are commonly made during this process. Being mindful of these missteps can ensure the process runs smoothly and that the beneficiary fully benefits from this Medicaid eligibility tool.

One critical error is not understanding the nature of funds that can be deposited into the QIT account. Only the grantor's income should be deposited; no other assets or savings, or anyone else's income, should be mixed into this account. This specific distinction ensures the trust serves its intended purpose without causing eligibility issues.

A mistake often overlooked is the failure to promptly fund the QIT account according to Medicaid's timing requirements. Opening and funding the account should be synchronized with the grantor's eligibility for Medicaid benefits. Delays or mismanagement of this step can lead to periods where the grantor might be ineligible for Medicaid coverage they would have otherwise qualified for.

There’s also the risk of improper payment of expenses from the QIT account. The QIT funds are strictly for approved expenses under Medicaid rules, such as Medicare premiums, patient liabilities, and certain medical costs not covered by Medicare or other insurances. Misusing these funds for unapproved expenses could not only jeopardize the grantor's eligibility but also result in financial penalties.

Another common mistake is ignoring the prohibition against commingling funds. Introducing non-qualified income or savings into the QIT account compromises its integrity and the trust's compliance with Medicaid regulations. Such actions can lead to serious implications, including denial of Medicaid benefits.

  1. Not ensuring the account title accurately reflects its trust status, potentially causing confusion and mismanagement.
  2. Forgetting to maintain and transfer detailed records to a successor trustee, jeopardizing accountability and the ability to verify the proper use of funds.

Understanding these potential pitfalls is crucial for trustees. Adequate preparation, continuous attention to detail, and adherence to both the letter and spirit of the QIT guidelines will help trustees fulfill their responsibilities effectively, ensuring that the grantor's needs are met without complicating their Medicaid eligibility.

Documents used along the form

When handling a Qualified Income Trust (QIT) in Tennessee, it's essential to understand the surrounding context and the other documents often involved in the process. Given the specificity of QITs and their role in enabling individuals to qualify for Medicaid, several other documents typically accompany or support the QIT form. Each document serves a purpose, contributing to a comprehensive approach to Medicaid eligibility and management.

  • Medicaid Application Form: A comprehensive application that initiates the process of determining eligibility for Medicaid benefits. It collects detailed information about the applicant's income, assets, and other personal details.
  • Proof of Income Documents: Documents such as pay stubs, Social Security benefit statements, and pension statements prove the applicant's monthly income, which is crucial in establishing the necessity for a QIT.
  • Asset Disclosure Forms: These forms list all of the applicant's assets, helping to ascertain eligibility for Medicaid by demonstrating that asset limits are not exceeded.
  • Bank Statements: Recent statements from all bank accounts are needed to verify current balances and to track the flow of funds into and out of the QIT once established.
  • Notarization Acknowledgement Form: A document confirming that the QIT and other relevant forms have been signed in the presence of a notary, ensuring the authenticity of the signatures and the documents.
  • Conservatorship or Power of Attorney Documents: If applicable, these legal documents authorize an individual to act on behalf of the grantor, including making decisions about income and assets, and setting up a QIT.

These documents complement the QIT by providing a full picture of the grantor's financial and legal status, ensuring that the trust is appropriately funded and operated in accordance with Medicaid guidelines and requirements. Whether preparing to establish a QIT, managing an existing trust, or considering Medicaid eligibility, it's crucial to have a thorough understanding and all necessary documentation in place to successfully navigate the process.

Similar forms

The Tennessee Qualified Income Trust (QIT) shares several core similarities with a Special Needs Trust (SNT). Both are designed to support individuals with specific financial and care requirements without disqualifying them from receiving certain government benefits, such as Medicaid. While the QIT focuses primarily on managing income for Medicaid eligibility, the SNT manages a broader range of assets for a person with disabilities, ensuring their needs are met without exceeding the income and resource limits set by government assistance programs.

Similar to the QIT, a Revocable Living Trust is a document created during a person's lifetime that can be altered or canceled at any time. This trust type also involves a grantor, trustee, and beneficiary framework, wherein the grantor retains control over the trust assets during their lifetime. The key difference is the broad purpose of asset management and estate planning in a Revocable Living Trust, compared to the specific goal of Medicaid qualification in a QIT.

An Irrevocable Trust, on the other hand, cannot be easily changed or terminated once it is established. This characteristic is somewhat echoed in the QIT, which also involves a firm commitment to its terms, especially regarding the handling of income for Medicaid eligibility. However, the primary intent behind an Irrevocable Trust is to protect assets from estate taxes and potential creditors, rather than to meet Medicaid income guidelines.

A Guardianship Account is a financial tool set up by a guardian to manage the assets of a minor or an incapacitated adult. Like the QIT, it involves managing another individual's financial affairs under the oversight of the state or a governing body. However, the focus of a Guardianship Account is broader, covering all aspects of an individual's financial life, not just the specific aspect of healthcare funding.

The Pooled Income Trust operates on a principle closely related to the QIT by allowing individuals with excess income to still qualify for Medicaid. By pooling the resources of many individuals in a trust managed by a nonprofit organization, it lets beneficiaries maintain Medicaid eligibility. Though similar in purpose to the QIT, the Pooled Income Trust serves a broader population and deals with both income and resources in a collective way.

A Spend-Down Account is another financial strategy to meet Medicaid's income eligibility criteria, much like a QIT. This approach involves spending excess income on qualified medical expenses to fall within Medicaid's allowable income limits. While a Spend-Down Account is directly about reducing countable income through expenses, the QIT involves legally setting aside income so it's not counted towards Medicaid eligibility limits.

Lastly, a Miller Trust, which is another name for the QIT itself, directly aligns with the function and purpose described in the guide. It specifically enables individuals whose income exceeds Medicaid limits to qualify for benefits by placing excess income into a trust. This shows the direct overlap and reinforces the QIT's core role in Medicaid planning.

Dos and Don'ts

When embarking on the task of filling out a Tennessee Qualified Income Trust (QIT) form, one navigates through both mandatory actions and pitfalls to avoid. To ensure accuracy and compliance with the requirements, the following provides a concise guide:

Do:

  1. Ensure the QIT document is correctly signed by both the grantor and the trustee in the presence of a notary. This foundational step legitimizes the trust.

  2. Open the QIT account with the specific bank during the grantor’s initial month of Medicaid eligibility to ensure timely benefit access.

  3. Title the QIT bank account accurately, incorporating “The Qualified Income Trust” followed by the grantor’s name, to properly earmark its purpose.

  4. Deposit only the grantor’s income into the QIT account to adhere strictly to how funds are to be allocated within this specialized account.

  5. Use the trust funds solely for the approved expenses outlined by Medicaid rules to avoid mismanagement and legal issues.

  6. Save all records related to the QIT, including bank statements and transaction records, which are vital for accountability and monitoring by relevant agencies.

  7. Consult with a professional such as an attorney or Certified Public Accountant regarding the QIT at the end of the calendar year, especially concerning IRS reporting requirements.

  8. Regularly account for all receipts and disbursements with meticulous records, keeping the Department of Human Services and the Bureau of TennCare updated.

  9. Understand the procedure for closing the QIT account, including stopping deposits and notifying relevant authorities, in accordance with the scenarios detailed in the trust agreement.

Don't:

  • Delay the creation and funding of the QIT account after the document has been signed and notarized, as this can delay Medicaid eligibility.

  • Deposit savings or other assets into the QIT account, as this account is solely for the grantor’s income meant to qualify for Medicaid.

  • Allow money from other sources, including a spouse’s income or the trustee’s funds, to be co-mingled with the grantor’s income in the QIT.

  • Get a bank cash card or credit card for the QIT account. It’s essential to have a controlled, paper-trace environment for all transactions.

  • Forget to consult with professionals regarding significant changes in the grantor’s financial situation or health status that might affect the QIT.

  • Charge the QIT for personal trustee services, except under specific circumstances communicated by Medicaid, which might include a community spouse allowance.

  • Pay for expenses out of the QIT without proper approval from either the grantor’s attorney or the Medicaid eligibility worker, as doing so could lead to unauthorized use of funds.

  • Ignore the advise of your bank regarding the maintenance of the QIT account, including obtaining copies of cancelled checks for record-keeping purposes.

  • Overlook the need for regular consultations with an attorney or accountant to ensure compliance with all legal and financial requirements of managing the QIT.

Misconceptions

Understanding the intricacies of the Tennessee Qualified Income Trust (QIT), also known as a Miller Trust, can be challenging due to prevalent misconceptions. Clearing up these misconceptions is essential to effectively utilize a QIT and ensure compliance with Tennessee Medicaid requirements.

  • Misconception 1: A QIT Can Hold Assets Other than Income

    One common misunderstanding is that a QIT can hold assets besides income, such as savings or property. However, a QIT is designed solely to hold the income of the grantor (the person for whom the trust is established), specifically to help meet Medicaid's income eligibility requirements. Savings and other assets must be managed through different means.

  • Misconception 2: Income from Other Individuals Can Be Deposited

    There is a belief that a QIT can contain income from sources other than the grantor, such as a spouse or relative. This is incorrect; only the grantor's income should be deposited into the QIT account to comply with Medicaid rules and the purpose of the QIT.

  • Misconception 3: A QIT Bank Account Operates Like Any Other Bank Account

    Another misunderstanding is that the QIT bank account functions like any standard bank account. Instead, it has specific requirements, including restricting account access and transactions to the trustee and focusing on the payment of the grantor's care-related expenses, Medicaid premiums, and certain other approved expenses.

  • Misconception 4: Trustees Can Pay Themselves for Services Rendered

    It is wrongly assumed that trustees can compensate themselves from the QIT funds for their services. Trustees are generally not permitted to use QIT funds for personal gain or remuneration unless receiving a specific allowance as a spouse of the grantor, which is part of Medicaid's eligibility determination.

  • Misconception 5: Setting Up a QIT is Optional for Medicaid Eligibility

    Some believe that creating a QIT is a matter of choice for individuals seeking Medicaid assistance for long-term care. In reality, for those whose income surpasses the Medicaid threshold in Tennessee, establishing a QIT is necessary to qualify for benefits.

  • Misconception 6: The QIT Allows for Flexible Use of Funds

    A misconception exists that funds within a QIT can be used flexibly for any purpose. In truth, the use of QIT funds is strictly regulated, allowing them to cover specific costs such as the grantor's care, certain medical expenses not covered by Medicaid, and administrative fees within set limits.

  • Misconception 7: A QIT Document Is Not Required to Be Notarized

    Some may believe that the formalities for establishing a QIT are minimal. However, the trust document must be executed correctly, which includes being signed by both the grantor and trustee in the presence of a notary, to ensure its legality and validity.

  • Misconception 8: The State of Tennessee Has Secondary Consideration

    The role of the State of Tennessee as a secondary beneficiary is often misunderstood to be of lesser importance. In contrast, this designation is critical, as it ensures the state can recover Medicaid expenses from the QIT upon the grantor's death, up to the total amount of benefits paid on behalf of the grantor.

Correcting these misconceptions about the Tennessee Qualified Income Trust is fundamental to supporting trustees in their roles and ensuring that grantors make the most of their Medicaid benefits under the regulatory framework.

Key takeaways

When setting up a Qualified Income Trust (QIT) in Tennessee, understanding its unique features is essential for effectively managing the trust and ensuring Medicaid eligibility for the grantor. Here are seven key takeaways:

  • The purpose of a QIT is to assist individuals whose income exceeds the Medicaid eligibility threshold to qualify for Medicaid coverage for long-term care by placing excess income into a trust.
  • A QIT can only contain the income of the individual needing Medicaid; it cannot hold savings, assets, or income from other persons, such as a spouse.
  • The trust document is a crucial part of setting up a QIT. It must be properly prepared, signed by both the grantor and the trustee in front of a notary, and then used to open a QIT bank account.
  • The trustee, who manages the QIT, has a fiduciary duty to the beneficiary, meaning they must act in the best interest of the beneficiary with a high standard of care and loyalty.
  • Funds within the QIT are meant to be used for specific expenses approved by Medicaid, such as Medicare premiums, nursing home patient liability, personal needs allowance, and certain medical costs not covered by insurance.
  • Co-mingling funds is strictly prohibited, meaning only the income of the grantor can be placed in the QIT account. Savings, assets, or income from other sources must not be deposited into the QIT.
  • The QIT must be carefully managed, with all expenditures tracked and records maintained for review by Medicaid. This includes bank statements and itemized lists of disbursements, underscoring the trustee's responsibility to ensure the trust complies with Medicaid’s requirements.

Additionally, it’s important to note the conditions under which a QBols qbols a Qbol bqbolsall leaves or decides to suspend her QBol subscriptiondue to personal NonQBol-related obligations Qbit after four days of subscription, the Qbol policy on refunds should be consulted to ensure she is able to recoup any unused portion of her subscription fee in accordance with QBol terms of service.

In conclusion, the trustee plays a critical role in managing a QIT, ensuring the grantor's Medicaid eligibility, and abiding by the strict guidelines set by the state of Tennessee. Legal or financial advice should be sought when setting up or managing a QIT to ensure all actions taken are in accordance with state laws and Medicaid regulations.

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