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Understanding Qualified Income Trusts: What They Are and How They Work

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A Qualified Income Trust (QIT), is a tool designed to help individuals qualify for Medicaid benefits while preserving a portion of their income. By placing excess income into a trust, individuals can reduce their countable income, making them eligible for Medicaid without losing their financial stability. 

According to a study done by National Institutions of Health (NIS), 40% of medicaid applicants strongly agreed that the Medicaid application was long and complicated. Better understanding tools like trusts, can help you secure the benefits you are entitled to, no matter how elaborate. 

At Jarvis Law Office, we understand that planning for your future shouldn’t be overwhelming. That’s why we go beyond simply creating a Qualified Income Trust (QIT). Our dedicated team helps you move assets into the trust and provides the tools you need to manage them effectively. 

Key Takeaways

  • A Qualified Income Trust (QIT) helps individuals with income above Medicaid limits qualify for benefits by transferring excess income into a trust.
  • QITs are irrevocable and must be carefully managed to comply with Medicaid rules, including depositing excess income and using funds only for approved expenses.
  • Ohio has specific requirements for QITs, such as mandated language in trust documents and rules about allowable expenses, making legal guidance essential.
  • Properly setting up and managing a QIT can secure Medicaid eligibility and provide peace of mind for individuals needing long-term care.

What is a Qualified Income Trust (QIT)?

A Qualified Income Trust is a legal arrangement that allows individuals with income above Medicaid limits to still qualify for Medicaid benefits. According to Medicaid Planning Assistance, the monthly income limit for Ohio in 2025 is $2,901. 

By placing excess income into the trust, it is no longer counted toward eligibility calculations, helping individuals meet Medicaid’s strict income requirements.

A QIT is irrevocable, meaning once it is established, its terms cannot be changed or terminated. The funds in the trust must be used only for specific purposes, such as medical costs, personal needs allowances, and Medicaid co-payments. 

Each state has unique rules regarding QITs, including income limits and approved uses of trust funds. Consulting a knowledgeable attorney allows for compliance with these requirements.

How Does a QIT Work?

A QIT works by diverting an individual’s excess income into a trust account managed by a trustee. The process typically involves:

  1. Drafting a legal document to establish the trust.
  2. Opening a dedicated bank account for the trust.
  3. Depositing the portion of income that exceeds Medicaid’s limit into the account each month.
  4. Confirm that funds are used only for allowable expenses, such as medical bills or personal needs allowances.

By following these steps, a QIT can help individuals maintain Medicaid eligibility while effectively managing their income.

Who Needs a QIT?

QITs are helpful for individuals who exceed Medicaid’s income limits but cannot afford long-term care out-of-pocket often. The average cost of nursing home care in Ohio for 2025 is $9,806 per month, according to Senior Living. 

Seniors needing nursing home care or disabled individuals requiring in-home healthcare services may find a QIT essential for accessing Medicaid benefits.

Setting Up a Qualified Income Trust

Proper setup is important to avoid complications or penalties. Setting up a QIT involves several important steps:

  1. Consult an attorney to confirm that the trust complies with state-specific Medicaid guidelines.
  2. Appoint a trustee, often a trusted family member, to manage the trust.
  3. Draft a legal document that specifies how the trust operates.
  4. Open a separate bank account to hold the trust’s funds.

Managing a QIT

Proper management of a QIT is key to maintaining Medicaid eligibility. Excess income must be deposited into the trust each month, and funds can only be used for approved purposes like healthcare expenses or personal allowances. Trustees should keep detailed records of all transactions to confirm compliance with Medicaid regulations.

An infographic addressing the 3 common medicaid mistakes when using QITs: exceeding income limits, eligibility errors, and asset mismanagement.

State-Specific Considerations

Each state has its own approach to Qualified Income Trusts, with unique rules governing income thresholds, trust setup, and fund management. 

Ohio Medicaid Rules for QITs

In Ohio, Medicaid income limits are updated annually, and the state requires that all QIT funds be used for approved expenses like medical bills, long-term care costs, and personal allowances. 

Consulting an attorney who has experience with Ohio’s specific trust laws can allow for a smoother and more efficient process. 

Benefits and Limitations of QITs

Using a QIT offers significant benefits, like allowing individuals to qualify for Medicaid benefits even if their income exceeds the limits. It also provides a structured way to manage funds. However, the funds in a QIT are restricted to specific uses, and mismanagement could result in the loss of Medicaid benefits.

Secure Your Medicaid Benefits Today

A Qualified Income Trust can be a lifeline for individuals who need Medicaid benefits but have income above the qualifying limit. With careful planning and the right legal guidance, you can access the care you need while staying compliant with Medicaid’s rules.

If you or a loved one needs assistance setting up a QIT, contact our experienced team today. We are here to guide you through the process and help you secure your Medicaid benefits.

At Jarvis Law Office, we focus on helping Ohio residents establish and manage QITs to protect their Medicaid eligibility. Don’t wait until it’s too late—contact us today for personalized assistance and peace of mind. Visit our contact page to get started and let our dedicated team guide you every step of the way.

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