Using a Qualified Income Trust in Colorado to Reduce Income and Retain Medicaid Eligibility for Long-Term Elder Care

Nursing home and other long-term care costs can be extremely high for the people in need of care and their families. Medicaid and other federal programs may help those in need to pay for long-term care costs. In some states, including Colorado, eligibility for Medicaid assistance with nursing home care is dependent on a person’s income rather than their need. In Colorado, it is common for someone who legitimately cannot afford long-term care to make too much money to qualify for Medicaid assistance.

In Colorado, the Medicaid income limit for 2021 is generally $2382. Persons who generate more than this amount of income will not be eligible for Medicaid assistance in paying for long-term care or nursing home costs. Most long-term care facilities and nursing homes will cost substantially more than this amount for care, and many people with income above the limit will be unable to afford the care they need without additional assistance. With the help of a Colorado estate planning attorney, however, people in need of care may be able to use what is called a qualified income trust to sequester some of their income for care costs while still maintaining Medicaid eligibility and receiving federal benefits.

A qualified income trust, also known as a Miller trust, is a specific legal instrument that is used to manage a person’s income. Income that is deposited in the trust account is not counted toward the income limit for Medicaid eligibility. Miller trusts require a trustee to be appointed to manage the income and expenses of the account. In order to successfully establish a qualified income trust, a person must meet the other requirements for Medicaid eligibility, including a medical need for care, as well as owning less than $2000 in countable assets.

After a Miller trust is established in Colorado, all or part of the person’s income will be deposited into the trust account and can be used only to pay for the beneficiary’s share of their care and certain specific allowances. Any excess money remaining in the trust account on a monthly basis is allowed to stay in the account; however, upon the death of the beneficiary, the state of Colorado has priority to recover any expenses that Medicaid paid on behalf of the beneficiary. If there is a remaining balance in the trust account after the state has recovered its expenses, the other trust beneficiaries are entitled to that amount.

Contact a Colorado Estate Planning Attorney

Drafting trust documents and establishing the necessary accounts for long-term care or end-of-life plans can be a complicated endeavor. If you want to ensure that you can afford long-term care, reaching out to the experienced Boulder estate planning attorneys at Braverman Law group with your concerns can help you find peace of mind. We can advise you on the possibility of using Medicaid to help cover long-term care or nursing home expenses. Our lawyers have decades of experience assisting clients with estate plans. To schedule a free consultation and to speak with one of our qualified attorneys, give us a call at 303-800-1588 today.