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Qualified Income Trust

Fair Hearing Report: Appeal No. 01F-0036, Qualified Income Trust deemed ineffective, retroactive benefits denied.*  *Income Cap requirement for year in question (2000) was $1,536 per month.  Year 2009 Income Cap is $2,022.00 per month.

The following is an example of a qualified income trust being improperly prepared.


FILED MAR 22 2001

APPEAL NO.01F-0036

CASE NO. 1019812940







Pursuant to notice, and rescheduling at the request of the petitioner's representative, an administrative hearing was convened before the undersigned hearing officer on March 6, 2001 at 10:30 a.m. in Palm Bay, Florida. The petitioner had passed away and was represented by her daughter, ********, assisted by the nursing home administrator, *******, Susan PerryJuhl, public assistance specialist supervisor, represented the respondent.


At issue was whether or not denial of Institutional Care Program (ICP) vendor payment benefit under the Medicaid Program was correct due to excess income.


The petitioner resided in a nursing facility and application was filed on her behalf for the Institutional Care Program under Medicaid. The respondent determined that between months of May through September 2000, an income trust had not been adequately funded. For that reason, ineligibility was determined for the months of May through September 2000. Approval beginning October 2000, due to adequate trust funding, was not at challenge. Notice of both eligibility and ineligibility was Respondent's Exhibit 1, dated November 17, 2000, as under challenge. (Case denial due to assets through the month of April 2000 was not in dispute.)

Income of the petitioner exceeded the $1536 (Year 2000) standard shown in the "Financial Eligibility Standards" chart, Respondent's Exhibit 2. Income was a total undisputed gross amount of $1748.33 as shown in Respondent's Exhibits 6-9. During April 2000 the trust was established and funded with $300. During May 2000 it was not funded. During June through September it was funded at amounts between $126.45 and $173.83. October 2, 2000, funding was $305 and at that point income was below the $1536 standard. During April 2000, an agency employee thought he had given an adequate explanation of the income trust criteria, as shown in Respondent's Exhibit 4. Regretably, as noted by the respondent's representative, that explanation was not shared in writing, with the daughter of the petitioner. The daughter did not understand all the criteria and when the trust was first established and approved, it was not sufficiently funded.

Section 1805.15.20 of the Integrated Public Assistance Policy manual, included in Respondent's Exhibit 3, showed the "gross income" weighed against "300 percent of the SSI federal benefit rate" as the eligibility review starting point. It also informed as follows:

"The individual (or their legally authorized representative) must deposit sufficient income into the trust account in the month in which the income is received to reduce their countable income (the income outside the trust) to within the program income standard. The individual must make the deposit each month that eligibility is requested. The public assistance specialist must advise the individual that they cannot qualify for Medicaid institutional care services or HCBS for any month in which their income is not placed in an executed income trust account in the same month in which the income is received. (This may require the individual to begin funding an executed income trust account prior to its official approval by the district legal counsel.)"

The nursing home administrator noted that if staff there had understood the gravity of the situation they would have given better and quicker financial advice. Petitioner's Exhibit 1 showed the nursing home payments made on a regular basis. Funds of the petitioner were going to pay for her care and were not being withheld.


Several arguments were offered on behalf of the petitioner. According to the petitioner, it was not possible to achieve eligibility before October 2000 because the Department had not promptly issued sufficient information to make adequate trust deposits. According to the respondent, the trust simply was inadequately funded between May and September, and regardless of reason, without sufficient reduction of income there was unalterable income ineligibility during that period. As an institutionalized person, the petitioner's Medicaid coverage group, under which benefits can occur by vendor payment of the agency, would derive from Florida Administrative Code (FAC) 65A-1.713. This says in relevant part:

"(1)(d) For ICP, gross income cannot exceed 300 percent of the SSI federal benefit rate after consideration of allowable deductions set forth in Rule 65A1.713(2) F.A.C. (Examples of irregular, in-kind, or income placed into a special approved trust are elaborated.) Individuals with income over this limit may qualify for institutional care services by establishing an income trust which meets criteria set forth in Rule 65A-1.702(13)(a) F.A.C."

Under that authority with federal benefit rates, the State's income standard was $1536. At all times in question, based upon gross income, without sufficient funding to an income trust, it must be concluded that ineligibility would be a necessary determination.

In recognition of the potential problem created by income ineligibility for the program, yet with remaining inability to pay high cost of institutional care, at federal level the 1993 Omnibus Reconciliation Act provided further authority for establishment of an income trust. If an applicant so desired, in order to reduce monthly income below a State's standard, a trust could be established. This opportunity to create eligibility is a federal option, not a State or federal mandate. However, if a person were to select the income trust account option, it becomes necessary under the rules for the instrument to appropriately exist and to be sufficiently funded, during a particular month, from one's income sources, so as to reduce income below State standards. Funding of the trust must occur before Medicaid eligibility may occur. Moreover, the rule clearly and unequivocally declares that "the individual must make the deposit each month..." No exception is authorized for any reason and the income must be reduced below State standards before eligibility may occur.

In the case at hand, excess income was a recognized eligibility problem. While it may be true that an agency worker did not write down an exact monthly amount to deposit, crucial ineligibility information was available at the outset. In this situation, the critical fact was that all criteria necessary for approval were not fulfilled during the period in question. Arguments of the petitioner are recognized. Existence and some funding of the trust were evident. However, whether due to misunderstanding, insufficient information, or insufficient funding, the critical and insurmountable problem was that the trust simply was not adequately funded from any income source for the months under dispute. It must be concluded there is no permissible regulatory foundation for a more favorable conclusion. Denial was necessary.


The appeal is denied and the agency action is upheld.