What Is an Income Cap Trust?
Provided by HG.org
Income caps affect the elderly and other individuals seeking Medicaid for long-term assistance, and when the older person needs an income cap trust, this could affect the situation with children or other guardians. Those seeking to help an elderly individual in need of long-term care may need to satisfy the state conditions to do so for him or her.
The normal income cap that the elderly workforce members are able to earn is set around $2000 each month in the states that require these caps on income for Medicaid benefits. Long-term care becomes important for those in advancing years with health conditions. Only so much work is possible each week and month. The cap appears to become less necessary as the person progresses through old age. Unfortunately, the caps exist even if healthcare costs exceed the income earned each month. This is true even if the bills are much greater than any funds earned through work.
The Income Cap Trust
For those that need Medicaid, pension or Social Security income, a trust is set up for these individuals. This could be a bank account where the person has his or her benefits routed to for the income cap trust. All monthly income redirect to this account. In the states that have the income cap, any income earned over the amount does not directly disqualify him or her when the income cap trust sets up correctly. A trustee must abide by the rules of approved Medicaid spending, and then all benefits will remain in effect. The trustee is usually a spouse, partner or adult child of the elder person.
The Income Cap Trust Account
Many elderly need help with accounts and ensuring that payments provide the necessary healthcare and other services with funds. If the older individual becomes confused easily, a family member may need to assist with these matters. Through a trustee equipped to handle the situation, the income cap trust account has someone overseeing where the funds will go. It is after all income deposits into the account that the trustee may maintain the appropriate care for the older person. This may involve paying doctors, contacting pharmacies for medication and calling for appointments with specialists. With a trusted individual taking care of the account, the elderly involved individual may clear any worries about these matters.
The need for these accounts arises when the older person receives income in excess of the cap with the Medicaid program. The healthcare necessary to assist this individual usually takes more funds than the income earned. With the account created and managed by a trustee, the aged person may bypass this cap and still receive Medicaid benefits. The situation works for everyone involved and provides security and peace of mind to the elderly affected. However, a trustee may receive notification from the state or city where the older person resides. Without additional details, this could cause confusion and complications if he or she does not know how to proceed.
Professional Assistance in the Income Cap Trust
Many that have older parents or family members may not have any experience in creating a spending plan. The trust requires supervision and application in payments for various expenses. If the son or daughter of the elderly affected individual is not in his or her life enough, a professional may need to help throughout the lifetime of the trust. Many seek an elder law lawyer for these matters. This type of professional may prepare a plan for monthly income expenses that align with the Medicaid rules. It is then generally necessary to submit the plan to the Medicaid authorities for approval.
Because it is possible to design the plan with the most benefits to the older person, professional assistance may increase awareness of what the ill person may go through. The trustee may need to become more involved with his or her parent in these situations. These trusts do take time to setup from scratch. The application needs approval, and if there are any complications, more time is necessary before the plan takes action. With rising nursing home costs, the trustee may face financial difficulty without professional help.
The Elder Law Lawyer in Income Cap Trusts
Legal support in these matters may provide the necessary help for an elderly person facing health conditions and illness. By creating the income cap trust with a legal professional, any other issues may resolve before presented in the situation. This could also provide other opportunities for the involved parties.
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer.