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Chapter: 1800 Income Program: MSSI, SFP 11 1840.0110 Income Trusts (MSSI) The following policy applies only to the Institutionalized Care Program (ICP), institutionalized MEDS-AD, institutionalized Hospice, Home and Community Based Services (HCBS) and PACE. It does not apply to Community Hospice.

To qualify, an individual's gross income cannot exceed 300 percent of the SSI federal benefit rate (refer to Appendix A-9 for the current income standard). If an individual has income above the ICP income limit, they may become eligible for institutional care or HCBS if they set up and fund a qualified income trust. A trust is considered a qualified income trust if:

1. it is established on or after 10/01/93 for the benefit of the individual; 2. it is irrevocable; 3. it is composed only of the individual's income (Social Security, pensions, or other income sources); and 4. the trust stipulates the state will receive the balance in the trust upon the death of the individual up to an amount equal to the total medical assistance paid on their behalf.

The eligibility specialist must forward all income trusts to their Region or Circuit Program Office for review and submission to the Circuit Legal Counsel for a decision on whether the trust meets the criteria to be a qualified income trust. Refer to Appendix A-22.1, Guidance for Reviewing Income Trusts, for instructions on processing income trust cases.

The individual (or their legally authorized representative) must deposit sufficient income into the income 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. This may require the individual to begin funding an executed income trust account prior to its official approval by the Circuit Legal Counsel.

Once the Circuit Legal Counsel returns the income trust transmittal through the Region or Circuit Program Office, the eligibility specialist must promptly process the Medicaid application, making sure proper notification of eligibility and patient responsibility is given.

If the Region or Circuit Program Office and the Circuit Legal Counsel determine the trust is a qualified income trust:

1. do not consider the corpus of the trust an asset to the individual for any month the qualified income trust exists and eligibility is requested; 2. do not apply penalties for transfers of income placed in a qualified income trust account provided the individual receives fair compensation; 3. do not count income deposited into the trust account as income when determining if the individual's income is less than the program income standard; 4. do not consider disbursements from the trust account to third parties as income to the individual; 5. do not count income generated by the trust account which remains in the trust as income to the individual; 6. count any payments made directly to the individual as their income; and 7. count all income going into the trust (plus any not going into the trust) in determining patient responsibility, unless protection of income for the month of admission or discharge policies apply (refer to Chapter 2600).

Note: The amount computed for patient responsibility exceeds the provider’s Medicaid rate. The trustee of the qualified income trust must provide quarterly statements identifying the deposits made to the trust for each month.