Over the Florida Medicaid Income Cap? What a Qualified Income Trust Can Do

Gloria's situation: a few hundred dollars "too much"

Gloria is 79, lives in DeLand, and spent her career teaching in Volusia County schools. Between her pension and her Social Security, her monthly income lands a few hundred dollars above Florida's Medicaid income cap for long-term care. (Gloria is a composite example, not an actual Truestead client, but her situation is one I see constantly.) When her daughter Angela started the paperwork for a nursing facility, someone at the front desk told her, flatly, that Gloria "makes too much" for Medicaid.

That comment is technically true and also badly incomplete. Florida is what's called an income-cap state. Unlike states that use a sliding-scale spend-down, Florida's long-term care Medicaid programs draw a hard line: gross monthly income either falls at or under the cap, or it does not. There is no partial credit and no gradual phase-out. If Gloria's income is one dollar over, the application gets denied on paper, exactly as written. But that hard line is precisely why the Qualified Income Trust exists, and why Angela's story does not have to end at that front desk.

Why Florida uses a hard income cap, and what counts as "income"

Florida's income cap comes from federal Medicaid law, not from a state policy choice that could shift year to year on a whim. The cap applies to gross monthly income, meaning income before any deductions, and it applies across nursing facility Medicaid and Florida's home and community-based waiver programs alike. That gross-income rule is exactly why an applicant with modest resources can still show up "over the cap" on paper.

• Countable income generally includes Social Security retirement benefits, pension payments like Gloria's teacher pension, IRA or annuity distributions, and most other regular income sources.
• The cap is measured against gross income, so Medicare premiums, tax withholding, or other deductions that reduce a person's take-home pay do not reduce their countable income for this test.
• Because the cap is a fixed dollar figure that adjusts periodically at the federal level, the exact number changes from time to time. Families should confirm the current monthly figure with a Florida elder law attorney or with DCF rather than relying on a number from a prior year.

This is the trap Angela ran into. Gloria's pension was a modest, steady benefit from decades of teaching, not a windfall, yet combined with Social Security it pushed her just over the line. That single fact, on its own, is what triggered the denial conversation at the facility.

How a Qualified Income Trust actually works

A Qualified Income Trust, often called a QIT or a Miller Trust, is an irrevocable trust created specifically to hold a Medicaid applicant's excess income. It does not shelter savings, real estate, or other assets. It only holds income, and only the income that would otherwise push the applicant over Florida's cap.

The mechanics are straightforward once set up correctly:

• A dedicated bank account is opened in the name of the trust, using the trust's own tax identification number, not the applicant's Social Security number.
• Each month, income that would otherwise exceed the cap (in Gloria's case, her pension check, or a portion of it) is deposited into that trust account rather than into Gloria's personal checking account.
• The trust document names the State of Florida as the remainder beneficiary, meaning that when the trust eventually closes, any funds left over reimburse the state for Medicaid benefits paid on the recipient's behalf.
• Because that income is legally reassigned to the trust, it is treated as unavailable to Gloria for Medicaid eligibility purposes, and her countable income drops back under the cap.

What happens to Gloria's income each month after the trust is set up

Once the QIT is drafted and the account is open, Angela's job becomes a monthly routine rather than a legal puzzle. Gloria's pension deposit needs to be routed into the trust account before the end of the calendar month, every month, without exception. Some families set this up as a direct deposit; others manually transfer the excess amount right after the check arrives.

From there, most of the money in the trust account gets used according to Medicaid's rules for what's called patient responsibility, which is the amount a Medicaid recipient in a nursing facility is expected to contribute toward the cost of their own care each month, after certain allowances (such as a small personal needs allowance and, in some cases, deductions for a spouse still living at home). The facility and the caseworker walk the family through exactly what Gloria's patient responsibility figure will be. The trust is the mechanism that gets her eligible; patient responsibility is the separate calculation of what she pays once she is.

Where these applications go wrong

In my practice, the Qualified Income Trust itself rarely fails because of a drafting problem. It fails because of sloppy monthly administration, and Florida's Department of Children and Families reviews that administration closely, especially at redetermination.

• Late deposits. If Gloria's pension check arrives on the last business day of the month and the deposit into the trust account slips into the first days of the following month, DCF may treat that as a late or missed deposit for that period.
• Commingling funds. The trust account has to stay completely separate. Depositing other money into it, or using trust funds to pay for something unrelated to Gloria's care, creates exactly the kind of red flag that triggers a compliance review.
• Forgetting a month entirely. If a deposit is simply missed, that month's excess income was never reassigned to the trust, and Gloria's countable income for that month can appear over the cap again.
• Setting up the trust too late. Some families wait until after a denial to create the QIT. It is almost always better to set it up before or immediately alongside the application, since a trust that exists on paper but was never properly funded does nothing.

For Angela, once she understood that the trust required a disciplined monthly habit rather than a one-time fix, the process stopped feeling like a legal maze and started feeling like a checklist she could actually manage.

This article is for general informational purposes only and does not constitute legal advice, nor does reading it create an attorney-client relationship. Florida estate, elder, probate, and real estate law are fact-specific and change over time. Consult a licensed Florida attorney about your individual circumstances. Arthur Simpson, Esq. is licensed to practice law in the State of Florida. Attorney advertising.