IMPORTANT INFORMATION FOR INDIVIDUALS WITH INCOME OVER $2205

Establishing an income trust to become eligible for long term care

To qualify for South Dakota Medicaid, individuals must meet both resource and income requirements. The income limit for Medicaid in South Dakota is 300% of the SSI standard ($2205 for 2017). A Medicaid Income Trust is used when a Medicaid applicant has too much income to qualify for Medicaid but not enough to private pay for nursing home care or other long-term care costs. This type of trust is established for the sole benefit of an individual who receives Long-Term Care or Home Community Based waiver services. Medicaid income trusts may not be used for Assisted Living or Adult Foster care eligibility.

An individual, their spouse or guardian can set up an income trust account to deposit income that is over the 300% SSI standard. In general, a Medicaid applicant opens a bank account with the title “Income Trust for (Applicant’s Name)”, with a Trustee listed on the account. The bank does not need to complete the trust documentation; they merely need to assist in opening the account. The income trust has to be established in the month services are requested to begin. Any income over $2205 (2017) must be placed into the trust in the month of receipt. There is no limit on the amount of income that can be placed into an income trust.

Income can be removed from the trust for an allowable deduction such as personal needs allowance and community spousal allowance (if married). However, this can only be an amount that when combined with other income not placed in the trust, equals up to 300% ($2205 in 2017). EXAMPLE: Recipient receives $1000 in pension and $3500 in Social Security. The $1000 pension IS NOT placed in the trust, the $3500 SS is put into the trust. The applicant can withdraw $1205 out of the trust to equal $2205. The Trustee shall pay any amount remaining in the trust directly to the provider of long-term care OR for items not covered by the long-term care or Medicaid program which are necessary for Grantor’s (Applicant’s) health and direct administration of the trust.

Money remaining in an income trust the month after receipt is a countable resource. The balance of an income trust should typically be $0 per the terms of the trust. Income trusts exceeding the $2000 resource limit will be subject to penalty.

There are requirements that the trust must meet. If the trust document does not meet all the requirements, the trust does not qualify as a Medicaid Income Trust.

·  The trust must be for the sole benefit of the individual.

·  The trust must consist of the individual’s income only. It is not a Medicaid income trust if it consists of any other personal or real property of the individual or any other person.

·  It must specify that upon death of the individual, South Dakota Department of Social Services is entitled to payment from the trust up to an amount equal to all medical expenses paid for the individual.

Attached is an example of an income trust, which we consider as having the language that meets all requirements. Copies of this example may be used. If you have questions, please contact your local long term care office at -. A copy of the trust will need to be provided during the application process.

This information is not intended as legal advice, and individuals seeking information on the legal consequences of these documents are encouraged to consult a lawyer of their choosing. DSS will only review trust documents in connection with the processing of a Medicaid application. The review by DSS is limited to a determination of whether the trust meets the requirements for a Medicaid Income Trust.

Helpful Hints in completing an

Income Trust

Grantor- is the LTC applicant

Trustee - power of attorney or Legal Guardian or whoever will be managing the trust account

Name- Long Term Care Applicant’s name

Beneficiary-Long Term Care Applicant’s name

Trust Estate- list the type of income the applicant has

Successor Trustee-someone to name as the trustee if the trustee dies or becomes disabled

The form needs to be signed by a Notary Public.