James F. Little, Attorney Silverton

Income Cap Trusts

Income Cap Trusts

About Income Cap Trusts

If a person earns more than 300% of the Supplemental Social Security Income Standard $579 per month in 2005) he or she will not be eligible for Medicaid assistance to help pay for long-term care services, regardless of how much the care costs. This "income cap" is $1,737 per month for the year 2005. So, for example, a client may have $1,700 in monthly income, and a $5,000 bill for monthly care, and not qualify for assistance. This is a terrible result, and thankfully, there is a means of avoiding the effects of this rule.

There are several strategies to deal with excess income. An income cap trust is one of the most commonly used and successful strategies in Oregon. The concept behind income cap trusts is that by creating an irrevocable trust, and transferring all the client's income to the trust, that income is no longer "available" to pay for the client's support needs. Instead, the income is distributed according to a schedule that conforms to the Medicaid rules concerning post-eligibility treatment of income.

Income cap trusts first appeared in Colorado in response to that state's adoption of an income limit for Medicaid eligibility for long-term care. The state Medicaid agency challenged the use of income cap trusts, and lost in federal court. In 1993, the use of income cap trusts was recognized and approved by Congress. Now, there is no question but that income cap trusts are effective, perfectly legal and proper ways of qualifying for Medicaid benefits.

For more information contact :

James F. Little,
1430 Pine Street,
Silverton, OR 97381
Telephone: (503) 873-6081 Office;
(503) 873-7919 Home