Medicaid Qualifying Trusts (MQTs) (Archive)

Although referred to as a Medicaid Qualifying Trust (MQT), this type of trust generally causes the client to be ineligible for Medical Assistance (MA) because the trust corpus The assets and undisbursed income held in a trust, also referred to as the trust principal, estate or res (Latin for the subject matter of a trust or will). Assets and undisbursed income held in a trust are owned by (titled to) the trust and are not owned by the client. The trust corpus of a trust, however, may be available to the client. is considered available to the client.  

Elements of a Medicaid Qualifying Trust (MQT).

Trust-Like Arrangements, Instruments and Devices Treated as MQTs.

Evaluation of Assets Held in the Trust.

Medicaid Qualifying Trust Provisions.

MinnesotaCare and MA Method A.

MA Method B and GAMC.

Treatment of Payments Made from a Trust to the Client.

Medicaid Qualifying Trust (MQT) Verifications.

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Elements of a Medicaid Qualifying Trust (MQT)

The client must be a current beneficiary of all or part of the disbursements from the MQT. An MQT must be:

l  Established before August 11, 1993.

Exception:  A trust established before August 11, 1993, is not an MQT if the trust was established solely for the benefit of a disabled person residing in an intermediate care facility for the developmentally disabled (known as an ICF/DD). For a trust or initial trust decree established prior to April 7, 1986, solely for the benefit of a developmentally disabled person who resides in an ICF-DD, follow the policies for Third Party Established and Funded Trusts.

l  Funded by:  The client or the client’s spouse must be a grantor The individual who provides the trust corpus, also called a settler or trustor. The individual funding the trust is the grantor even if an agent (such as, power of attorney or conservator) establishes the trust with funds or property that belong to the individual and even in situations where the trust agreement shows a person legally empowered to act on the individual’s behalf as the grantor. of the trust.

n  A trust that is established by an individual’s guardian or legal representative acting on the client’s or client’s spouse’s behalf is considered to be funded by the client or the client’s spouse.

n  If a trust is not funded by the client or the client’s spouse, the trust cannot be a MQT. Instead, such a trust must be evaluated as a Third Party Established and Funded Trusts.

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Trust-Like Arrangements, Instruments and Devices Treated as MQTs  

For purposes of evaluating Medicaid Qualifying Trusts (MQTs) only, a trust includes any legal instrument, device or arrangement which may not be called a trust or qualify as a trust under state law, but which is similar to a trust. A trust-like arrangement, instrument or device involves a grantor who transfers property to an individual or entity with fiduciary obligations with the intention that it be held, managed and administered by the individual or entity for the sole benefit of the grantor or others.  

Request a county attorney opinion for questions regarding whether a trust-like arrangement, instrument or device meets the definition of an MQT. Submit a HealthQuest for a determination regarding the availability of the trust if a county attorney opinion is not available.   

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Evaluation of Assets Held in the Trust

Medicaid Qualifying Trust (MQT) Provisions Linked to Public Assistance Eligibility

MQT provisions created on or after July 1, 1992, that provide for the suspension, termination, limitation or diversion of the trust corpus, income or beneficial interest of a beneficiary if the beneficiary applies for, is eligible for, or receives public assistance or benefits under a public health care program are unenforceable as against public policy. The unenforceability of such trust provisions applies without regard to the irrevocability of the trust or the purpose for which the trust was created. The unenforceability of such a provision does not invalidate the remaining provisions in the trust.

For the purposes of this policy, a trust provision is created on the date of execution of the first instrument that contains the provision, even though the trust provision is later amended or reformed or the trust is not funded until a later date.  

Request a county attorney opinion, or submit a HealthQuest for a determination regarding availability.  

MinnesotaCare and MA Method A

Instruct the client to contact the trustee(s) to request the maximum undistributed payments permitted under the terms of the trust for the applicable budget period assuming the full exercise of discretion by the trustee(s). See Medicaid Qualifying Trust Provisions.

Request a county attorney opinion or submit a HealthQuest for a determination regarding availability.

Approve or continue eligibility while the client contacts the trustee(s). Consider the trusts funds unavailable and do not count the trust funds toward the client’s asset total until the client gains access to the funds.  

n  Applicants have 30 days from receipt of the agency’s written request, or until the end of the month of application, whichever is later, to begin this action.

n  Enrollees have 30 days from the date of the agency’s written request to begin this action.

Note:  When the trust instrument permits the distribution of trust funds to or for the benefit of the beneficiary only pursuant to a court order, or permits the beneficiary to petition the court for a disbursement of trust funds when the trustee refuses to disburse them, the beneficiary or representative of a MQT beneficiary must petition the court for the maximum distribution that can be made by the trustee(s) as a condition of eligibility.  

MA Method B and GAMC

Count the maximum undistributed amount of payments permitted under the terms of the trust for the applicable budget period assuming the full exercise of discretion by the trustee(s) in the client’s asset total. This applies even if the trustee does not actually disburse any portion of the trust corpus to the client. See Medicaid Qualifying Trust Provisions Linked to Public Assistance Eligibility.

The maximum distribution that can be paid by the trustee(s) includes only amounts that can be distributed from either the income (interest or other trust earnings) or the trust principal under the terms of the contract.  

Example:

Client has an MQT that allows a maximum of $10,000 of trust principal per year to be disbursed to the client.

Action:

Count $10,000 minus any amount already received and spent down in the client’s asset total in the past 12-month period.

Note:  When the trust instrument permits the distribution of trust funds to or for the benefit of the beneficiary only pursuant to a court order, or permits the beneficiary to petition the court for a disbursement of trust funds when the trustee refuses to disburse them, the beneficiary or representative of an MQT beneficiary must petition the court for the maximum distribution that can be made by the trustee(s) as a condition of eligibility.  

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Treatment of Payments Made from a Trust to the Client

For MinnesotaCare, MA Method A, MA Method B and GAMC, count the amount disbursed by the trustee(s) to the client beneficiary as unearned income in the month of receipt.  

If a waiver is:

l  Granted, send the client a notice stating the waiver is granted as of a specified date.

l  Denied, send the client a notice containing the client’s right to appeal the decision.    

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Medicaid Qualifying Trust (MQT) Verifications

l  A copy of the trust instrument.

l  A statement from the trustee(s) providing the maximum distribution that may be made under the MQT during the applicable budget period.

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