PM 07-02-16-a: Treating as Income and Resource

WAG 07-02-16-a

When determining initial or ongoing eligibility for a person who has a Medicaid qualifying trust, consider the maximum distributable amount as a nonexempt Revised textresource.

The "maximum distributable amount" is the current amount of principal and undistributed interest in the trust that the terms of the trust allows the trustee to distribute to the person. The Revised textresource value of the trust is only determined once, and that is when it is first evaluated by HFS and the maximum distributable amount is determined.

For current and future months, budget as nonexempt monthly income the maximum monthly amount of income that the trust allows the trustee to distribute to or on behalf of the client. Use that amount whether or not it is actually distributed.

Example: Ms. A's trust was set up in March 2011 with a principal of $50,000. The terms of the trust allow the trustee to distribute $100 monthly. The payments are to be made from the trust's interest and from a specified portion of the principal ($25,000). The trustee can distribute $100 per month but only distributes $30.

Ms. A applied for medical assistance in May 2012. Medical backdating is requested for March and April. Medical benefits are approved effective for 03/2012. The review of the trust agreement in June determines that it is a Medicaid qualifying trust with a maximum distributable amount (resource value) of $25,210. The maximum distributable amount is determined, as follows:

$ 100 monthly trust payment (income)
-30 distributed amount
$ 70 monthly undistributed amount
x 3 months (03/2012-05/2012)
$ 210 total undistributed amount
+25,000 distributable principal
$25,210 maximum distributable amount.

For May the budgetable income is $210, the total undistributed amount. Beginning in June, budget $100 monthly as nonexempt income whether or not it is actually distributed from the trust. Budget $100 monthly as nonexempt income unless the terms of the trust are changed.


An exception to using the maximum distributable amount of an MQT may be granted if its use would cause an undue hardship. For example, if a person would be forced to go without life-sustaining services because these services were not being paid for by the trustee even though funds were available from the trust to do so. This could include situations where a client was forced to move from a long term care facility for nonpayment of facility charges when the full amount of funds available from the trust were not being used by the trustee for the care of the client.

For an undue hardship waiver, request specific case guidance from Revised textLong Term Care - Asset Discovery Investigation (LTC-ADI).