What Can a Qualified Income Trust Pay For in Tennessee?
TennCare's policy (ABD Trusts Policy 110.055) has the trustee distribute, each month, the entire amount of income transferred into the trust except up to $20 (or another verified amount) for trust expenses. Allowed payments are the personal needs allowance, the trust-expense deduction, spouse or dependent allowances, other health insurance premiums, and approved non-covered medical care; the rest goes to the facility, up to the Medicaid rate. Every item below is cited to TennCare's own published rules; where TennCare says nothing about an item, this page says so instead of filling the gap. This guide is informational only and is not legal or financial advice.
Income goes into a Tennessee Qualified Income Trust each month, and the trustee may pay it out only for the purposes TennCare allows. Paying for anything else can put eligibility at risk. Here is the list, with the TennCare source for each item.
What TennCare's rules allow
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Personal needs allowance
$70 a month in a nursing facility or ICF; 300% of the SSI federal benefit rate for HCBS enrollees.
Source: TennCare ABD Trusts Policy 110.055
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Trust expenses
Up to $20, or another verified amount, for expenses of managing the trust, such as bank charges.
Source: TennCare ABD Trusts Policy 110.055
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Spouse or dependent allowance
The community spouse or dependent income maintenance allowance, if applicable.
Source: TennCare ABD Trusts Policy 110.055
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Other health insurance premiums
Premiums for health insurance other than TennCare, such as Medicare or a Medicare supplement.
Source: TennCare ABD Trusts Policy 110.055
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Approved non-covered medical care
Medical or remedial care recognized under state law but not covered by TennCare.
Source: TennCare ABD Trusts Policy 110.055
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Payment to the facility
Remaining trust income, and any income not placed in the trust, paid monthly to the facility, not more than the Medicaid reimbursement rate.
Source: TennCare ABD Trusts Policy 110.055
The order payments are made in
For HCBS enrollees, TennCare's policy figures the liability in steps: the personal needs allowance, then the trust-expense deduction, then any spousal allocation, health insurance or approved non-covered medical expense; the remainder is the liability.
Trustee and bank fees
Not allowed. TennCare lists trustee fees among the expenses that can't be paid from the trust, along with attorney fees and costs (including those to establish the trust), accountant fees, court fees, guardian ad litem fees, funeral expenses, past-due medical bills and other debts. The only administrative item is up to $20, or another verified amount, for trust expenses such as bank charges.
What the trust can't be used for
No other deductions or expenses may be paid from the trust (TennCare ABD Trusts Policy 110.055).
Timing, and money left over
The policy says the trustee distributes the entire monthly amount except the trust-expense deduction, and also that any excess income not distributed accumulates in the trust monthly.
Keeping the monthly record
The trustee is the one who has to show that the trust paid only these items. A month-by-month record of every deposit and every payment, checked against the bank statement, is what makes that easy to show when TennCare asks.
Related: who can be the trustee in Tennessee, what happens to the money at death, and the Miller Trust trustee guide for how the monthly cycle works in every state.
Trust not open yet? The account comes first
None of these payments can start until the trust account exists, and most branches have never opened one. Free one-pager: the questions to ask before you drive to a branch, emailed now. Then 4 more short emails over the next 10 days — then we stop.