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Miller Trust

Also Known as the Qualified Income Trust

The legal description of a Miller Trust is a Qualified Income Trust (QIT).  Its sole purpose is to help legally qualify an individual or a couple for Medicaid benefits. It is an irrevocable trust specially designed to legally divert an individual or married couple’s income into a trust.  In doing this, the income is excluded for the purpose of determining eligibility for nursing home Medicaid. Texas permits the use of a QIT when a Medicaid applicant’s income exceeds the special income limit.

Before continuing, let me make one point perfectly clear. There is an incorrect belief that a Miller Trust can protect assets from Medicaid. That is completely FALSE!  As you continue to read, you will have a better understanding of this statement of fact.

The Medicaid limits on income changes each year.  For 2019, in order to qualify for Medicaid benefits for nursing home care, the individual may not have income exceeding $2313 per month. If both spouses are seeking Medicaid benefits for nursing home care, their combined income cannot exceed $4626 per month.  There are number of other criteria that must be met to qualify for Medicaid, but those are not included in this article.  This article only addresses the income issue that arise from Medicaid application and a potential way to resolve that issue.

The QIT Acts as a Funnel


An example will help you understand how the QIT works.  Joe is needing to qualify for Medicaid so he can receive the nursing home care he requires.  In 2019 he cannot have income greater than $2313 per month. 

However, Joe’s income is currently $2500 per month.  Since that amount is over the limit, Joe will not qualify for Medicaid. Joe’s income disqualifies him from Medicaid, but his income is not sufficient to pay for his nursing home care.  That is where the QIT comes into play.  If Joe establishes a QIT/Miller Trust, the trust documents will provide that Joe’s countable income will go into the Miller Trust each Month. Part of the amount deposited will be paid to the nursing home for his care.  Medicaid pays for the remainder of his care to the nursing home.  Funds from the Miller Trust can also go to pay for additional health insurance and Medicare premiums.

Joe can also use the Miller Trust to pay for medical costs not paid by Medicare or Medicaid.  Finally, the Miller Trust is required to pay Joe $60 per month from the trust for his personal needs such as toothpaste, hair care products, haircuts, clothing, etc.

Specifics regarding the Miller Trust

It is IMPERATIVE that a licensed Texas attorney who is well versed in Texas Medicaid law draft the Trust document for you.  This is NOT a do-it-yourself project!  Failure to draft the trust correctly can result in you not qualifying for Medicaid.

Once the trust documents are drafted and signed, the trustee you name should go to the bank and open a checking account in the name of your Miller Trust. The trustee should then direct that all sources of income for you must go through the Miller trust.  In reality, the trustee could deposit the funds into the account for you, but I always recommend that they be automatically deposited.  If your trustee fails to deposit your income into the trust by the last day of the month (if they are ill or injured or forget), you can lose your eligibility for a month or longer.  (During that period of loss of eligibility, YOU will be required to pay the nursing home the full amount due for the period of ineligibility. 

Rules, rules, rules!

Medicaid is a government program so of course there are MANY rules associated with a Miller Trust.  Failure to abide by the rules exactly can result in you losing your Medicaid benefits. Here are just a few of them:

  • The Miller Trust must be irrevocable. (Which means it cannot be changed.)
  • A separate trust bank account must be opened to hold the income.
  • The Trust must contain a provision stating that Texas will receive all amounts remaining in the Trust upon the death of the Medicaid recipient.  (up to the amount the state paid out in Medicaid resources for the individual.)
  • Only the income of the person needing care can be deposited.
  • Only the income of the person can be deposited.  That means things such as tax refunds, cannot be deposited into the account.
  • The trust must receive any and all sources of a person’s income which would otherwise cause an individual to be income ineligible.   
  • The income must be deposited in its entirety.  For example, you cannot deposit only a portion of the Social Security or retirement check into the account. The entire amount – down to the penny – must be deposited. 
  • All income for the month must be deposited by the last business of the receipt month.
  • The Trustee must be required to pay to the individual the monthly personal needs allowance ($60).
  • If there is a spouse at home who is not receiving Medicaid, the Trustee must be required to pay the monthly allowance for the spouse.
  • The Trustee must pay monthly the medical expenses not paid by Medicaid or third-party insurance.

Process

The QIT should be submitted with the application for Medicaid assistance. When submitted, the HHSC (Health and Human Services Commission) caseworker to whom the case is assigned is required to forward a copy of the trust instrument to the regional HHSC attorney for review.  The regional attorney will review the trust to determine if it satisfies all of the requirements set out by the regulations.

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