When an individual wants financial assistance from Medicaid to pay for nursing home care, he or she must meet four important criteria:
- There must be a medical need
- They must be in a Medicaid bed
- Countable resources must be under $2,000, and
- Gross Income must be less than $2,829/ month
Texas is what is known as an “income cap” state. In 2024, when an individual’s income exceeds $2,829, a Miller Trust (also called a Qualified Income Trust) is necessary to qualify for benefits. Only income is allowed to be placed in the trust. It is not designed to protect assets.
As an example, let’s say your father’s total monthly income is $2,995: a check of $1,100 from a pension and $1,895 from social security. Since total income exceeds $2,829 he would not qualify financially for Medicaid even if he had no assets whatsoever. A Miller Trust is the legal means around that problem. Without one, any application for Medicaid nursing home financial assistance would be denied.
Using a Qualified Income Trust is an effective solution to the problem of “too much income”, but the solution is clumsy. To fix the situation in my example an elder law attorney needs to draft the Miller Trust document. The State requires the check or checks that cause the income to exceed the monthly limit to be deposited in a special trust bank account every month. The solution in this case requires either the social security check of $1,895 or the Pension check of $1,100 must go into the Miller Trust.
Keep in mind that your particular financial picture may be more complicated. If you have multiple sources of income, how you deposit those funds into the trust is critical. Funded incorrectly could disqualify the trust, foiling Medicaid eligibility.
After the trust is funded, the State determines how much of the nursing home bill will be paid by the State and how much by the patient. Texas follows guidelines established by the Federal government. From the patient’s total income the following amounts may be deducted:
- A “Personal Needs Allowance” for the patient ($75 in Texas for 2024)
- Premiums for health insurance such as Medicare Part B, Medicare Part D (prescription drug plans), Medicare supplements, and private health plans.
- If a spouse lives “in the community” (meaning not in a nursing home), an amount to raise his or her available monthly income to the Spousal Income Protected Allowance of $3,853.50.
The balance is paid to the nursing home as the patient’s “share of cost” known in Texas as the “co-pay” or the “applied income amount”.
Let’s say your father is widowed but pays a Medicare Part B premium of $174 and a premium of $215 per month for a Medicare Supplement. The co-pay calculation would be $2,995 per month less the Personal Needs Allowance of $75 less the Medicare Part B premium of $174, less the $215 Medicare Supplement premium for a total of $2,531.
If your father is married and his wife is living at home she would be entitled to the greater of her monthly income or $3,853.50 of their combined income. Let’s say her income is $900 each month from Social Security. That brings their total family income to $3,895 (dad’s $2,995 and mom’s $900)
Since her income is less than $3,853.50, your father is allowed to direct the difference through the Miller Trust to her each and every month. The applied income payable to the nursing home would be reduced to about $1,631.
Nursing home room and board costs in the Houston area run about $7.500/month. Using a Miller Trust allows your Dad to become income-eligible and dramatically reduces his cost of care.
Drafting and funding a Miller Trust is very precise. Holland Elder Law can help. You’re safer hiring an elder law attorney experienced in creating Qualified Income Trusts to guide you.
If you have a question about Miller Trusts give me a call at 713-970-1300.
