A Miller Trust is a type of trust that allows a person to become eligible for Medicaid even if his or her income is over the qualifying limit. It’s also known as an income cap trust or Qualified Income Trust.
Definition and Purpose
A Qualified Income Trust (QIT) is a special legal setup that helps people get Medicaid benefits by managing their income. The main goal of a Miller Trust is to help people qualify for Medicaid by putting extra income into the trust. Doing so lowers their monthly income to meet Medicaid limits.
It’s an income only trust, necessary for applicants who earn more than the Medicaid income cap but still need long-term care services. By using a Miller Trust, people can make sure their income meets Medicaid rules, allowing them to get important healthcare services without losing all their money.
Benefits of a Miller Trust
A Miller Trust provides several important benefits for people trying to qualify for Medicaid. First, it helps them become eligible for Medicaid by moving extra income into the trust. This lowers their monthly income to meet Medicaid’s income limit.
Income eligibility must be met to get Medicaid benefits. The Medicaid program covers costly long-term care services like nursing home care.
Additionally, a Miller Trust can help protect a person’s assets, like their home and savings, from being used up to pay for these services.
How to Set Up a Miller Trust
Setting up a Miller Trust involves a few vital steps to make sure it follows the law so it helps the person who needs it. First, you should talk to an elder law attorney who knows about Medicaid planning. This expert help is important to set up the trust correctly.
Next, the attorney will create the trust document, explaining the rules, the trustee’s duties, and the beneficiary’s rights. After that, you need to open a separate bank account in the trust’s name to keep the income that goes into it.
The applicant’s income must be put into this trust bank account in monthly deposits. Lastly, you must choose a trustee to manage the trust and distribute the funds to the beneficiary according to the trust’s rules.
Funding a Miller Trust
The trust only allows income; it is not designed to protect assets. Only 25 states allow Miller trusts to meet Medicaid’s income requirements.
Funding a Miller Trust means putting different types of income into the trust account. Types of income include Social Security benefits, pension payments, retirement account distributions, annuity payments, and other income that pushes the patient over the Medicaid income limit.
The income must be put into the trust every month.
The designated trustee then, the person who manages the trust, handles this money and ensures all funds are used as the trust document says. Making sure the trust is funded correctly helps keep the person’s income at a level that lets them qualify for Medicaid benefits.
Eligibility Requirements
To be eligible for a Miller Trust, an individual must meet specific criteria.
They must be a Medicaid applicant or recipient with income above the Medicaid income limit.
They must require long-term care services, such as nursing home care or assisted living.
They must meet the specific eligibility requirements for the of Texas Medicaid program.
In Texas, when an individual wants financial assistance from Medicaid to pay for nursing home care or medical expenses, he or she must meet these 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 $2,901/ month
For 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 his total income exceeds $2,901, he would not qualify financially for Medicaid even if he had no assets. A Miller Trust is the legal means around that problem. Without one, any Medicaid nursing home financial assistance application 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 must draft the Miller Trust document. The state requires checks or checks that cause income to exceed the monthly limit to be deposited in a special trust bank account every month. In this case, the solution requires either the social security check of $1,895 or the Pension check of $1,100 to 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. Funding incorrectly could disqualify the trust, preventing you from being eligible for Medicaid.
After the trust is funded, the state determines how much of the nursing home bill will be paid by the state and how much will be paid 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 2025)
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 $3,848.00
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 a single person 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 lives at home, she would be entitled to the greater of her monthly income or $3,948 of their combined income. Let’s say her gross 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 $3,948, your father can direct the difference through the Miller Trust to her every month. This would reduce the applied income payable to the nursing home to about $1,631.
The Houston area’s nursing home room and board costs run about $7,500/month. Using a Miller Trust allows your Dad to become income-eligible and dramatically reduces his cost of care.
Upon the Medicaid recipient’s death, the state is named as the beneficiary of the Miller Trust and will receive the remaining funds.
You’re safer hiring an elder law attorney experienced in creating Qualified Income Trusts to guide you. Drafting and funding a Miller Trust is exact. I can help.
If you have a question about Miller Trusts, call me at 713-970-1300.
Medicaid Eligibility Gift Rules vs the $19,000 Yearly Gift Exemption
