What Is A Miller Trust and Why Do I Need One?
When and why to use a “Miller Trust,” (officially a Qualified Income Trust
QIT), is probably the most misunderstood concept of elder law. “Street lawyers”
(those non-attorneys who freely dispense advice about elderlaw but whose advice
is worth what you pay for it – nothing) think this is the magic key to quickly
qualifying for Medicaid. Not true! They think it is a receptacle for assets in excess
of the maximum amount of resources (assets) a person can have and still qualify
for Medicaid. Nothing could be further from the truth!
Here’s when and why and how to properly use a Qualified Income Trust.
Sometimes a potential Medicaid applicant would be able to qualify based upon her
countable resources being less than $2,000. But her monthly income is too high,
more than $2,094 (for 2012), so she is disqualified. However, that income is just
not enough to pay the cost of her long-term care in a skilled nursing facility. So
she finds herself in a Catch-22 situation. The Qualified Income Trust is designed
to free her from this problem.
The name “Miller Trust” comes from a federal court case in Colorado approving
the use of such a trust. The court essentially ruled that if
• All income from one or more sources of income to the Medicaid applicant
was placed into the QIT each month; and
• It was all expended in specified ways for the benefit of the applicant; and
• The remaining income was less than the maximum allowable income –
then the applicant was income eligible for Medicaid. This method was codified in
The Miller trust solution works only for institutional (nursing home) Medicaid, the
Community Based Alternatives (CBA) program, and some home and community-
based waiver services.
A Qualified Income Trust agreement must be prepared by an attorney and signed
by the Medicaid applicant (or by an agent acting for the applicant) and by the
person named to serve as the Trustee. The applicant should not be the trustee.
The trust agreement must (1) be irrevocable, (2) provide the State of Texas will
receive all amounts remaining in the trust upon the death of the applicant, and (3)
designate precisely which sources of income will be deposited into this trust each
month (such as Social Security, Teacher Retirement or a monthly pension source.)
Then a QIT checking account must be established at a bank that will have no
service charges, and no printed check charges, and no fees of any kind. An
existing account should NOT be used.
When the applicant’s income is received from the designated source, the entire
amount must be placed into that QIT bank account. No other income or assets
must ever be placed in this trust bank account. The designated income may
be direct deposited into the QIT bank account. Or it may be received into another
account (such as the applicant’s personal checking account) and then transferred
in whole to the QIT bank account. Either way, all the income from the designated
source must get into that QIT account in the same month in which it is received.
Then the Trustee is required to make certain payments on behalf of the applicant
who is the Medicaid recipient and the beneficiary of the trust. First, the Trustee
must pay to the applicant a monthly personal needs allowance (currently $60).
Second, if the applicant has a spouse, the Trustee pays the amount (determined by
the HHSC caseworker) needed to create a minimum monthly maintenance needs
allowance for the applicant’s spouse. Third, the Trustee pays the applicants’s
medical expenses that are not subject to payment by a third-party – such as for the
Medicare supplemental insurance policy premiums and for the Medicare part D
premiums. Finally, the balance in the QIT bank account must be paid as applied
income toward the cost of long-term care provided by the nursing home. This will
result in the QIT bank account having a zero balance at the end of every month.
The QIT terminates at the death of the Medicaid recipient. In most cases no
balance will remain in the account. If any funds remain, they should be paid by
cashier’s check to HHSC in coordination with the Medicaid caseworker.
If the Trustee follows these procedures faithfully and in a timely way every month,
the applicant should remain qualified for Medicaid – despite the fact that the total
monthly income she is receiving is in excess of the maximum allowed amount.
Thus she will be delivered from the Medicaid Catch-22!
Mark R. Ensign
Ensign Law Firm, PC
3131 S. Bell, Suite 202
Amarillo, TX 79106