"MILLER TRUSTS"/QUALIFIED INCOME TRUSTS

Texas is known as an “income cap” state.  So what is an income cap state?

In those states, Medicaid eligibility is not allowed if the nursing home resident’s income exceeds $2,022 per month for 2009. This amount increases every year.

Let me give you a quick example.  Hilda has total income of $2,500 per month and is trying to qualify for Medicaid.  She is allowed a $140 deduction for her insurance premiums and $60 for personal needs allowance. She is left with $2,302 per month. Since Texas is an income-cap state-they would say that’s too much income to qualify for Medicaid. Hilda can only have 2,022 per month or she would be ineligible.

But there is a way to fix that and it’s called a “Miller Trust.”  Miller Trust just refers to the case from Colorado that brought about this type of trust. It’s really called a “Qualified Income Trust.”  This trust is a way for Medicaid to ignore the fact that Hilda had too much income. They will allow her to put all of her income into a Trust and she can still keep $60 for personal needs and still pay the $140 premium to her insurance and the rest will go to the nursing home as her “applied income” amount.  

She must set up an actual trust document, and establish a bank account in the name of the trust where all of her income goes each month and where all income is paid out in the same  month for tracking purposes.

So if your loved one has more than $2,022 in Texas this is the way that that problem gets fixed.  Now Miller Trusts are very complex documents, so they have to be set up just right and once they are set up there are very specific rules about exactly how, and more importantly when money is paid in and out of the account.

Most states require the state to be named as the remainder beneficiary of any funds remaining in the Miller Trust at the time of death. In general there should not be much in there, because it should only be monthly income that goes into the account and is paid out to the nursing home in the same month. Now again remember that your loved one will have to pay excess income to the nursing home and Medicaid will then makes up the difference.