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WHAT IS A MILLER OR QUALIFIED INCOME TRUST?

WHAT IS A MILLER OR QUALIFIED INCOME TRUST?

Although “Miller” or “Qualified Income” Trusts have been around for over twenty years (this author has been doing them since first approved in Texas in 1994), it is often surprising how confusing this income trust is to many – including some banks. Several Medicaid programs (i.e., long-term care and home/community-based waiver service programs) have an income cap – which is presently (as of 1/01/21) $2,382 per month. A Miller Trust also known as a Qualified Income Trust or QIT or a “d4b trust”, is often the best and most common solution when a Medicaid applicant’s gross income (i.e., including Medicaid Part B which is normally withheld by   from Social Security before deposit) exceeds the cap since income directed to the trust is disregarded from countable income when testing eligibility for institutional settings such as nursing homes. This is important since if Medicaid eligibility is achieved, the government assists with some (and sometimes pays all when there is a spouse living in the community whose income is below the level described below) of the cost of care (the average cost of a semi-private room in the D/FW area is around $6,000 – $7,000 per month) plus medication.  The income of the Medicaid applicant’s spouse is not considered in determining if it exceeds the income cap unless the spouse is also applying for Medicaid and in those cases the income cap is doubled.

All of the Medicaid applicant’s income from a source (not necessarily all of the Medicaid applicant’s income) must be deposited into the trust account. Thus, if the applicant receives Social Security income in the amount of $2,400 per month, you must put all of that income into the trust (not just the amount that exceeds $2,382) in the month for which eligibility is sought. Therefore, if you received Social Security in July and did not deposit it into the trust account until August there would not be eligibility for July. Social Security and pensions are the most common income sources deposited into QITs. Resources should never be put into a QIT. If the Medicaid applicant is single, then most of the income (there are few deductions such as a personal needs allowance of $60, Medicare Part B and D premiums, Medicare Supplement premiums, etc.) is used as a co-payment to the nursing home.

If the Medicaid applicant is married and the spouse is living in the community, there can be a diversion of the income from the trust to the community spouse to allow the community spouse to keep up to $3,259.50 (as of 1/01/21). If the community spouse has income over $3,259.50 per month, then although the community spouse would not be diverted any income of the applicant from the QIT, the community spouse could have unlimited income in their own name.

Although the trust is irrevocable, the Social Security number of the applicant should be used in establishing a bank account. The state is required to be a remainder beneficiary of the trust, but that should not be an issue since each month the income should then be paid to the nursing home or to the community spouse. If there is anything left in the trust (other than a nominal amount to establish the trust) at the death of the Medicaid applicant, then it usually means that the trustee made an error.

If interested in learning more about this article or other estate planning, Medicaid and public benefits planning, probate, etc., attend one of our free upcoming virtual Estate Planning Essentials workshops by clicking here or calling 214-720-0102.  We make it simple to attend and it is without obligation.



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