What Is a Miller Trust and How Does It Help Medicaid Eligibility?
by Ben Lamm
Avoiding Your Parents' Debts
Taking Over Your Parents' Finances
Care Management for Your Elderly Parent
Medicaid eligibility is a challenge for many seniors. In order to be eligible for Medicaid's long-term care benefits, an applicant must have income and assets that fall below the Medicaid threshold. Unfortunately, many seniors have enough money to disqualify them, but not enough to provide for their own care. Miller Trusts offer a viable solution.
A Miller Trust, also known as a QIT (Qualified Income Trust) fund, provides a way to convert excess income into a form that doesn't count for Medicaid eligibility limits. This means that seniors with too much income to qualify can find themselves eligible for Medicaid after all. The Miller trust takes all of a senior's regular monthly income, but they can still receive a small personal needs allowance. The individual's spouse is also eligible to receive a monthly allowance. The rest of the money in the account is used to cover the individual's care.
How Do Miller Trusts Work?
A Miller Trust is an irrevocable trust that is set up to pay for an individual's medical expenses and nursing home care. Their income goes into the trust instead of to them personally and is used to cover those expenses. Any expense that the individual incurs can be sent through the trust for them to pay for it, including copays and other expenses. Medicaid pays the rest of an individual's medical expenses, nursing home care, etc.
How Can a Miller Trust Help?
A Miller Trust is designed for individuals whose income or assets are slightly too high for Medicaid, but who cannot afford to pay the cost of long-term care on their own. The trust absorbs the additional income, all of which must go into it, in order to make the individual eligible for Medicaid.
How Do You Establish a Miller Trust?
You can contact your bank or credit union or work with a lawyer who specializes in elderly care to set up a Miller Trust. Make sure the person you're working with understands how to set the trust up properly, including the fact that any funds within the trust revert to Medicaid, up to the amount that Medicaid has paid for your expenses.
How Much Does It Cost to Create a Miller Trust?
A Miller Trust should include your income above the Medicaid limit. It doesn't cost anything for you to set up the trust.
What Can a Miller Trust Pay for?
A Miller Trust provides the individual and their spouse with a monthly allowance. Other than that amount, the Miller Trust is used to contribute to the cost of the individual's care.
What Special Conditions Must Be Met by a QIT?
A Miller Trust or QIT must contain only income made during the month it is deposited. It doesn't contain any other types of income. It must also contain a disclaimer indicating that the funds up to the amount of care provided will revert to Medicaid on the individual's death. It must be irrevocable, and it must have a trustee to manage it.
What Types of Income Are and Are Not Allowed in a QIT?
Any time of income can be placed in a QIT. The entirety of the payment, however, must be placed in the QIT. If you have multiple types of income, only that which exceeds the Medicaid limit must be placed in the trust. Income deposited in this account should only come from the individual it benefits, not from any other source.
Can My Spouse and I Share a QIT?
No. Only a single individual can use a QIT. Instead, your spouse will need to set up his/her own account or trust.
Who Can Establish a QIT on Behalf of the Beneficiary?
The beneficiary, their guardian, or someone who has Power of Attorney for them can establish it.
Do I Need a Lawyer?
While a lawyer can be helpful, you can also choose to set up a QIT on your own.
What Happens on the Death of the Beneficiary?
The state is the first person to collect from the QIT after the death of the beneficiary. Funds in excess of that amount can be used for other purposes.
Understanding the rules of the trust and what expenses can and can't be paid for is critical to creating and using a Miller Trust. It's a great way to help ensure that you or an elderly loved one is eligible for Medicaid even if income exceeds that allowable amount. It may be helpful to reach out to a Medicaid planning professional in your state. With careful planning, you can acquire the Medicaid care that you need. Click here to find out more.
Take the Next Step:
- Talking to aging parents about finances can be difficult. Here are some tips to help you know when and how to bring up this delicate subject.
- Find information geared specifically for Baby Boomers in The Dollar Stretcher section dedicated to your financial issues. If you're over 50 your financial needs are different. And so are your questions.
- Subscribe to After 50 Finances. You've learned how to work smarter, not harder. This weekly newsletter is dedicated to people just like you. Subscribers get a FREE copy of our After 50 Finances Pre-Retirement Checklist, a list of everything you need to do to be ready for retirement.
Share your thoughts about this article with the editor.
Debt is preventing me from saving as much for retirement as I should be! Tell us: Yes, debt is hindering my ability to save for retirement and I could use help dealing with it! or No, debt is not a problem but I'd love to discover more ways to save as I head into retirement!
Baby Boomer Tools & Resources
- A tool to determine the best time to take Social Security benefits
- Get out of debt before you retire
- Get free answers to financial questions
- Get free answers to legal questions
- Retirement shortfall calculator
- Life expectancy calculator
- IRA required minimum distribution calculator
- More retirement planning calculators
Trending in Baby Boomers
- Investing retirement money that you may never need
- Financial tips when nearing retirement
- Why pay off your mortgage with a reverse mortgage loan?
- 3 ways retirees can tap into their home equity
- Financial advice for women in their 50s
- Including real estate in your retirement plan
- Frugal ways to beat the winter blahs
- This week's Readers' Tips