What is a Miller Trust?

A Miller Trust, or qualified income trust, is an irrevocable trust that allows individuals qualify for Medicaid long-term care services, such as nursing home care, when they earn more income than Medicaid’s income limit.

The Texas Income Cap

Texas is one of 12 states that has an income cap to qualify for Medicaid nursing home care.

In addition to having a medical need that requires skilled nursing care and countable recourses under $2,000, individuals who want to qualify for Medicaid must earn less than $2,829 (in 2024) in gross monthly income. This amount changes from year to year. The American Council on Aging’s website maintains updated information regarding income and asset limits for eligibility. Those with gross income more than the income cap can be denied coverage for nursing home care.

The income cap results in a situation where many people who need nursing home care receive too much income to qualify for Medicaid but earn too little to afford the high cost of nursing home care. To solve this problem, the Omnibus Budget Reconciliation Act of 1983 included provisions to help these individuals qualify for the care they desperately need by transferring the income they earned into a trust.

What are the Requirements of a Miller Trust?

A valid Miller trust meets the following requirements. It must:

• Be irrevocable;
• Funded only with a pension, Social Security, or other income of the individual;
• Contain a provision that the State of Texas will receive all funds that remain in the beneficiary dies, up to an amount equal to the total assistance paid by Medicaid on behalf of the beneficiary.

Who Can Be the Trustee of a Miller Trust?

Anyone other than the Medicaid applicant can be the trustee. For example, a sibling, an adult child, or an agent under a durable power of attorney can be the Trustee.

How Miller Trust Work?

A Miller Trust is specifically designed to qualify an individual for Medicaid benefits by diverting all income into the trust. Income diverted to the trust is not counted as income for purposes of Medicaid eligibility when attempting to qualify for nursing home care.

A Miller Trust can only hold the applicant’s income. No other resources should be transferred to the trust. Every month, the Trustee of the Miller Trust will make certain distributions:

1. Personal Needs Allowance. Under current law, the personal needs allowance is $60. The Trustee should distribute this amount to the beneficiary once each month.
2. Spousal Maintenance. If the beneficiary has a spouse, the trustee can distribute a monthly maintenance needs allowance to the spouse. In 2024, the allowance is $3,853.00. Like the income cap, the allowance varies year to year. The Trustee can distribute a portion of the income received by the trust to a spouse each month in order to reach this monthly cap.
3. Medical Payments. The Trustee must pay medical expenses not subject to payment by a third party, and the cost of long-term care provided to the beneficiary by the end of each month.

Once the trustee makes a distribution to the nursing home, there should not be any additional funds in the trust’s checking account. However, if minimal funds do remain, they must be retained in the trust and be paid to the State of Texas upon the beneficiary’s death.

An attorney can help you decide whether a Miller Trust is the right solution for your family, draft a trust that complies with Medicaid rules, and advise you on how to properly administer the trust.

This article was originally written on February 10, 2021 and updated on August 2, 2024.