What Is a Miller Trust? How It Works, How to Set One Up

A Miller trust, also called a Qualified Income Trust (QIT), can help you qualify for Medicaid nursing home benefits or other long-term home-based care services if your income exceeds the eligibility requirements.

For many people, long-term care — which is covered by Medicaid but not by Medicare — is too costly to pay for out-of-pocket. Medicaid’s strict income requirements make it difficult for many people to qualify for assistance, but in many states, a Miller trust can be a workaround.

Depending on which state you’re in, a Miller trust can also be called an:

• Income Diversion Trust.

• Income Cap Trust.

• Irrevocable Income Trust.

• Income Trust.

• d4B trust.

• Income Only Trust. 

With this type of trust, any income earned over and above the special income limit is put into an irrevocable trust and no longer considered income for the purposes of Medicaid eligibility.

The pros and cons of Miller trusts

Pro

• Miller trusts can help you to become income-eligible for long-term care Medicaid. Because the income deposited into the trust isn’t counted toward the Medicaid income limit, it can help you save significantly on health care costs. 

Cons

• The trust must be irrevocable, meaning once it’s established you can’t change it or remove those funds. 

• You may be required to deposit all of your income directly into the trust, depending on your state’s rules and regulations. The trust also sharply limits how much of your own money you can access. After you die, any remaining funds generally go to the state.

Which states have Miller trusts?

Medicaid income guidelines vary by state. Some states cap income for a single person below $1,000 per month, while others have no income caps but set rules about how much income a person can keep each month.

Only 25 states allow Miller trusts to be used to meet income requirements. Those states are:

• Alabama.

• Alaska.

• Arizona.

• Arkansas.

• Colorado.

• Delaware.

• Florida.

• Georgia.

• Idaho.

• Indiana.

• Iowa.

• Kentucky.

• Mississippi. 

• Missouri.

• Nevada.

• New Jersey.

• New Mexico.

• Ohio.

• Oklahoma.

• Oregon.

• South Carolina.

• South Dakota.

• Tennessee.

• Texas.

• Wyoming.

How to set up a Miller trust

To set up a Miller trust you need to:

1. Open a bank account.

2. Work with an elder law or estate planning attorney to establish a trust document. 

3. Select a trustee. This person will manage the account. (Note: As a Medicaid applicant, you cannot be the designated trustee.) 

4. Name the state where you’ll be receiving long-term care as the beneficiary of the trust. 

Once the trust is set up, monthly deposits will be made into the trust. Only pension funds, Social Security payments and other types of income can be placed in the trust. Assets, such as a house, cannot be added.

Again, the exact requirements will vary state by state, so it’s important to know your state’s specific rules and requirements for Miller trusts. Some require direct deposits of your monthly income in its entirety, while other states will allow you to deposit only some of your monthly income.

However, all states require payment from a single income source to be deposited in the designated account. You won’t be able to split your Social Security check between your Miller trust account and your savings or checking account.

You also won’t be able to use Veterans Affairs aid and attendance benefits or housebound allowances, or any additional medical reimbursements as income for the trust.

» MORE: Best online wills

How does a Miller trust work?

As soon as you have signed the trust document, opened a trust bank account and deposited enough of your income to fall below the Medicaid special income limit, you have a functioning Miller trust.

You’ll continue to deposit into the trust account on a monthly basis, as you receive income. Then, before the end of the month, your designated trustee will make distributions from the trust. The exact timing of deposit and payment may vary from state to state. Some states also have a limit to how much can be deposited into the trust monthly. It’s important to always check with your state agency to clarify any specific rules and regulations.

There are three specific payments a trustee must allocate funds for:

1. Monthly Personal Needs Allowance (PNA): This allowance is meant to cover expenses such as clothing, personal care items, entertainment and other similar expenses. For nursing home enrollees it is between $30 and $130 a month, but can go up to the Medicaid income limit for home and community-based service recipients. 

2. Minimum Monthly Maintenance Needs Allowance (MMMNA): This is for the Medicaid recipient's spouse, if needed, to cover basic living expenses. This goes toward essential needs like housing, food and other necessities. 

3. Cover the cost of medical assistance: Any remaining funds after paying the PNA and/or MMMNA go to cover the costs of medical assistance provided to the Medicaid recipient. This covers any medical treatments, medications, doctor visits, hospital stays or other related health care expenses not paid for by Medicaid.

The trust terminates with the death of the Medicaid recipient. So, if there are any funds remaining in the trust after your death, the state is repaid for the care provided. This payment must be less than or equal to the total amount the state actually paid for care. However, it’s rare that a Miller trust will have excess funds over and above that dollar amount.