A Miller Trust also referred to in Missouri as a Qualified Income Trust, can be used by Medicaid applicants who are over the Medicaid income limit for those programs with an income cap.  There are many different names used for a Miller Trust depending on the state in which an applicant resides or the state in which the applicant is applying for benefits. The titles for such trusts include d4B Trusts (named after the federal statute authorizing the trusts, i.e. 42 UCS 1396p(d)(4)(B)), Income Cap Trusts, Income Diversion Trusts, Irrevocable Income Trusts, Income Only Trusts, and Qualifying Income Trusts, or QIT’s for short. No matter the title, they’re all referring to what we will mostly call Miller Trusts in this article.

*This blog is for educational purposes only and should not be considered legal advice. The use of the Paths Law Firm website does not constitute a client-lawyer relationship.

Applicants are allowed to place income, not assets or resources, over the Medicaid income limit in this type of trust and the income is not counted towards the income component for Medicaid eligibility. In Missouri, the income cap Medicaid programs are waiver services, also known as Home and Community Based Services (HCBS), Program for All-Inclusive Care for the Elderly (PACE), and MO HealthNet for Children with Developmental Disabilities (MOCDD). 

Missouri is not an income cap state for long-term nursing home care (also known as skilled nursing care) Medicaid benefits. This means all available income must be paid towards care.  An applicant’s income will not limit long-term nursing home care benefits.  So, in Missouri, the use of a Miller Trust is not useful for long-term nursing home care Medicaid assistance.  

What is Medically Needy and Categorically Needy?

It is important to understand the terminology medically needy and categorically needy and the relevance they have for a Qualified Income Trust.

The phrase “medically needy”, also referred to as spend down, is when a state allows a recipient to spend income over of the Medicaid limits, on qualified expenses, to become eligible for long-term care nursing home benefits.  Once the applicant’s income is within the maximum income limit, they become eligible for benefits for the remaining time left in the current spend down period.

Whereas a state that is “categorically needy”, also referred to as income cap, does not allow Medicaid recipients to spend down income above Medicaid limits.  These states utilize Miller Trusts to allow applicants the opportunity to meet income limits to qualify for nursing home Medicaid benefits (but not Missouri).  For a Medicaid qualification of an income cap benefit, the Home and Community Based Services Medicaid Waiver is usually 300% of the Federal Benefit Rate.  For 2020, this equates to $2,349 per month.

How Does a Miller Trust Work?

With a Miller Trust or QIT, the individual applying for Medicaid allocates any income over the Medicaid income limit into the Qualified Income Trust.  This lowering of counted income allows the applicant to qualify for the benefits through Medicaid.  The uses of the income diverted to the trust is discussed below.

The applicant, a power of attorney, or guardian is required to set up a bank account and have the trust documentation drawn up to establish the trust.  A Miller Trust or QIT is highly recommended to be drafted only by an experienced Elder Law Attorney.  There are many legal nuances that must be considered.  Once the trust is in place, a trustee must be chosen to manage the trust and follow the established guidelines for the trust.  The trustee can be anyone, except the applicant, also considered the beneficiary. 

The other hallmarks of a valid Miller Trust, as set forth in Missouri’s Medicaid caseworker’s manual, are the following:

• The trust is irrevocable,
•  Only the beneficiary’s income is paying to the trust,
• The income must be paid to the trust in regular intervals,
•  The State of Missouri is the beneficiary of any remaining trust funds after the death of the beneficiary, and
•  Disbursements from the trust must be for the beneficiary, the beneficiary’s spouse, or a disabled child of the beneficiary who is residing with the beneficiary.

 

At least monthly, the portion of the recipient’s income must be deposited into the trust.  It is important to note if a recipient only has one source of income such as social security, the entire check does not need to be deposited into the trust.  Only the portion of income the participant needs in order to qualify for under the income limitations is the minimum that needs to be deposited.  The monies deposited into the Qualified Income Trust (QIT) by the Medicaid participant are exempt and not counted towards the income limit for Medicaid.

It is important to note, a QIT will not help an applicant over the Medicaid asset limit.  Assets are not eligible to be deposited into a QIT.  However, if an applicant is planning for future Medicaid needs, an asset protection trust can provide another avenue to protect assets and meet the asset limits set by Medicaid.   There are different transfer rules applicable to assets, again this depends on the particular program for which the applicant is applying.

Also, as may have been noted under the hallmarks listed above, a Qualified Income Trust does not shelter money for the participant or their family after the death of the trust’s beneficiary, the Medicaid participant.  When the Medicaid participant dies, the state will recover any expenses paid by Medicaid for the participant’s cost of care, up to what remains in the trust.  In fact, by the terms of the trust, the trustee must first make such payments to the state.  Once Medicaid has recouped their funds, any additional funds remaining in the trust will then be paid according to the terms of the trust by the trustee.  

What Expenses Can a Miller Trust be Used for?

There are specific guidelines for how funds in a Qualifying Income Trust can be used.  The trustee is responsible for managing the trust and disbursing payments from the trust for qualified expenses.  If all income for a Medicaid recipient is deposited into a Miller Trust, the recipient is eligible to receive a personal needs allowance (PNA).  The amount of the PNA will vary based on the state the recipient lives.

If the recipient is married and the non-applicant or community spouse meets the spousal impoverishment income guidelines, the spouse may also qualify for a monthly allowance.  This allowance is paid out to help support the spouse.

Money in the QIT must be used each month for medical needs, including expenditures for physicians’ bills, medications, durable medical equipment, and the recipient’s share of costs for their in-home care not otherwise covered.  Most often, funds in the trust are used to supplement costs above what Medicaid pays, medical bills not covered by Medicaid, as well as Medicare premiums.   

What Can Personal Needs Allowance Funds be Used For?

The primary purpose of the PNA is to provide recipients a personal fund to be used at their discretion for items or services not covered by Medicaid.  If the recipient is living in a nursing home, the nursing home cannot take PNA funds for items or services unless it is not covered by Medicaid or is more expensive than what is covered by the program.  The regulations of use for PNA’s is set by both the federal government and individual states to protect recipients from misappropriation of funds and abuse.  Some states require PNA funds periodically to determine misuse or abuse by guardians and long-term care facilities, however, Missouri does not have such a requirement.

What is the Maximum Amount of Money That Can Be Put into a Miller Trust?

While some states have restrictions on how much income may be put into a Miller Trust, other states do not have a cap.  In states that do not set a cap, there is a reasonable limit.  For a single individual, the reasonable limit is no more than the cost of a private pay nursing care facility in the state in which the individual resides.  For couples that are married, the amount considered reasonable is a maximum of the spousal allowance combined with the cost of private pay nursing facility care.

In Closing

Understanding Medicaid’s guidelines can be quite difficult, especially when it comes to the qualifications of income and asset limitations.  A Miller Trust can significantly help resolve financial issues for medical needs and daily living requirements for individuals needing in-home care.

At Paths Elder Law, we understand the importance of protecting your future and the future of your loved ones.  We have close to 30 years of experience helping individuals and married couples with Estate Planning, Asset Protection, Medicaid eligibility, and application process, VA Benefits, Probate, and Guardianship.  We have been extremely successful in helping our clients protect their futures and in mitigating issues related to Medicaid and setting up Miller Trusts. 

If you or your loved ones need assistance with a Miller Trust, qualifying for Medicaid or Medicaid planning, contact Paths Elder Law.  We are here to help you protect your future and assist you in getting the care you need.