qualified income trust

What is a Miller Trust and How Does it Work?

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.

qit guidelines

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.
income trust

 

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.  

miller trust

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.   

qualified income trust

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.

personal needs allowance

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. 

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Administrative Assistant

Ryan D. Foley

Ryan Foley at Paths Law

Administrative Assistant

Ryan D. Foley

Ryan graduated from the UMKC School of Law in 2018 and passed the Missouri Bar that year. Prior to law school, Ryan attended the University of Missouri – Columbia where he attained a degree in Business. He is a Kansas City native, growing up in the Northland where he achieved his Eagle Scout rank by doing a project for his high school. During his time in law school, Ryan was introduced to the practice area of Elder Law by one of his professors and has been

Ryan enjoys working with and educating clients to provide advocacy and support during the unfamiliar and often overwhelming probate process. Ryan understands the challenges faced by individuals when faced by the uncertainty and complexity of government systems or even handling a Trust during a time of grief, and he strives to make the process as easy as possible.

Administrative Assistant

Makaylee A. Morelli

administrative assistant at Paths Law

Administrative Assistant

Makaylee A. Morelli

Makaylee is currently working on her bachelor’s in political science and hopes to soon start law school as an aspiring attorney. In her free time, she loves to spend time with her friends and family but most importantly her dogs Taffyta, Tallulah Belle, and Harry. Their favorite thing to do is go on coffee dates and get pup cups.

Attorney

Kathleen E. Overton

Kathleen Overton, attorney at Paths Law

Attorney

Kathleen E. Overton

After starting her career as a disability attorney, Kathleen transitioned into estate planning at a mid-sized regional law firm. Kathleen joined Paths Law Firm in 2021 when she decided to return to a boutique law firm that provides excellent service and quality to clients. Because of her background as a disability attorney, she brings a thorough understanding of public benefits to each client meeting. At Paths Law FIrm, Kathleen focuses on traditional estate planning and business entity formation, providing tailored advice unique to each client’s situation.

Public Benefits Assistant

Tena K. Dooley

Public Benefits Assistant

Amanda D. Martin

I have my Associates in Applied Science and have over 20 years of office management experience. I have two daughters and one grandson.

During my time away from the office I enjoy spending time with my family.  I enjoy almost everything outdoors and my hobbies include fishing and gardening.

PARALEGAL

Sydney R. Morris

Paths Law elder law in Kansas City

PARALEGAL

Sydney

Sydney is currently enrolled at the University of Missouri-Kansas City pursuing an accounting degree and plans to later attend law school.

In her free time, Sydney enjoys spending time with her nephews and volunteering at her local church.

 

CLIENT SERVICES MANAGER

Christy L. Phillips

client service manager at Paths Law

CLIENT SERVICES MANAGER

Christy L. Phillips

Phone: 816-640-8635
Email: [email protected]

Christy has 3 years of experience in Elder Law working for seniors and their families as a Benefits Coordinator processing Medicaid and VA applications. Prior to joining Paths Law Firm Christy worked in the finance industry for over 10 years.

 

Christy’s experience in the finance industry has been extremely beneficial to her role as Benefits Coordinator. There have been many influences that went into her decision to select the field of Elder Law. Christy has a special place in her heart for the elderly and attributes this to her relationship with her grandparents.

When asked why she loves what she does, Christy said that at Paths Elder law, she gets the opportunity to help clients in more ways than one. Her favorite part of her job is getting clients approved for Medicaid or VA benefits as it is a huge relief for them and their loved ones.

Christy was raised in Ogden, Utah, and moved to Independence, MO, when she was ten years old. She has two children that keep her busy and fill her life with joy! Christy’s daughter cheers for Avila University, and her son plays competitive baseball for the Bucks and races BMX locally for the Motorcycle Closeout Team.

When Christy is not working, she enjoys crafting and making homemade gifts for her loved ones and raising her kids to be healthy, happy, and positive humans.

 

Practice Areas

  • Medicaid Benefits
  • VA Benefits

 

Professionalc Memberships and Affiliations

  • Missouri Notary

FINANCIAL MANAGER

René A. Fracassa

Rene A. Fracassa, Paths Law

FINANCIAL MANAGER

René

René has worked along side Rusty for 35 years. Not only is she part of the Paths team, she is also his wife. René spends her time working with the accountant to keep all of the finances in order, as well as general office management.

In addition to helping run the office, she helps manage the family and grandkids, tries to keep everyone fed, and has a passion to teach Bible Studies. Her former career in Event Planning trained her to juggle all the activity. She understands Rusty’s passion to serve people from the first mention of law school. It is a great pleasure for her to be an important part of every area of his life.

 

MARKETING MANAGER

Hilary R. Tichota

Hillary at Paths Law

MARKETING MANAGER

Hilary

Hilary plays a vital role in the daily operations of the office. In addition to her regular office duties, Hilary has a heart of gold.

For more than 5 years, Hilary has operated the front desk at Paths, running the office and catering to clients. Hilary recently moved into the role of Community Relations Coordinator. She has a passion for people and a focus to share our business practices with the community’s seniors, businesses, and clients. She especially has a heart for seniors, showing they are loved through her visits, treats, the “Pen to Pal” program, and volunteering services at various senior living communities. She is a wonderful wife and mother of two. Most activities with seniors involve her great talent for any type of craft.

 

SR. PARALEGAL & OPERATIONS MANAGER

Jennifer A. Bronson

Jennifer, senior paralegal

SR. PARALEGAL & OPERATIONS MANAGER

Jennifer

Jennifer has been in the legal field for over 25 years and considers Paths her second home.

When she’s not running the office or working for our clients, she’s spending time with her first passion – her children.

ATTORNEY

Russell A. Fracassa (Rusty)

attorney at Paths Law elder law

ATTORNEY

Russell A. Fracassa (Rusty)

Phone: 816-640-8635

When asked what he wants to do, his reply was “I just want to sit at the kitchen table and work directly with people.” Rusty enjoys working with clients providing experienced advocacy and supporting them through their unfamiliar and overwhelming situations. Due to all the challenges faced by seniors, it is essential to work with an experienced elder law attorney who has expertise in the law, issues, and concerns affecting seniors and their families.

Rusty brings nearly 30 years legal experience and expertise working for seniors and their families as an elder law attorney in Kansas City and surrounding. Prior to law school, Rusty was a practicing accountant. This provides invaluable experience in his current practice of law. Rusty decided to put his focus on helping the elderly, vulnerable adults, and their families navigate challenging life, end of life, and death events.

Rusty understands the challenges faced by individuals whose capacity is declining and how upsetting the loss of a loved one can be. He understands he may not be able to eliminate his client’s grief from loss, but he strives to provide clients with peace of mind. Rusty works directly with client’s long term care issues, including Medicaid, Veteran’s Benefits, Estate Planning, Asset Protection, and Special Needs Planning.

In 2010, Rusty’s faith and love led him and part of his family to China as Christian missionaries. He and his wife, went permanently, but ended up dedicating 3 years to that ministry. They returned to Missouri to help with grandchildren after a family tragedy and later began anew with Paths Elder Law. The goal is providing compassionate care through legal advocacy.

When Rusty is not practicing law, he enjoys spending time with his family, grandchildren, and excessive eating at local restaurants.

 

Practice Areas

 

  • Wills and Trusts
  • Estate Planning
  • Asset Protection
  • Medicaid Benefits
  • VA Benefits
  • Probate
  • Guardianship and Conservatorships
  • Education

 

BSBA and Master’s in Accounting, Master’s in Inter-Cultural Studies, and Doctorate in Juris Prudence

  • Rockhurst University
  • Liberty University
  • University of Missouri – Kansas City


Admissions to Practice

  • Missouri


Professional Memberships and Affiliations

  • State Bar of Missouri
  • National Academy of Elder Law Attorneys (long-time Member)
  • Elder Counsel (Charter and Ongoing Member)
  • Missouri Association of Trial Attorneys (Past Member)
  • Kansas City Metropolitan Bar Association
  • Missouri State Bar Committees – Elder Law, Estate Planning, Probate