Do you make too much money to qualify for Medicaid but not enough to pay for long-term care out of pocket? It’s a situation that many people in the Lone Star State face, especially since Texas law’s Medicaid long-term care income limit is only $2,829 per month as of 2024. 

As you age, planning for your health needs can be stressful, especially considering the costs. Thankfully, there are strategies to protect your Medicaid eligibility, including using a Miller Trust.

If you’ve begun the estate planning process, you’ve probably heard about trusts by now. They’re important for protecting your assets, helping you avoid lengthy and complicated probate processes, and minimizing taxes.

However, a Miller Trust account differs slightly from the standard types of trusts that protect your assets. This type of trust is designed to help you with your healthcare needs as you age. 

What is a Miller Trust?

Also known as a Qualified Income Trust (QIT), a Miller Trust is a type of trust in which you transfer income directly into the trust. 

A Miller Trust is considered an irrevocable trust, meaning it can’t be changed or canceled once established. This legal tool helps you qualify for Medicaid, especially when your income exceeds the Texas income limits. 

How a Miller Trust works

If you have a Miller Trust, you place all or a portion of your income each month into the trust, which a trustee then manages. You are the beneficiary of the trust, and the trustee distributes the money for some of your personal needs and your share of medical expenses. 

A Miller Trust acts as a bank account specifically to cover medical costs and a few miscellaneous expenses. Whatever is left in the account when you pass away often goes to Medicaid. 

With this account, your income is disregarded for Medicaid eligibility purposes. This allows you to qualify for Medicaid benefits when you otherwise would have been ineligible due to your income level. 

Types of qualifying income

You can only fund your Miller trust with sources of active income, such as:

• Wages
• Social Security benefits
• SSI payments
• IRAs
• Pensions

This doesn’t include:

• Certain annuity payments
• Income tax refunds
• Vocational rehabilitation
• Financial help from the Veterans Administration

Additionally, you can’t transfer assets like property or personal possessions into the trust.

How to know if you need a Miller Trust

Whether you need a Miller Trust largely depends on your state’s income eligibility rules. States generally fall into two categories:

1. “Income cap” states: States in which individuals whose income exceeds a certain threshold don’t qualify for Medicaid unless they use a Miller Trust.
2. “No income cap” states: States in which Medicaid eligibility is based on a person’s medical expenses in relation to their income, without a strict income limit. A Miller Trust is typically not necessary for Medicaid eligibility in these states.

To know if you need a Miller Trust, you should first determine if your state is an “income cap” state. Since Texas is an “income cap” state, residents can establish a Miller Trust. This means that if your income is too high to apply for Medicaid, you can still get the financial help you need. 

What trustees of Miller Trusts can and can’t do

Just like any other trust, a Miller Trust has a trustee—an authorized person who manages the money within the trust. This means that they deposit your income into the trust account on your behalf and distribute the funds appropriately.

Ideally, this person should be someone you trust (pun intended!), such as a friend, adult child, or close family member. You can also turn to a professional, such as an experienced estate planning attorney, to serve as your trustee. An attorney is often a strong choice, as they have insight into the legal requirements of the trust and are required to act in your best interest. 

What they can do

Your trustee can use the money from your trust to pay medical bills that Medicaid and Medicare don’t cover, along with any other state-approved medical costs and premiums. They can also distribute funds to cover court-ordered guardian fees.

Additionally, they can withdraw money to pay you a personal needs allowance (PNA). How much they can give you varies by state and where you receive your Medicaid long-term care benefits. As of 2023, Texas allows you to receive a PNA of $60 per month.

After your death, whatever’s left in the account after all the other distributions get paid to the state. 

What they can’t do

While your trustee can pay medical bills with your trust money, they can’t use it for non-medical bills such as:

• Rent
• Mortgage
• Utilities
• Life insurance premiums
• Taxes

How an elder law attorney can help

While not a requirement, it’s best that someone other than you creates your Miller Trust account. If you’re the beneficiary and your trust doesn’t comply with the state requirements for some reason, you could end up losing your Medicaid eligibility altogether. 

You might be tempted to let a trusted friend or family member set up your Miller trust for you. However, Texas laws governing Miller Trusts are intricate, strict, and precise. While your loved one may want to help you get as much coverage as possible, they could accidentally:

• Set your trust up incorrectly
• Deposit the wrong amount of money
• Put funds other than qualifying income into the account

These small mistakes could void the trust, permanently costing you thousands of dollars in financial help. 

That’s why it’s always best to work with a local Medicaid planning attorney or elder law attorney to establish your Miller Trust account. 

Such attorneys have deep knowledge of Medicaid and Texas Miller Trust laws, so they can help you set up your trust correctly. They can also assess your financial situation, help you create the best possible estate plan, and customize your account to benefit you. With their help, you can rest assured that everything follows Texas law so you can receive long-term Medicaid benefits for years to come.

Get help with your Miller Trust account from an experienced Texas attorney

If you’re looking for an experienced elder law attorney to help you set up your trust account in Texas, the law firm of Shann M. Chaudhry Esq., Attorney at Law PLLC, is here to help! 

Our compassionate team is dedicated to working with you to help you plan for your financial needs as you age. Contact our offices today to schedule an affordable consultation and see how we can help you set up your Miller Trust account.