What is a Miller Trust?

Miller Trust Arizona

What is a Miller Trust?

Miller Trusts, sometimes called Income Only Trusts, are a mechanism to help seniors and people with disabilities qualify for the ALTCS program. Miller Trusts allow a person to redirect either all, or a portion, of their income to a trust. This is done to help that person qualify for the ALTCS program. ALTCS sets an income limit of $2,742 per month and any income over the limit will disqualify an applicant. In order to avoid disqualification, a single person who has income in excess of $2,742 per month from all sources may need a Miller Trust to qualify for ALTCS.

Many people who apply for long-term care through the Medicaid benefits system get denied the first time they apply. One of the main reasons why people are considered ineligible for Medicaid benefits is because they do not meet the income requirements.

You deserve to receive the full benefits of the Medicaid system and one way to qualify even if you are over the income limit is by using a Miller Trust. By transferring funds into a Miller Trust, the government does not consider these funds as disqualifying income. This allows you to get state paid benefits for long-term care.

Is a Miller Trust Always Required to apply to ALTCS?

There are many different names for a Miller Trust. In the state of Arizona, these trusts are called “Income Only Trusts”. Other names for a Miller Trust include Qualifying Income Trust, d4B Trusts, and Income Trusts. These trusts exist to help people qualify for Medicaid based on their state laws. The federal government currently requires that Medicaid recipients make less than $2,742 a month. If you receive over $2,742 of income then you cannot qualify for Medicaid benefits without a Miller Trust.

The federal income requirements stay the same, but Medicaid requirements can vary based on the jurisdiction. Some states allow you to “spend down” your excess income by spending it on healthcare until you meet the financial income requirements for Medicaid benefits. In states that do not allow you to “spend down” your income, the solution is to direct your income into a Miller Trust so that it does not count against your Medicaid eligibility.

How does a Miller Trust Work?

If you make over the income cap to qualify for Medicaid and you do not live in a “spend down” state (Arizona is an income cap state), then you must allocate your excess income into a Miller Trust. You can allocate the entirety of your income or only the amount that goes over the maximum income cap for benefits.

The Miller Trust must be established as a financial account by a bank. The account can be drawn up by the Medicaid recipient him/herself, their guardian, or their power of attorney. In some cases, it may be required that the income is directly deposited in the account each month. A trustee must be designated to manage the trust on behalf of the Medicaid recipient. 

When the Medicaid recipient eventually passes away, any funds left in the trust will go towards reimbursing the state for the cost of care. The state will be listed as a beneficiary of the trust. It is also a requirement that the trust is irrevocable (can not be canceled or changed after it is established). The state will never claim more of the trust than what they paid for in long-term care services and it is only rarely that there are ever excess funds in the trust.

When does Someone need a Miller Trust?

Someone who has substantial long term care needs, such as the need to live in an assisted living or memory care community, may find that although their monthly income is over the ALTCS limit ($2,742/month) they still have care expenses that exceed their income. Therefore, to pay for care, they still need to qualify for ALTCS.

A person in this situation can use a Miller Trust to redirect some of their income (Social Security or a pension) to a Miller Trust, so that their personal income, the portion that goes to them personally, is below $2,742/month. That person will then be able to qualify for ALTCS, provided that they meet the other enrollment criteria.

Can You Use the Money in a Miller Trust?

Once you set up a Qualifying Income Trust, the funds can only be used towards medical expenses or long term care expenses. The designated trustee is in charge of the management of the trust. If someone’s entire income is placed into the trust, the Medicaid recipient will get a Personal Needs Allowance through their Miller Trust. This provides a limited amount of spending money to be paid out to the Medicaid recipient each month.

The most frequent way funds in a Qualifying Income Trust are used is to pay what is called the share of cost. A share of cost is how much the Medicaid recipient owes for their long term care before Medicaid will pay. Generally most of the money deposited into a Miller Trust will be used to pay a person’s share of cost. This can sometimes be distributed as payments directly to a nursing home or long-term care facility.

Senior Planning Can Help with Miller Trusts

Senior Planning can help draft the paperwork and set up a Miller Trust on your behalf. We offer Miller Trusts and other estate planning documents for sale.

The best way to establish a Qualifying Income Trust is through a professional. Unless you are confident you can write up the trust paperwork and establish an account with a bank that offers trust and estate management services, it is best to take advantage of Senior Planning’s free consultation.

If you need more information about Miller Trusts or about Senior Care, please call Senior Planning today. We can help you prepare for your ALTCS application can even assist you with the full ALTCS application if desired.

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