If you are caught in that “no man’s land” of having too much income to qualify for Medicaid to pay your nursing home expenses, but not having enough money to pay for a nursing home out of your own funds, do not despair. You have options. Some states allow you to spend part of your income on your medical expenses to bring down the amount they will count as your income. People call these states “spend-down” or “medically needy” states. But what do you do since Alabama does not allow “spend-down?” Is your income too high for Medicaid? If so, you might consider a Miller trust.
Miller Trusts briefly
Miller trusts, also called Qualified Income Trusts (QITs), came about because of a 1990 Colorado court case. If your state does not permit qualifying for Medicaid nursing home benefits by spending down your income on medical expenses, you can set up an irrevocable Miller trust.
Your “extra income” is your income that exceeds the Medicaid limit. Your extra income goes into the trust, which will pay you a personal needs allowance every month and give your spouse who still lives at home (called the community spouse because he or she still lives in the community as opposed to in the nursing home) a minimum monthly maintenance needs allowance (MMMNA), if applicable. Any income left over will go to the nursing home. Medicaid will pay your remaining monthly nursing home bill.
You must designate someone to serve as the trustee of the Miller trust. Every month, this person will pay out the personal needs allowance, spousal MMMNA and your portion of your nursing home bill. You may not serve as the trustee of your account, but a family member can do so.
A Rose by Any Other Name
Not all states call them Miller trusts. Here are some of the other names for Miller trusts across the country:
- Income Diversion Trusts
- Medicaid Income-Only Trusts
- Income Cap Trusts
- (d)(4)(B) Trusts
- Income Only Trusts
- Income Assignment Trusts
Downsides to Miller Trusts
They are irrevocable. Unless you have extraordinary circumstances, you cannot undo a Miller trust. If your income is higher than the Medicaid-approved monthly cost of your nursing home, you cannot use a Miller trust to qualify for Medicaid.
Reasons to Consider a Miller Trust
In Alabama the legal fees to set up a Miller trust are usually reasonable. The money you will save on paying for a nursing home will greatly outweigh the costs to set up the trust.
Nursing homes are expensive, costing thousands of dollars a month. The fees could quickly impoverish you and your spouse, if you do not avail yourself of Medicaid nursing home benefits and shelter income for your spouse.
If Medicaid does not approve of your Miller trust, they can deny you nursing home expense benefits. The laws vary from state to state. This posting discusses the general law. Talk with an elder lawyer in your area.
Paying for Senior Care. “Qualifying for Medicaid using Trusts: QITs, Miller, Pooled Income Cap and Other Trusts.” (accessed January 31, 2018) https://www.payingforseniorcare.com/medicaid-pooled-income-special-needs-trusts.html
Aging Care. “How to Use a Miller Trust for Medicaid Eligibility.” (accessed January 31, 2018) https://www.agingcare.com/articles/how-to-use-a-miller-trust-for-medicaid-eligibility-207367.htm