A Miller Trust Might Be Your Answer to Medicaid Eligibility
Miller Trusts, also known as Qualified Income Trusts (QIT), provide a way for individuals with incomes above the limit to become eligible for Medicaid long-term care assistance. According to the Florida Department of Children and Family, “If your income is over the limit to qualify for Medicaid long-term care services (including nursing home care), a QIT allows you to become eligible by placing income into an account each month that you need Medicaid.” This allows individuals to lower their incomes enough to become Medicaid eligible.
How Does a Miller Trust Work?
When a Miller Trust is established, the individual’s income (partial or total) is deposited into the trust, instead of into their personal bank account. The individual and their spouse can be paid allowances from the Miller Trust account, but otherwise all money accumulated in the Miller Trust must go towards the cost of their care. If there is any money left in the trust when the individual dies, those funds will go towards reimbursing Medicaid for care expenses.
“The income you have in and out of the QIT is used to calculate your patient responsibility. If you do have a patient responsibility, you are responsible for paying that amount. If there is money left in the QIT upon your death, it is paid to the state, up to an amount equal to the total medical assistance paid on your behalf by the state while the trust was in effect,” explains The Florida Department of Children and Family. If there is any additional money left once Medicaid has been reimbursed, remaining assets go into the individual’s estate to be passed onto beneficiaries.
Miller Trusts are “irrevocable trusts,” meaning that they cannot be altered or reversed once established. This prevents people from being able to create a Miller Trust to access Medicaid and then revoking it without reimbursing Medicaid.
Qualifying for Medicaid
Affording long-term care support is a tremendous problem in the United States. Medicare doesn’t cover long-term care, and it is often prohibitively expensive to pay for care privately. Unless you have good long-term care insurance — which is becoming increasingly difficult to access — many Americans must look to Medicaid for their long-term care needs. Unfortunately, Medicaid has strict eligibility requirements that can be difficult to navigate.
The U.S. Department of Health and Human Services estimates that “70% of adults who survive to age 65 develop severe LTSS [long-term services and support] needs before they die and 48% receive some paid LTSS over their lifetime.”
Given the enormous costs of care facilities, many Americans must rely on Medicaid to fund their long-term care. But what can you do if you earn too much to qualify for Medicaid?
In order to qualify for Medicaid long-term care support, an individual must have income below a certain threshold. The income thresholds for Medicaid can be quite low, and many people earn too much from social security, pensions, and retirement savings to qualify. Medicaid limits vary state to state, but are often 300% of the federal poverty level. In Florida, for example, the 2022 Medicaid income limit is $2,523 per month. (Please note: this refers to the Medicaid long-term care income limits, not the Medicaid health insurance limits. These programs have separate requirements.)
This creates a tremendous gap in coverage for individuals who earn too much to qualify for Medicaid assistance but not enough to afford to pay for long-term care out of pocket.
Income Cap States
It is a common problem to earn too much to qualify for Medicaid long-term care. Because of this, some states let individuals “spend down” any income above the threshold on care expenses so that they can still qualify for Medicaid assistance. For example, if your state’s Medicaid income threshold is $2,500 per month and you earn $2,900, you would pay the difference of $400 towards your care. The initial $2,500 would be yours to keep, and you would qualify for Medicaid long-term care assistance.
However, individuals cannot qualify for Medicaid long-term care if their incomes are above the Medicaid-eligibility threshold. These are called “income cap” states, because you do not qualify for Medicaid long term care if your income is at above that cap, even by $1; Florida is an income cap state.
In those situations, many individuals look to shield some of their income so that they can become eligible for Medicaid’s assistance. Miller Trusts are a common solution for this situation.
If you are nearing retirement age, it’s never too early to consider your financial and healthcare plans. If you live in an income cap state and anticipate higher retirement income, a Miller Trust could be a good solution.
The laws and requirements for Miller Trusts vary state to state. We always suggest working with an estate planning or elder law attorney to determine the right plan for you. Navigating long-term care planning is tremendously challenging and can be isolating.
If you’re helping care for an aging loved one, Aidaly Advocates are here to help you understand the options and resources available to you.