San Antonio Express-News
March 5, 1999

Miller Trust (Qualified Income Trust)

copyright 2005, Paul Premack

Medicaid is a federally designed and funded program administered by each state. It provides basic medical care for people on welfare and it pays for nursing home care for qualified patients. One requirement to qualify is that the patient’s income must be lower than $2022 per month from all sources. (Note: this figure changes annually. Please click here to see an update.)

You say your stepfather’s income exceeds the limit. If, for instance, his monthly income is $2100 -- $1100 from social security and $1000 pension -- he would fail to qualify for Medicaid. The Qualified Income Trust (QIT), formerly called a "Miller Trust," is a legal way to get around the limit. Your banker was right about one thing: someone involved in this process is from another planet, and it isn’t you. Hint: think "Congress."

A QIT is an awkward approach. It allows Medicaid to pretend that certain funds do not exist when asking how much income your stepfather has. Of course, they know about the funds – and include them in other calculations. Let’s look at an example:

If your stepfather sets up a QIT and puts in his $1000 pension, then Medicaid only sees his $1100 social security check. This is below the $2022 cut off, so he qualifies for benefits (assuming all the additional standards, like having modest assets, are also met). Medicaid then shifts gears, asking "how much does he contribute to the nursing home, and how much does Medicaid pay?"

To answer that question, they follow certain rules set out in federal law. The first legal priority is to cover your stepfather’s personal needs allowance of $60. The second priority is to cover your mother’s spousal income allowance of $2739. After that, his must be used to pay for his medical care or nursing home bill.

Now, let’s say that your mother also has some of her own income. If she get social security of, say, $800, then she is legally allowed to 1) keep her $800, 2) keep the $1100 from your step-father’s social security, and 3) draw $839 from the QIT. Then she will have income of $2739 for her own living expenses.

The remaining $161 in the QIT is used for his $60 needs allowance, then paid to the nursing home to cover part of his monthly expenses. If the nursing home’s total bill is $4000, the Medicaid program will be paying $3899 toward his care. Without a QIT, Medicaid would pay nothing toward his care. All their combined income would go to pay the nursing home and your mother would have no money for food or shelter.

You need to hire a knowledgeable attorney to draft a QIT - it is best to call on a Certified Elder Law Attorney (CELA). Don’t go to any of the businesses that offer to write QIT’s or use a form offered by a Medicaid caseworker. They are illegally practicing law and not giving you advice that is biased in your favor.