The Miller Trust
Whenever I first discuss the need for and use of a Qualified Income Trust (aka Miller Trust) with a client, I think they often believe I am taking them on a Medicaid equivalent of a Snipe Hunt. I imagine the client picturing me and my staff all jumping out of our hiding places at the bank having a good laugh about convincing them to go there and ask to open a “Miller Trust” account.
Fortunately, the Miller Trust is not a fictitious entity. It is a “safe harbor” created by statute to help those individuals who have excess income qualify for Medicaid benefits. To qualify for long term care assistance under Medicaid, the applicant must have monthly income below the Special Income Level. This Special Income Level, or “income cap,” is $2,349 per month in 2020. For applicants who have income above this amount, he or she will need to create a Miller Trust and deposit some or all of their monthly income into the Trust to qualify.
Successful Miller Trust Administration
Although the concept of Miller Trust administration can be confusing, transactions are usually routine and administration can be fairly simple once the recipient and his or her family get the hang of it. Here are some tips for successful Miller Trust administration.
1. Fund the Miller Trust each Month
The recipient’s income must be below the income cap every month. This means that the recipient must fund the Miller Trust with the required amount of income every month to maintain Medicaid eligibility.
2. Only Deposit Income into the Miller Trust
Miller Trusts are only for the recipient’s income. The Medicaid recipient should never deposit assets in the Trust. Remember that once a new month starts, the income from the last month becomes an asset. If the recipient misses a monthly Trust deposit or has assets that are accumulating, contact legal counsel to review his or her options.
3. Trust Funds Will Typically be Spent Monthly on Necessities
Recipients of Medicaid are required to use their income to pay monthly health insurance premiums, the Medicaid copayment (aka liability), and for their personal needs. In most instances, monthly deposits to the Miller Trust will be completely exhausted to meet these obligations.
If funds are accumulating in the Miller Trust, those funds may be spent on anything the recipient needs. However, the Trustee must be aware of the rules that treat some Miller Trust expenditures as income. A good rule of thumb is for the Trustee to make purchases for the beneficiary directly from the Miller Trust account and to consult with legal counsel before using Miller Trust funds for the recipient’s food or shelter.
4. Ensure that the Amount of Deposits are Adjusted When the Special Income Level Changes or Income or Expenses Fluctuate
The Medicaid recipient must deposit at least that amount of monthly income in excess of the Special Income Level each month. The Special Income Level typically changes each year. The recipient’s income may also increase annually based on cost of living adjustments. These circumstances may give rise to the need to recalculate the amount to be deposited into the Miller Trust. If the recipient is even $1 over the Special Income Level, he or she will be ineligible for Medicaid that month. When in doubt, consult legal counsel to determine if the monthly Miller Trust deposit needs adjusted due to a change in the Special Income Level, income, or expenses.
5. Miller Trust Accounts Are Exempt
Most Miller Trusts are irrevocable. In fact, Indiana Medicaid policy requires all Miller Trusts to be irrevocable. As a result, any funds in the Miller Trust account are not countable resources (assets) and do not count toward the resource limit.
Miller Trust administration can appear daunting at first, but with good instruction and a little practice, most families find them to be simple to administer. If the Stinson Law Firm can assist you with establishing or managing a Miller Trust, please contact us at 317-622-8181 or www.stinsonelderlaw.com today.