What is a “Miller Trust?”

Miller Trusts are a type of trust used to qualify a Medicaid applicant for Medicaid when the Medicaid applicant’s income exceeds the state published Income Cap.  In Arkansas, the “Income Cap” (a phrase with a specific meaning for Medicaid purposes) as of the date of this article is $2,250. This means any applicant for Medicaid is not qualified so long as the applicant’s monthly income exceeds $2,250.  The problem with this situation is the Medicaid applicant might have too much income for Medicaid but usually not enough income to pay for a nursing home without assistance. This situation can be remedied by utilizing a Qualified Income Trust.  Qualified Income Trusts are also known as “Miller Trusts” based upon a court case with that name.


How is a Miller Trust established?

In general, a Medicaid applicant establishes a Miller Trust by designating someone to serve as Trustee and establishing a bank account in the name of the trust. The applicant’s income is then direct-deposited into this newly created Trust account. (Most states require the direct deposit of income into the trust bank account.) In many cases, all of the income of the Medicaid applicant is set up to go into the trust account, leaving nothing that gets paid directly to the Medicaid applicant.


Note the following additional rules regarding directing money into the trust:

  • The Trust account must be opened with a $0 balance or a minimal amount required by the financial institution to open the account.  Deposits not considered income disqualify the Miller Trust during the month the inappropriate deposits are deposited.
  • No other resources may be added to this type of trust. It must be composed only of income that would otherwise be going to the Medicaid applicant.
  • Excluded (not counted) income should not be assigned to the Trust. Examples of excluded income include income tax refunds, certain annuity payments, Agent Orange payments, VA Aid and Attendance and housebound allowances, VA reduced pension, and vocational rehabilitation.
  • Income and interest earned by the trust, if any, can accumulate and will not be counted as a resource.


How does a Miller Trust work?

Once deposited, the income may only be spent on the medical care of the Grantor.  Usually all the income is paid to the nursing home where the Grantor is institutionalized toward the cost of care.  Medicaid will pay the difference of the income paid and the total cost of care. The Grantor is allowed a $40 monthly allowance to personal needs from the Miller Trust funds.


What is a Miller Trust “payback provision?”

Upon the death of the Medicaid applicant/lifetime beneficiary, the state has priority to recover expenses that Medicaid paid on behalf of the beneficiary. Anything remaining in the Trust after the death of the Medicaid applicant is reimbursed to pay those expenses incurred by the state.  In the unusual event there are remaining assets after the state is reimbursed, then those assets are paid to the other beneficiaries named in the trust document. Ordinarily, all income deposited into the trust will be spent each month as part of the beneficiary’s “share of cost,” so there is not likely to be anything left.


Who can establish a Miller Trust?

Any individual, of any age, who is otherwise eligible for Medicaid may establish an income trust. The individual does not have to be disabled. But an income trust can be used only when the Medicaid applicant is residing in a living arrangement where long-term care services can be provided.


If you are making preparations either to enter an assisted care facility, or are making preparations for a family member, and you are concerned about asset protection or paying for the cost of care, give us a call today and we will assess your situation and determine the best steps for you to take in the coming months.  We know this process can feel complicated and scary, but we are experienced with the process and will do everything in our power to protect you and your family.