Many seniors find themselves in need of Medicaid to pay for their long-term care in their later years. However, they may be surprised to learn that their modest monthly income may disqualify them from these Medicaid benefits.
The reason for this is that Medicaid is a “means-tested” benefit. In other words, to qualify for and receive Medicaid long-term care benefits, your income can’t exceed certain thresholds. For example, in states such as New Jersey, Nevada, and Florida, the monthly income limit for nursing home or community-based services is $2,829 for an individual and $5,658 for a married couple (in 2024).
Medicaid expects an applicant’s monthly income, besides a monthly personal needs allowance and Medicare premiums, to go toward nursing home costs. So, what if you have more income and other expenses? A Miller Trust may help you resolve this dilemma.
A Miller Trust is a type of Medicaid planning tool. It can assist you in meeting the income limits and qualifying for Medicaid. Unlike other planning tools, Miller Trusts do not have specific disability or age requirements.
How Does a Miller Trust Work?
If your income exceeds your state's Medicaid income limit, you can deposit the amount of your excess income into a Miller Trust. Note that you may hear your attorney also refer to a Miller Trust as a qualified income trust, or QIT. Once you have placed that excess income into this type of trust, Medicaid does not count it as income.
However, to qualify, a trust must be irrevocable, which means you cannot cancel or change it. This means that once you put money into a qualified income trust, you will not have a way to get it back directly. However, the trust can pay certain expenses on your behalf.
A Miller Trust is a good option for any Medicaid applicant needing long-term care services. (You may be able to receive this type of care at home, in your community, or in a skilled nursing care facility.)
You, as the Medicaid applicant, can create a qualified income trust. Or, your guardian or a person you have appointed with a properly drafted power of attorney can establish it. You would then choose a trustee to manage the trust and the income deposited. Anyone other than the Medicaid applicant can serve as a trustee.
Once the trust is set up, the trustee establishes a bank account to receive excess income from the Medicaid applicant. The income can only go toward certain expenses. For example, it can pay the personal needs allowance of an individual in a nursing home. It also can help cover Medicare premiums, bills not covered by Medicaid, or supplement costs of a nursing home.
Another requirement of a Miller Trust is that the applicant’s state Medicaid agency will be able to claim any remaining funds in the trust upon the death of the Medicaid applicant. The amount the state receives is limited to the total value the state paid in long-term care on behalf of the applicant. Any amount remaining after this payment may go to a person the Medicaid applicant had chosen.
Medicaid Income Cap
You should be aware that not every state allows qualified income trusts as a method to qualify for Medicaid. Currently, only about 25 states, known as “income cap” states, permit this particular type of trust.
Other states do not impose an income limit for nursing home care; so, there is no need for a Miller Trust in these locations. For example, in Massachusetts, you would pay all your income, minus certain deductions, to the long-term care facility. Medicaid would then pay the remaining cost.
Consult With an Elder Law Attorney
Before creating a Miller Trust, it is important to speak with an elder law attorney to ensure this option is right for you. If you live in a state where these types of trusts are not allowable, you may have other options, such as pooled income trusts. Average nursing home costs today are running at nearly $95,000 per year for a shared room. In the long run, working with an attorney to plan for Medicaid can actually end up saving you money.
For guidance in all aspects of Medicaid planning, consult a qualified elder law attorney in your area today.
For additional insights on protecting your assets and trying to qualify for Medicaid, refer to the following informative articles:
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