Pinnacle Estate Planning

By JASON GRAY

Pinnacle Law PLLC

    If you or a loved one needs long term care in a nursing home or assisted living facility, Medicaid may be the only program available to help cover the high cost of that care. But what if your income is just a little too high to qualify for Medicaid? For many seniors caught in that situation, there is a powerful and often misunderstood solution: the Miller Trust.

    Also known as a Qualified Income Trust, a Miller Trust is a special type of irrevocable trust allowed under Medicaid law in certain states, including Idaho. It was designed to help people who would otherwise be financially eligible for Medicaid coverage, but who exceed the strict income limits by a small or moderate amount. These individuals find themselves in what is often called the Medicaid income gap. They make too much to qualify, but not nearly enough to pay for their care out of pocket.

Medicaid has both asset limits and income limits. The asset limits can often be managed through careful planning with irrevocable trusts, gifting, or converting countable assets into exempt assets. But income limits are more rigid. For someone applying for long term care Medicaid there is a monthly income limit. If your income is even one dollar over that threshold, your application will be denied unless you have a valid Miller Trust in place.

    This is where a Miller Trust becomes essential. The trust acts as a legal funnel for excess income. It does not shelter income or make it disappear. Instead, it allows you to meet the technical requirements of Medicaid eligibility by redirecting your excess income into a trust that is used solely for your care and support.

    Here is how it works in practice. Once the trust is created and signed, a bank account is opened in the name of the trust. Each month, the portion of your income that exceeds the Medicaid limit is deposited into the Miller Trust account. The funds in the account are then used to pay your patient responsibility, which is your share of the cost of care. The remaining costs are picked up by Medicaid. The trust is irrevocable, which means it cannot be changed or revoked. Upon your death, any remaining balance in the trust account goes to the state up to the amount that Medicaid paid on your behalf.

    To be valid, the trust must meet several legal requirements. It must be established by the applicant, their spouse, or a court appointed representative. It must only hold income, not other assets. It must name the state Medicaid agency as the first remainder beneficiary. And it must be properly administered each month. A common mistake is failing to deposit the excess income consistently, which can lead to a loss of eligibility.

    In Idaho, the Department of Health and Welfare will not process your Medicaid application if your income is over the limit and you do not have a Miller Trust in place. It is not enough to promise to get one later. The trust must be established and funded before your application is approved. This makes timing critical. If you or your family member is entering a facility and may be over income, talk to an elder law attorney right away. A Miller Trust can be set up quickly if you are working with someone who understands the requirements.

    While it may seem like a complex legal tool, the Miller Trust is really about fairness. It provides a path to coverage for people who cannot afford care but are technically disqualified because of outdated income rules. Without it, many would fall through the cracks. With it, seniors can access the care they need while preserving their dignity and complying with the law.

    If you or your loved one are facing the need for long term care and are over the Medicaid income limit, do not assume you are out of options. A Miller Trust may be your key to qualifying for benefits and protecting your family’s finances.   

*This article is for informational purposes only and should not be construed as legal or financial advice.