One of the most persistent myths is that a Miller Trust in Texas can protect assets from Medicaid.

I don’t know why this misunderstanding persists, but it does.

The truth is simple: you cannot use a Miller Trust in Texas to shelter assets. If you try, you invalidate the trust and lose benefits. For families who don’t know the rules, the consequences can be serious.

*Been told income is too high to get Medicaid?
Use my 100% guaranteed Miller Trust.
Put an end to high nursing home bills and sleepless nights. 713-970-1300

How a Miller’s Trust Will Help You Get Medicaid in Texas

Federal and Texas law limit how much monthly income you can have and still get for this Medicaid nursing home benefits. The income limit is low, well below the average monthly cost of nursing home care. Years back, this restriction would keep patients from becoming Medicaid eligible.

In 1993 Congress established laws to address the problem. The new rules allow applicants to set up a special purpose income trust – a Miller Trust. The name derives from the family who brought suit against the system. Thankfully, they won.

The legal description for this type of document is a Qualifying Income Trust. The name spells out the only purpose of the trust. It’s designed to help someone become income eligible for benefits.

A basic limitation of Miller Trusts is that only income of the person needing care can go into it. Medicaid’s income limit for 2023 is $2,742 per month. If a person has income over the threshold, the only way to become eligible is to set up a Texas Miller Trust. If you have too much income to qualify but too little to pay the large nursing home costs, you can get the financial help you need.

Without a Miller Trust, you can’t.

That is why it’s so important to put one of these trusts in place. But you must do it in the right way. Unless you’re using an Medicaid planning attorney in Texas skilled with these documents, you can get this wrong. Only the income of the person needing care can be deposited.  Medicaid rules deem assets in the trust as “wrong money.” If you put the “wrong money” into a Texas Miller Trust Medicaid will deny the application. Denials are a costly mistake. You ruin your chances of qualifying for Medicaid money to pay those high nursing home costs.

How Income Trusts Work

The Miller trust document establishes a special checking account. The terms of the trust legally redirect monthly income away from the care recipient. Instead, the patient directs his or her income into a new checking account. When properly the character of the income changes under Texas Medicaid Income rules.

Excess income no longer prevents eligibility. The purpose of a Miller Trust is not to shelter the income. It acts as a funnel instead. Rules restrict how the income deposited in the trust account can be used. The funnel follows those rules to channel money flows from the patient to medical providers.

This approach works because the language of the trust recycles the money back out to help the patient pay nursing home and medical expenses. Income is no longer considered for eligibility purposes. It is considered, however,  when the state calculates how much the patient pays for care.

Income deposits into the trust may also provide funds to a spouse if the patient is married. In Texas, Miller Trust funds can also be used to pay for health insurance and Medicare premiums. Medical costs not covered by Medicare and Medicaid can also be paid from the trust. Rules also allow a $60 personal needs allowance for the patient.

Miller Trust Funding Mistakes

Another type of mistake families make is setting up the trust incorrectly. The benefits of a Miller Trust in Texas can be lost by not understanding the language required to establish the trust in the first place.  The rules for Texas Miller Trusts are precise. The problem is most don’t understand the rules.

One mistake I see has to do with the amount of money people put into the Medicaid trust. Sometimes they “round off” the amount. Sometimes they put only a part of a Social Security or retirement check into the trust. When the deposited amount differs from what the law requires, the agency caseworker voids the trust. Caseworkers may view an incorrect deposit as attempt to protect the income.

This small change can mean losing thousands of dollars of financial help.

Another mistake is people try to put funds other than income into their trust bank account. Miller Trusts are income-only trusts. The monies that go in must only come from the patient’s income. Putting other money into the account is a big mistake. When you place other anything else in the trust you run the risk of voiding the entire trust. Examples of disqualifying income include income tax refunds, some annuity payments, vocational rehabilitation or some financial help from the Veteran’s Administration. This simple mistake translated into losing Medicaid eligibility.

If you need a Texas Miller Trust, work with an elder law attorney who understands Medicaid rules. A skilled attorney will help you avoid small mistakes that lead to big problems. Something as simple as not depositing income by the last business day of the receipt month can cause problems. Some pension benefits are received the last day of the month. If the deposit isn’t made during the same calendar receipt month, Medicaid policy requires the State to count the income. Eligibility can be lost.

Setting up and funding a Miller Trust account can be tricky. Simple missteps lead to losing of thousands of dollars of benefit eligibility. ..money you can’t recover. There’s a easy way to avoid each of these serious blunders. If you need a Miller Trust to qualify for Texas Medicaid, hire an elder care attorney. Follow the advice of a lawyer with extensive Texas Miller Trust experience. You’ll be able to qualify faster, save money and reduce the emotional stress of the process.

Think about this for a minute.

Do you want to spend all the money that you’ve saved throughout your life on nursing home care? Or do you want prefer to leave it to your spouse and children?

If you don’t take the steps to protect assets from Medicaid and nursing homes, you won’t have any choice in the matter.

*Need to find money to pay for nursing home care but got no clue?
Start here. For a free, no-obligation strategy session, call me at (713) 970-1300

Many of our clients (and most people) believe they’ll never need nursing home care. Some assume that if they do, the government will pay the costs.

The sad truth is that long term care is a reality we need to face. As each year goes by we become more and more likely to need skilled medical care. Advances in medicine have allowed more complex medical services to be provided at home. But there are some situations that need round the clock attention in well-staffed and equipped facilities.

Care from these facilities costs run $91,000 per year. The 2021 Genworth Cost of Care Survey finds semi- private nursing home rooms in Texas can cost $67,525 per year. Private rooms can top $91,615! What’s shocking is the bulk of these payments will come out of your family’s pockets. That is unless they take the proper steps to ensure Medicaid asset protection.

Doesn’t Medicare Cover That?

Another piece of upsetting information is Medicare pays little toward nursing home expenses. 

Part of elder law asset protection is helping clients deal with this reality. Medicare does not cover long term stays in nursing homes.  They may pay for skilled rehabilitation services up to 100 days, but even that is not guaranteed.

If you need care in a facility for an extended period of time, Medicare will not pay for it. The main “Medicare asset protection” strategy is to qualify for a Medicaid program once those 100 days are up. The reason is Medicare is an entitlement. If you’ve contributed to Social Security long enough, you get the benefits. The program names may sound alike but the programs are different.

Medicaid, unlike Medicare, is a “means tested” program. This means that you need to meet strict income and asset guidelines to qualify.

Let’s look at the four primary means you have of paying for long term care.

Four Options for Paying the Costs of Nursing Home Care

Pay Privately: The costly option

Most people start out paying healthcare expenses out of their own pocket. These expenses include:

• the cost of prescription medications
• insurance deductibles and co-insurance
• home maintenance and housekeeping services
• medical transportation
• companion services
• care management

Once you start paying these expenses out of your pocket, you realize how expensive care can get. The bills can add up quickly. When you’re facing these expenses for years to come, it is natural for worry and fear to set in.

Long Term Care Insurance: The pre-planning options

Medicare and retiree health insurance programs don’t cover long term care. Long term care insurance does. Private insurance companies write this type protection. Most plans cover both medical and non-medical services. Long term care insurance is not just only for nursing homes costs. Some policies cover care in the home or assisted living facilities, as well. It’s can be a critical part of elder law asset protection strategy. Long term care insurance can pay for services Medicare and private health insurance do not.

Regular health insurance doesn’t contribute to the costs of the activities of daily living. These are things like bathing, eating, dressing and personal hygiene. Depending on the terms of a policy, these services can be provided in a patient’s home, a nursing home or in an assisted living facility. But long term care insurance is a pre-need purchase. To qualify you need to meet health requirements.

And less than 10% of seniors have this type of protection.

Medicare

Medicare is the federally run health insurance program for those 65 and older. Most folks believe Medicare will pick up the majority of their medically-related expenses. Unfortunately, it does not. The government designed the program to cover the costs of hospital and physician care. Medicaid was set up to help with nursing home expenses. Medicare only covers services for short-term skilled care like speech, physical and occupational therapy.

To qualify for Medicare to pay for your skilled care needs you need to first have a 3-day stay in a hospital. On top of that, those benefits are only provided for a limited amount of time. There is a 100-day maximum, and even that’s not guaranteed!

How to Protect Assets from Medicaid

The fourth option is Medicaid asset protection.  My approach is to help families protect themselves against the crushing cost of nursing home care using a government program called Medicaid. The strategies used are part of an arsenal of proven legal techniques. The focus of the planning is to reduce the burden of care costs on a spouse or the adult children.  The techniques work in a crisis. They also work as advance planning strategies, too.

One of the keys to successful Medicaid planning is to know you’ll qualify for benefits before you submit the application. If you don’t know how to protect your assets from Medicaid, you get tangled up in the rules. When that happens you’ll lose benefits and end up paying more than legally required. The first step is to understand the asset and income limits. You can find out more about the limits here. 

America’s health care system is a confusing collection of private, federal and state programs. The system suffers from serious gaps that can leave seniors exposed to huge medical costs at the end of life. Medicaid estate planning is all about protecting assets and income using Medicaid’s rules and regulations. Proper planning allows you to avoid spending all your hard-earned money on nursing home care. The key is using laws that qualify a senior for financial help that pays for nursing home costs.  

Since each family situation is different, how to protect assets from Medicaid depends on family specifics.