Miller Trusts – Holland Elder Law

Miller Trusts Texas. What they are. How they work.

Michael L. Holland — Tue, 04 Feb 2025 16:50:35 +0000

In some states (Texas being one of them), when the income of an applicant for Medicaid exceeds the monthly limit, a special type of document is necessary to meet income eligibility rules. Known as “income cap” states, they cap monthly income to $2,901 (for 2025). In these states, if your income is more than the monthly amount Medicaid permits, special rules allow you to redirect your income to a Qualified Income Trust. Most folks know it as a “Miller Trust” (so named for the family that brought the court action that now makes the solution possible) and as a “QIT.” In Texas, this arrangement is commonly referred to as a Miller Trust Texas solution, helping applicants qualify for Medicaid despite exceeding income limits.

Why Miller Trust Texas Solutions are Needed

A Qualifying Income Trust is set up for one reason and one reason only. In it’s most basic form a person gains income eligibility by depositing specific income received into a checking account titled in the trust name.

It’s used to process the Medicaid applicant’s income so that it fits Medicaid’s income rules. The trust must follow special rules for managing the monthly income of the person seeking Medicaid’s help. The instructions contained within the document are what make up the trust. Only income may be deposited into these types of trusts. The trust bank account is prohibited from accepting anything other than income. That is why they are generically referred to as income trusts.

Regulations require depositing income into a Miller Trust checking account authorized by the trust. Rather than using an existing account, I recommend fresh bank accounts with a zero balance. You can use a current account, but it’s too risky. In my practice, I always help clients set up a new account, which is easier and safer.

Medicaid policy limits the monthly income people can receive and still get nursing home benefits. The Federal government adjusts this upper limit for inflation each year. If the applicant’s income exceeds the limit, special rules allow them to be put into a Miller Trust.

When deciding eligibility, the Medicaid agency ignores the income deposited into the Miller Trust bank account. Using this approach reduces countable income. The apparent income reduction helps the person in need of long term care meet the strict income rules.

How Income Flows Through the Trust

A qualified income trust in Texas helps people qualify for Medicaid but it doesn’t shelter income. Money deposited into trust bank account typically flows out of the trust to pay the nursing home. It’s designed to cover part of the care costs. The balance of the nursing home payment comes from Medicaid. If any money remains in the trust after death, the state keeps it to help defray their costs.

Here’s an example of how a QIT works in Texas

Let’s say your dad needs nursing home care. He gets a monthly Social Security payment of $2,950. His income exceeds the Medicaid eligibility limit of $2,901 but is not enough to pay for the care he needs. The rules say he won’t qualify for Medicaid, but the QIT provides a way.

The first step is to hire an attorney to create a Medicaid qualified income trust. You then deposit the Social Security check into the account. This drops the amount of income the state counts against his eligibility. His Social Security income will pay part of his care. Medicaid makes up the difference.

Expenses Allowed Using The Miller Trust Texas Solution.

The Medicaid agency figures out how much of the long-term care costs an individual must pay. They add up the amount of income received each month. From that, they allow payments for health insurance premiums. Examples include premiums for

Medicare Part B,
Prescription Drug plans (Medicare Part D),
Group retirement health insurance
Medicare Supplements
Vision insurance and
dental coverage.

Payment of medical expenses not otherwise covered by Medicare and Medicaid is also allowed through the trust. The trustee (the person managing the trust) cannot use trust funds for any other purpose than what Medicaid allows.

Your dad also gets to keep a $75 out of the $2,950 for his personal needs.

If an applicant has a spouse, the trust may be able to distribute part of the income to the spouse. This allotment is called the Minimum Monthly Maintenance Needs Allowance. The Spousal Income Protection rules determine the size of this monthly allowance. For 2025, the largest allocation in Texas is $3,948 per month.

Payback Provision

The trust will typically distribute all deposited funds each month to cover the items detailed above. There is little chance the balance will grow in the qualified income trust.

Typically, money flows into the trust and right back out each month. If a person dies with a balance in the Miller Trust bank account, the state can recover what it spent on the applicant’s care. After the state is repaid, the trustee can distribute the rest to beneficiaries named in the document.

Setting up and managing a Miller Trust is not a “do-it-yourself” project. The rules are too complicated.

If you set it up the wrong way, you face a real risk of losing thousands of dollars’ worth of benefits. Remember that once you lose those benefits, they are lost to you forever. If you have income that’s too high to qualify for Medicaid, a Qualifying Income Trust makes sense. But, you must execute each step the right way.

Find an experienced Miller Trust attorney to guide you. A skilled attorney will prepare the specific instructions needed for the trust. You’ll get advice on how the trust should be set up and how to fund it. It’s the best way to avoid the pitfalls and get all the benefits from qualified income trusts in Texas.

Make Sure You Get Medicaid—Call Me Today!

A Miller Trust can help you qualify for Medicaid in Texas, but setting it up the wrong way could cost you thousands in lost benefits. Don’t take that risk!

📞 Call me now at (713) 970-1300. Get your questions answered. The call is FREE!

As an elder law attorney, I will walk you through the process step by step, making sure everything is done right. Get the care you need—call today!

What Is a Miller Trust?

Michael L. Holland — Tue, 04 Feb 2025 15:35:01 +0000

A Miller Trust is a type of trust that allows a person to become eligible for Medicaid even if his or her income is over the qualifying limit. It’s also known as an income cap trust or Qualified Income Trust.

Definition and Purpose

A Qualified Income Trust (QIT) is a special legal setup that helps people get Medicaid benefits by managing their income. The main goal of a Miller Trust is to help people qualify for Medicaid by putting extra income into the trust. Doing so lowers their monthly income to meet Medicaid limits.

It’s an income only trust, necessary for applicants who earn more than the Medicaid income cap but still need long-term care services. By using a Miller Trust, people can make sure their income meets Medicaid rules, allowing them to get important healthcare services without losing all their money.

Benefits of a Miller Trust

A Miller Trust provides several important benefits for people trying to qualify for Medicaid. First, it helps them become eligible for Medicaid by moving extra income into the trust. This lowers their monthly income to meet Medicaid’s income limit.

Income eligibility must be met to get Medicaid benefits. The Medicaid program covers costly long-term care services like nursing home care.

Additionally, a Miller Trust can help protect a person’s assets, like their home and savings, from being used up to pay for these services.

How to Set Up a Miller Trust

Setting up a Miller Trust involves a few vital steps to make sure it follows the law so it helps the person who needs it. First, you should talk to an elder law attorney who knows about Medicaid planning. This expert help is important to set up the trust correctly.

Next, the attorney will create the trust document, explaining the rules, the trustee’s duties, and the beneficiary’s rights. After that, you need to open a separate bank account in the trust’s name to keep the income that goes into it.

The applicant’s income must be put into this trust bank account in monthly deposits. Lastly, you must choose a trustee to manage the trust and distribute the funds to the beneficiary according to the trust’s rules.

Funding a Miller Trust

The trust only allows income; it is not designed to protect assets. Only 25 states allow Miller trusts to meet Medicaid’s income requirements.

Funding a Miller Trust means putting different types of income into the trust account. Types of income include Social Security benefits, pension payments, retirement account distributions, annuity payments, and other income that pushes the patient over the Medicaid income limit.

The income must be put into the trust every month.

The designated trustee then, the person who manages the trust, handles this money and ensures all funds are used as the trust document says. Making sure the trust is funded correctly helps keep the person’s income at a level that lets them qualify for Medicaid benefits.

Eligibility Requirements

To be eligible for a Miller Trust, an individual must meet specific criteria.

They must be a Medicaid applicant or recipient with income above the Medicaid income limit.
They must require long-term care services, such as nursing home care or assisted living.
They must meet the specific eligibility requirements for the of Texas Medicaid program.

In Texas, when an individual wants financial assistance from Medicaid to pay for nursing home care or medical expenses, he or she must meet these criteria:

There must be a medical need
They must be in a Medicaid bed
Countable resources must be under $2,000, and
Gross Income must be less than $2,901/ month

For example, let’s say your father’s total monthly income is $2,995: a check of $1,100 from a pension and $1,895 from social security. Since his total income exceeds $2,901, he would not qualify financially for Medicaid even if he had no assets. A Miller Trust is the legal means around that problem. Without one, any Medicaid nursing home financial assistance application would be denied.

Using a Qualified Income Trust is an effective solution to the problem of “too much income”, but the solution is clumsy. To fix the situation in my example, an elder law attorney must draft the Miller Trust document. The state requires checks or checks that cause income to exceed the monthly limit to be deposited in a special trust bank account every month. In this case, the solution requires either the social security check of $1,895 or the Pension check of $1,100 to go into the Miller Trust.

Keep in mind that your particular financial picture may be more complicated. If you have multiple sources of income, how you deposit those funds into the trust is critical. Funding incorrectly could disqualify the trust, preventing you from being eligible for Medicaid.

After the trust is funded, the state determines how much of the nursing home bill will be paid by the state and how much will be paid by the patient. Texas follows guidelines established by the Federal government. From the patient’s total income, the following amounts may be deducted:

A “Personal Needs Allowance” for the patient ($75 in Texas for 2025)
Premiums for health insurance such as Medicare Part B, Medicare Part D (prescription drug plans), Medicare supplements, and private health plans.
If a spouse lives “in the community” (meaning not in a nursing home), an amount to raise his or her available monthly income to the Spousal Income Protected Allowance of $3,848.00

The balance is paid to the nursing home as the patient’s “share of cost” known in Texas as the “co-pay” or the “applied income amount”.

Let’s say your father is widowed but a single person pays a Medicare Part B premium of $174 and a premium of $215 per month for a Medicare Supplement. The co-pay calculation would be $2,995 per month less the Personal Needs Allowance of $75 less the Medicare Part B premium of $174, less the $215 Medicare Supplement premium for a total of $2,531.

If your father is married and his wife lives at home, she would be entitled to the greater of her monthly income or $3,948 of their combined income. Let’s say her gross income is $900 each month from Social Security. That brings their total family income to $3,895 (dad’s $2,995 and mom’s $900)

Since her income is less than $3,948, your father can direct the difference through the Miller Trust to her every month. This would reduce the applied income payable to the nursing home to about $1,631.

The Houston area’s nursing home room and board costs run about $7,500/month. Using a Miller Trust allows your Dad to become income-eligible and dramatically reduces his cost of care.

Upon the Medicaid recipient’s death, the state is named as the beneficiary of the Miller Trust and will receive the remaining funds.

You’re safer hiring an elder law attorney experienced in creating Qualified Income Trusts to guide you. Drafting and funding a Miller Trust is exact. I can help.

If you have a question about Miller Trusts, call me at 713-970-1300.

7 Costly Nursing Home Payment Mistakes & How to Avoid Them

Michael L. Holland — Mon, 03 Feb 2025 16:50:33 +0000

Paying for nursing home care is overwhelming. Making the wrong financial moves can cost you thousands. This article highlights common Medicaid mistakes, myths about asset protection, and financial traps to avoid. Discover how an elder law attorney can help you protect your savings and secure long-term care without unnecessary financial loss.

Maybe you’re the adult child of an ailing parent. Maybe you’re a spouse whose husband or wife needs long-term care. Whatever your situation, learning what you need to know about paying for nursing home care is a tough task. Some people take the time to study up and plan in advance of actual need. Most likely, you’re reading this now because you need to make some quick decisions about paying nursing home costs.

Beware of trying to make critical financial decisions too quickly. The combination of emotional and financial stress can bully you into a financial trap. And wrong decisions can cost you dearly. Texas nursing homes are expensive.

Mistakes can be devastating, costing tens of thousands or even hundreds of thousands of dollars. Below, I’ve listed some common pitfalls to help you avoid them. Other families had to learn these lessons the hard way, but you don’t have to.

*Worried about the high costs of nursing homes? I help spouses make care affordable.
I can help. Schedule your free strategy session now. (713) 970-1300

Now, let’s explore the top mistakes so you can avoid them.

Mistake #1: Relying on Medicare or health insurance to pay for long-term care.

Though Medicare may cover a portion of a stay in a nursing home, what they provide is limited to rehab – not long-term care. If your spouse or parent spends at least three days in the hospital for medically necessary care, Medicare may pay for certain types of rehabilitation in a Medicare-certified facility. Payments can last up to 100 days. The 100 days is not guaranteed. Continued coverage depends on the ability of your loved one to participate in and progress from the services.

Mistake #2: Expecting a will or living trust to protect your assets.

You’ve made a costly mistake if you have set up a revocable living trust to protect your assets from nursing homes. A will describes how assets will be distributed after death. While residing in a nursing home, you are still alive. The will is not yet effective. You see, a revocable trust is not so much an asset protection device as an asset management tool. The money in the trust can be used to pay nursing home expenses but will not help when you apply for government benefits to help pay the bills. To Medicaid, the trust is transparent, and all the assets are reachable to pay for nursing home care.

Mistake #3: Transferring your assets without solid advice

If you transfer your assets to others (or even into an irrevocable trust) within five years of needing nursing home care, you’ll be caught by the five-year “look back” rule. This rule puts a penalty on gifts or transfers of assets made within sixty months of the date you apply for Medicaid. The Medicaid agency determines the length of any delay based on the amounts transferred. The penalty could prevent ever getting help paying for care.

Mistake #4: Selling your home.

For most people, their home is their largest asset. There is also a common myth Medicaid expects you to sell the home to qualify for financial support. In Texas, you can keep your home. Selling the home is not necessary. In other words, selling your home can be an expensive mistake. You have additional options, including transferring the home to a spouse or creating a Lady Bird Deed (which works for both single and married applicants).

Mistake #5: Expecting others in your family to help pay nursing home bills.

Even if your relatives have deep pockets, the costs of nursing home care add up. Costs can balloon well beyond what anybody expects. The average daily rate for nursing home care in Texas keeps rising. Genworth, the giant insurance company, found that the 2023 average cost of a private room in Texas is $83,038 per year. The annual cost for semi-private rooms was $53,876. Rates in large cities like Dallas, Austin, and Houston are generally higher. Rural areas and smaller towns are less.

But make no bones about it: rates this high can bankrupt you.

Mistake #6: Going it alone

Medicaid rules are insanely complicated. Add to that complexity the limited training the state provides caseworkers, and you have a recipe for financial disaster. Even if you think your situation is “simple,” trying to figure out the best solutions yourself puts you at financial risk.

Mistake #7: Not Protecting the Healthy Spouse’s Finances

Don’t assume that if one spouse enters a nursing home, the other will have enough money to live on. Medicaid’s rules limit how much income and savings the healthy spouse (the “community spouse”) can keep. Without proper planning, the healthy spouse may struggle to afford everyday expenses. The good news is that Medicaid allows certain protections to help the healthy spouse keep more assets. Most people don’t know about them. Talking to an elder law attorney can help make sure both spouses are financially secure while still qualifying for Medicaid assistance.

Most elder law firms offer a free assessment of Medicaid eligibility. Some charge a modest fee for that meeting. Spending time with an experienced elder law attorney can save you hours of future heartache. If you have assets to protect, discover how to get care while protecting your assets.

Take Action Now – Protect Your Family’s Financial Future

Nursing home costs and Medicaid rules are complex, and making the wrong move could cost you thousands. Don’t risk your family’s financial security—get expert guidance today.

📞 Call now for a FREE strategy session: (713) 970-1300

Whether you’re planning ahead or facing urgent decisions, an experienced elder law attorney can help you protect assets, qualify for benefits, and avoid costly mistakes. Don’t wait—call today!

7 Mistakes That Will Kill Your Miller Trust.

Michael L. Holland — Thu, 09 Jan 2025 22:02:39 +0000

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. The consequences can be serious for families who don’t know the rules.

*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 Qualified Income Trust Will Help You Get Medicaid in Texas

Federal and Texas law limit how much gross income you can have and still qualify for 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.

The income cap for Medicaid nursing home care in Texas is a critical factor, as individuals with income above this cap may not qualify for Medicaid benefits.

In 1993, Congress established laws to address the problem by allowing applicants to set up a special purpose income trust, known as a qualified income trust, to determine Medicaid eligibility. The new rules allow applicants to set up a special purpose income trust – a Miller Trust.

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 Medicaid benefits.

Miller Trusts Ensure Income Eligibility

A basic limitation of Qualified Income Trusts is that only the income of the person needing care can go into it. Medicaid’s income limit for 20245 is $2,901 per month. This limit changes each year. 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, a Miller Trust can help you qualify for Medicaid even if your income exceeds the Medicaid income limit.

Without a Miller Trust, you can’t.

That is why it’s so important to put one of these income cap trusts in place. But you must do it in the right way. Unless you’re using a 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 consider assets in the trust as “wrong money.” If the “wrong money” gets deposited into Texas Qualified Income Trusts Medicaid will deny the application.

Denials are costly mistakes. They ruin your chances of qualifying for Medicaid money to pay for high nursing home costs.

How Income Trusts Work for Medicaid Eligibility

The Miller trust document establishes a special checking account. Qualified income trusts, also known as Miller Trusts, are used to help individuals qualify for Medicaid long-term care services when their income exceeds the Medicaid income limit. The terms of the trust legally redirects monthly income away from the care recipient. Instead, the patient directs his or her income into a new checking account. When properly managed the character of the income changes under Texas Medicaid Income rules

Excess income no longer prevents eligibility. A Miller Trust does not shelter income; instead, it acts as a funnel. Rules restrict how the income deposited in the trust account can be used, and the funnel follows those rules to flow money 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 $75 personal needs allowance for the patient.

Misconceptions About Qualified Income Trusts

A frequent 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.

Another 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, a Medicaid agency attorney can void the trust. Caseworkers may view an incorrect deposit as an 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 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 trust 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 how Medicaid rules work with the income cap. A skilled elder law 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 on 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 thousands of dollars of benefit eligibility. ..money you can’t recover. There’s an 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.

The Case of The Missing Miller Trust and a $15,000 Nursing Home Bill

Michael L. Holland — Thu, 26 Oct 2023 10:50:36 +0000

The phone rang at 3:30 Friday afternoon. A nursing home business office manager who refers business to me from time to time quickly reintroduced herself and said she had a problem she hoped I could help her with. She asked how quickly I could turn around a Miller Trust for one of her residents. “In as little as 72 hours,” I replied. “How soon do you need it?” I heard her draw in a long breath and let out a sigh. “Can you finish it by Monday morning?” she asked hopefully.

When a call like this comes in during the last week of the month, I realize the need to move that quickly. But, in the middle of the month, something else is causing the urgency.

And there was.

The patient applied in January. The business office manager told the patient’s daughter she would be happy to submit the application and told her what documents to provide with the application. When the application and documents arrived, the business office manager quickly reviewed the statements, said everything looked fine, and sent the packet.

But everything wasn’t okay.

Medicaid denied it in mid-April for excess assets. The business office manager said total assets were slightly higher than $2,000 monthly. The denial put the daughter on the blunt end of a hard lesson about how strictly Medicaid applies the rule on asset limits. Her dad could have no more than $2,000 of countable resources as of the first day of each month. The bank sent statements mid-month; neither the daughter nor the business office manager confirmed the end-of-month totals.

Because the case was denied, the business office manager told the daughter she needed to pay the full private pay amount for not only February, March, and April but May as well. To keep her dad in the nursing home, the daughter pulled out every penny she had saved in her IRA to cover the nursing home costs…nearly $15,000!

Once again, the business office manager reviewed the bank statements. She noticed the balance on the checking account was well below $1,000 and felt comfortable about the assets. Then, she checked the patient’s deposited income. Seeing that the only deposit was from Social Security for less than $2,901 (the income limit for 2025), she again submitted the application.

This time, the application was denied, but not for excess assets. The patient had too much income. The business office manager made a common mistake. To determine Medicaid income eligibility, the caseworker uses the gross amount of income. Gross means the amount before any deductions. Social Security deducts premiums for Medicare Part B and Medicare Part D for most recipients.

The nursing home business office manager missed the need for the Miller Trust. That mistake has cost the family $15,000 so far. They need to get the Miller Trust set up by the month’s end to avoid additional expenses.

There are two morals to this story. First, there are no simple cases. Just because the asset and income picture is not complicated doesn’t mean the Medicaid solution is “simple.” In this situation, the lack of understanding of how asset and income levels work complicated the solution.

The second lesson is to involve an Elder Law attorney experienced in Medicaid matters from the beginning, even if you think your situation doesn’t require an attorney.

You might be right.

If so, the worst you’ll be out is a few hundred bucks for a consultation.

Or, you could be wrong.

And, like in this case, you could end up spending $15,000 you didn’t need to because of something that was missed. Ultimately, you need to decide what your peace of mind is worth.

Why Give the Nursing Home More Money Than Legally Required?

Michael L. Holland — Thu, 26 Oct 2023 10:50:31 +0000

Is a Texas nursing home a possibility for you or someone you care about? Then, you’ll likely find yourself having to file a Texas Medicaid nursing home application sooner or later.

Why?

Because outrageous monthly nursing home costs can lead to financial ruin. The Medicaid program is the only federal program that helps pay long-term care nursing home costs.

Tackling the nursing home Medicaid application yourself could be tempting. After all, you can find information on the Internet. And, that nice lady at the nursing homes says she can help you process your application. And an experienced elder law attorney can be expensive, right?

You might be able to convince yourself you can successfully prepare your own Medicaid application. But, you might be making a mistake… and a costly one at that.

That comment may sound self-serving. I get it. I’m an attorney who helps people qualify for Medicaid benefits. Yes, I have a vested interest in convincing you to hire me. No doubt about it. But your stake in the outcome is far greater than mine.

Here’s what I mean…

If I fail to convince you to hire me, I lose the one-time fee associated with the guidance you would otherwise get. But, if you fail to become eligible for Medicaid nursing home benefits, you stand to lose thousands of dollars each and every month.

Routinely I get calls from families who tried to protect assets on their own. An aging parent or spouse is moved to the nursing home. The family does their research. They talk with friends and neighbors. Some have read a how-to guide on Medicaid asset protection. They try to understand the rules as best they can. Then they fill out the Texas Medicaid application, send in supporting documents, and wait.

It’s not until the Health and Human Services Commission denies the application they discover the difficulty of doing it right. When the case is denied, the benefits lost are substantial. The state has numerous reasons for denial. Any one of them means you lose those benefits forever.

Think about that for a minute.

Texas Nursing home costs mushroom quickly.

Monthly room and board rates range between $5,718 and $7,604 in Houston. The pricier dementia-focused facilities can drain $10,000 a month from savings. If your family member requires a ventilator, the nursing home bill leaps to $16,000. You’re talking serious money!

Federal Medicaid rules require states to process a request for assistance in 45 days. But here’s the rub: Some applications take much longer. A more likely timetable is between 60 and 180 days.

Now, consider that a patient must be in a “Medicaid-certified bed” for 30 days before processing the paperwork. So, let’s do the math. To keep it easy to follow, I’ll assume nursing
home costs at $6,000 per month.

Suppose that your spouse, parent, or grandparent needs nursing home care. You admit him or her to the facility of your choice. You write a check for $6,000 for the nursing home’s first-month rent. You expect Medicaid to cover the expense once it approves the application.

A month later, you submit the application. You’re now at month #2.

The nursing home demands another $5,000. You nervously pay the fee, clinging to the belief that Medicaid will also cover that cost. Let’s assume the caseworker acts quickly and completes her review within 45 days.

You’re now into the third month of the nursing home stay. Halfway into month 3, the Medicaid agency determines your loved one doesn’t meet eligibility criteria. The application is not approved. At this point, you’ve paid $18,000 out of pocket to the nursing home.

What if the Medicaid agency takes 180 days to come to the denial rather than 45? Your exposure mushrooms to $36,000. You no longer sleep through the night. Now you’re worrying about financial ruin. What impact will that have on you and your family? On the care your family member needs?

How Hard Is The Medicaid Application Process, Really?

In Texas, the application contains 16 pages of questions. As forms go, it looks simple. It’s not. How you answer the questions is critical to eligibility. Take income, for example. You would think it’s easy to identify how much monthly income the patient receives. Just look at the bank statement and fill in the appropriate field on the form.

The problem is that the bank statement doesn’t tell the whole story of how Medicaid needs to see it. The statement shows the amount of money deposited after deductions. Medicaid bases eligibility on the amount before deductions. The mistake is easy to make. And costly.

An All Too Common and Costly Medicaid Application Mistake

Recently, a family member, the Carsons, contacted me about the same issue. Their dad had only one bank account with a few hundred dollars. Asset eligibility wasn’t an issue. He had far less than the $2,000 allowed.

He had a modest income from social security and a pension. The Social Security deposit was $1,500. The pension deposit amounted to $1,390. The family reported a total income of $2,890 to the state. Based on the deposits, they assumed their dad’s income was below the $2,901 limit for 2025. They had a lovely lady in the business office helping them process the application, too. They were confident they would soon have Medicaid eligibility.

They made a common but costly mistake.

Social Security and the pension had deductions that were not evident on the bank statements. Mr. Carson, Sr. had Medicare Part B insurance. Social Security deducted a premium of $185.00 each month. The gross amount (the amount before the deduction) was $1,685. The employer deducted $105 for income taxes and insurance. The pension amount Medicaid considered was $1,495, not $1,390.

Rather than being under the limit, the total countable income was $3,180. He cannot qualify for benefits if his monthly income is above the limit of $2,901 – even by a nickel. You can apply for Medicaid benefits but cannot become eligible if income is over the limit, even if you have zero countable assets! In Texas, you’ll need a special type of trust called a “Miller Trust.”

Three months passed before Medicaid turned down the application. Responsibility for those 3 months of nursing home fees fell to the family. Since the case was denied, no date of eligibility was established. The agency caseworker didn’t could not, by law, establish a date of eligibility. Medicaid didn’t contribute a penny toward care.

This family thought they had handled the application correctly. They even had the “help” of the nursing home business manager. When she asked about income, the sons pointed to the income on the bank statement. The only other question asked by the office manager was, “Is this all your dad’s income?”

The family assumed she knew what information Medicaid wanted because of her position. They accepted her limited knowledge to indicate the income information was accurate. The business office manager may have acted in good faith. She may not have known to dig a little deeper. No matter how well intended, when Mr. Carson did not become eligible, the burden of paying the bill fell to the family.

Medicaid Myths and Half-Truths Can Be Costly

One common myth is the amount of assets subject to spend down. Spend down refers to the process of reducing assets to reach asset eligibility limits. You’ll hear over and over again the
the patient can keep the home, a car, and $2,000.

If the patient is married, the limit is different. You’ll hear the protected amount is 50% of the remaining resources plus the house and car. Nursing homes will also tell you excess assets must be paid towards nursing home care. The true part of that statement is assets may need to be reduced.

What was not said?

That Medicaid laws provide many ways to “spend down” without losing everything. And, no, you are not required to spend the excess only on your nursing home bill. A nursing home resident has an array of other asset protection options.

I had a family come to me after spending $150,000 in private nursing home pay for their mother. The nursing home led them to believe their mom’s assets had to be spent down to $2,000. Then, they could become eligible for Medicaid money.

This family met one of our clients at a church function and shared caregiving stories. My client suggested they contact me. Mom still had $100,000 left. I showed them strategies to prevent spending a penny more than required. The suggestions protected $52,000 for the family.

In April, a lady came to my office because her husband’s care was harming her health. She had supervised her husband’s needs for 4 years. After 42 years of marriage, she could no longer safely care for him at home. She made the uncomfortable decision to move him to a nursing home. The social worker there said she had too much money. She had to “get rid of” half her assets. Medicaid would not pay her husband’s nursing home cost with the amount of assets they had.

She and her husband had $57,000 in “countable assets,” a home and a car. Since her car was not reliable, she decided to spend down half of her assets by buying a new car. She planned to visit the car dealership after meeting with me. She was glad she met with me first.

The social worker was unaware of the importance of timing a spend down.

Medicaid rules provide a way to determine how much a couple can protect. Back in 1989, Medicaid started something called the “snapshot date.” The snapshot date is the first day of the month that the patient begins receiving continuous custodial care. A continuous custodial stay can start in a hospital, rehabilitation hospital, or nursing home.

In this situation, she planned to admit her husband to the nursing care from her home. The snapshot date would be set only after he had moved to the nursing facility. Spending down before
admitting her husband would have cost her even more.

Instead, I showed her an asset protection plan to keep 100% of the assets. She could buy a new vehicle and have the added comfort of more money in the bank.

5 Reasons Why People Don’t Like To Hire Elder Law Attorneys

When I’m hired to fix a denial, I ask families why they didn’t first come to someone like me to help apply for Medicaid. It boils down to five reasons:

Thinking they have a “simple” case
Having a bad experience with attorneys in the past
Don’t want to pay legal fees
Pressure from the nursing home to apply quickly
Believing nursing home personnel understand Medicaid rules

Let’s take these one at a time.

Is there such a thing as a “simple” Medicaid application?

Here’s my definition: a simple Medicaid planning for an unmarried applicant

has income at least $250 below the income limit
only one bank account with less than $2,000.
no life insurance
no funeral arrangements
no life insurance
no home
no assets have been sold or given over the last 5 years
no closed banking accounts in the past five years.

For a married applicant the same criteria apply with one exception. Assets must be less than $31,584. If you or your family member’s situation fits these conditions, you have a simple case. Everything else adds complication.

Complications increase your potential for denial.

How To Avoid A Bad Experience With an Elder Law Attorney

Like you, when I’ve had a negative experience in life, I go out of my way to avoid recreating it. Hiring an attorney is an important decision. If you weren’t facing a life-changing event, you wouldn’t be looking for an attorney, right? Because the decision is so important, you deserve peace of mind knowing you are in the right hands.

I do my best to offer the type of service I want for myself. Not all attorneys think that way, of course. If your situation fails the simplicity test, you’ll benefit from having an attorney guide you. These tips will help you find an effective attorney

Look for experience. Medicaid laws are complex. Experience counts. A law firm with lots of experience will better understand the nuances of Medicaid. That understanding usually translates to better results.
Avoid general practitioners. The practice of law, like the practice of medicine, has become specialized. If you needed heart surgery, would you put all your faith in an internist? Getting the best outcome can require an intricate application of the rules. You don’t want to find out too late that the level of knowledge of the attorney you hire to file a Medicaid application is less than you need.
Take advantage of free consultations. Many elder law attorneys provide a free assessment to discuss your needs. Use the opportunity to hear different legal approaches. Use the free evaluations to get a sense of the attorney’s style and skill sets. Decide if you feel comfortable with the lawyer’s approach.
Trust your gut. The elder law attorney you choose should put you at ease and instill you with confidence. Are explanations clear? Does he or she treat you with respect and listen carefully? As you’re talking with a potential attorney, pay attention to what you’re feeling. The financial and emotional costs of long-term care decisions can be high. Find a lawyer you feel comfortable talking with.
Don’t price shop. The “bargain basement” attorney is not always your best choice. Neither is the most expensive firm. You’re looking for a balance between know-how, cost, and expected outcome. You are buying advice and wisdom. Superior knowledge and work quality is worth paying for. With that said, get the fee agreement in writing. Be sure it clearly spells out your obligation.

Wanting to Avoid Legal Fees

Nobody likes to pay for something they don’t need. Myself included. Sometimes, it’s cheaper to pay a lawyer. Here’s an example that happened recently.

Kerrie Daniels (not her real name) is a retired engineer. She’s smart, analytical, detailed and capable. About a year ago her dad needed nursing home care. Her dad’s income wasn’t enough to cover the $6,500 cost per month. He was short $3,800 each month.

To get him care, she dug into her retirement funds to make up the difference. No one at the nursing home mentioned Medicaid benefits.

Six months later, she discovered Medicaid’s nursing home benefits program. She completed the Medicaid application. The application, along with supporting documentation, was sent to Texas Health and Human Services Department.

The application got “lost” in the bureaucracy.

It surfaced 3 months later with a request by the case worker for current bank statements. Kerrie responded quickly to the caseworker’s request. Thirty days later, she received a notice from Medicaid.

It wasn’t good news, either.

Her dad’s application had been denied for excess income.

Her dad receives two checks each month: his social security benefit of $1,290 and an “enhanced pension” from the Veteran’s Administration for $1,788. Kerrie had heard that Medicaid ignored “enhanced pension” benefits when checking income eligibility. Thinking an error had been made, she appealed the decision.

The hearing took place 60 days later. The appeals officer informed Kerrie that only part of the Veteran’s benefit is exempt. The balance was countable. The countable amount was high enough to push her dad’s income over the limit. The original decision was affirmed. Her dad was denied.

Keep in mind that she continued to pay the $3,800 shortfall to keep her dad in the nursing home. At this point, a year had passed, and she had reduced her retirement funds by $45,600 to pay
for her dad. She had submitted multiple Medicaid applications.

Kerrie was worn down and demoralized by the process. She found me with an Internet search, then hired me to create a Miller Trust and submit a new application. I also showed her a special rule that allowed her to keep $8,400 more of her father’s income each year. Plus the application was approved in less than 60 days. She used the extra funds to improve her dad’s quality of life.

The total fee? Less than $4,000.

Kerrie was not opposed to paying legal fees. Had she known a Texas Medicaid attorney would have been helpful, she would have hired one sooner. If she had, she could have saved $41,000.

How Quickly Should You Submit The Medicaid Application?

It depends. If you know the application will be approved, the sooner the better. The key word is “know.”

An attorney worth his or her salt can tell you quickly if you will qualify without their help. They will be relying on the information you provide so don’t hide any of the facts of your situation. If your circumstances aren’t simple by my definition, get your ducks in a row before you apply for Medicaid benefits. Otherwise you risk a denial and all the costs that pile up as a result.

My maxim is “Never submit until you believe the case will be approved.”

Why Nursing Homes Push To Get Applications Submitted

There are two big reasons:

Pressure from bosses. The business office in a nursing home is responsible for getting paid. They ride herd on their income sources. Nursing homes carry a ton of overhead and operate on narrow profit margins. Owners want to make sure they get paid for providing care. They keep staff focused on bringing in the money they are due. There’s nothing wrong with that. They are in the business to provide service at a profit.
Procrastination. One of the biggest headaches for nursing homes is getting families to submit paperwork. Better than half of the residents have truly simple cases. They don’t need an attorney to ensure approval. They just need to get the application in. Medicaid pays 60% of all long term care expenses in Texas. The program contributes substantial cash flow for facilities. But people being people, they put off filling out the paperwork. The nursing home business office applies pressure to keep money flowing in.

Medicaid provides a huge portion of the income for most nursing homes. The sooner the app is submitted, the faster the patient gets approved. The quicker a person gets approved the faster the nursing home gets paid. For simple cases, a rushed application may not cause any harm. But rushing the application may not be in your best interest if it has complications.

Don’t rely on nursing home personnel for your legal advice

You may be tempted to rely on nursing home personnel to help you. Doing so is dangerous on all kinds of levels. For starters, they don’t study Medicaid rules. It’s not their job. A common belief is nursing home staff know the rules because they deal with Medicaid every day. That’s like saying the billing clerk in your doctor’s office understands biochemistry. Taking medical advice from a physicians billing clerk puts your health at severe risk. Getting Medicaid advice from anyone in the nursing home threatens your financial health. Medicaid solutions require an understanding of a host of various elements including:

Federal Medicaid laws
State Medicaid policy
Life insurance matters
Retirement accounts like IRAs and 401ks
Real estate law
Laws of inheritance
The impact of income taxes
Cash flow management

Keep in mind folks there work for the nursing home, not you. It’s not there job to help you save money. There loyalty lies with their employer. No matter how nice they may be, if the advice is wrong, you end up paying for it. I hear sad versions of stories like this one frequently. Don’t be another victim. Don’t put at risk the date you become eligible.

Should YOU hire an attorney to help with a Medicaid application?

Find out in 60 seconds or less. If you answer “yes” to any of the following questions, you owe it to yourself to find an attorney you can trust.

Is the patient’s gross monthly income over $2,901? (The amount before any deductions.)
Does the patient own a home?
Does the home have a mortgage?
Is the home rented to a third party?
Does the patient (or spouse, if married) own a life insurance policy or annuity?
Does the patient (or spouse) own a second home or any other property?
Does the patient (or spouse) have an IRA, 401k, or other type of retirement savings
Have funerals been prearranged?
Does the patient or spouse have any mineral interests?
Is there a Revocable or Irrevocable Living Trust or other trust arrangement in place?
If the patient is single, does the value of all assets, excluding the personal residence and an automobile, exceed $2,000?
If married, does the value of all assets, excluding the residence and one automobile, exceed $31,584?
Have assets have been sold or given away in the last 5 years

Each positive answer means an increased the risk to your assets and income. Medicaid benefits could be denied or delayed. Don’t take the chance. Use the information I’ve given you to find an elder law attorney you trust to guide your Medicaid asset protection planning.

Medicaid Income Cap States in 2025

Michael L. Holland — Thu, 26 Oct 2023 10:50:31 +0000

Certain states impose strict Medicaid income limits, known as “Medicaid Income Cap States.” This article explains which states have these restrictions, how Medicaid eligibility is determined, and how a Miller Trust can help applicants qualify. Learn how an elder law attorney can guide you in navigating Medicaid rules to protect your assets and secure nursing home benefits.

A number of states apply Medicaid income limits. These states are referred to as “Income Cap States. The legislature in each strictly limit the amount of income an applicant for Medicaid nursing home benefits can have and still qualify for benefits.

Medicaid Income Cap States In 2025

Alabama
Alaska
Arizona
Arkansas
Colorado
Delaware
Florida
Georgia
Idaho
Iowa
Kentucky
Louisiana
Mississippi
Nevada
New Jersey
New Mexico
Oklahoma
Oregon
South Carolina
South Dakota
Tennessee
Texas
Wyoming

Important note:

Income qualification is still possible- even if the applicant has “excess income” – by using the services of an elder law attorney. When income exceeds the annual limit in Texas, you have a simple solution. It’s a special attorney-drafted agreement known as a Miller Trust. Without a Miller Trust, state law requires the caseworker to deny the application.

Medicaid Income Limits

In most states for 2025, the income limit for a single person seeking nursing home assistance is $2,901 of “countable income”. Some states set the limit higher. In Texas, the legislature sets that limit to $2,901.

Texas Medicaid considers income as payments bestowing a benefit to a household. Medicaid rules count some income when deciding how much a person must pay for care. Policy can also exclude certain income from that calculation. Factors specific to an income source determine if it’s countable.

Is Medicaid Eligibility Based on Income or Assets?

Medicaid uses both income and the value of a Medicaid applicants’ assets to decide eligibility. You will hear attorneys, nursing home personnel and caseworker also call them “resources”, “countable assets” and “countable resources.”

Medicaid rules offer a number of exceptions to what might be considered a “countable” resource subject to spending down. In Texas, the applicant’s personal residence, an automobile, personal jewelry, clothing and furniture and fully paid funeral arrangements are not counted toward financial eligibility.

When a senior’s resources exceed the Medicaid eligibility limit, the applicant (and spouse, if married) must use part of those excess assets to pay for their expenses until their assets are reduced to the limit.

As long as one spouse is not seeking Medicaid help (called the “community spouse”), federal and state law allows married individuals to keep more assets than a single person. For 2025, federal law guarantees a minimum protection level of $31,584.

Medicaid has rules that protect assets. Sadly, most people are unaware that state Medicaid policies allow them to protect more of their life savings—the uninformed end up spending more than the law requires.

Don’t let that happen to you.

Proper planning can save you and your family substantially more than the minimum spousal protection level. A person with resources that are greater than Medicaid’s limits may still be able to qualify for financial assistance.

Don’t overspend assets. Here’s a solution…

Find an elder law attorney experienced with Medicaid matters. The advice can prevent over spending for nursing home care. By using the laws, you can qualify faster and protect more assets and get eligibility.

Miller Trust Bank Accounts In Texas

WPDesigns — Wed, 18 Oct 2023 05:23:50 +0000

Miller Trust bank accounts are not the same as traditional bank accounts. Here’s why:

The bank accounts opened to fund a Qualified Income Trust (the technical name for a Miller Trust) operate more like a “representative account” for the payment of a disabled persons expenses. It is not a typical asset-type trust fund. They are considered an income only trusts. Because there are no significant assets placed in the trust there are none of the usual trust management issues you would encounter when assets are involved.

Unfortunately, some bank personnel confuse the setup of an income only trust with the administrative requirements of an asset trust.

You may find the banker will incorrectly insist you obtain a separate tax ID number. For income tax purposes, the Miller trust bank account is considered a “grantors trust”. As such, there is no separate trust tax ID number required. The bank should use the Social Security number of the grantor for the account. When the banker demands a different tax identification number, you lose valuable time qualifying for Medicaid nursing home support. Although the IRS typically responds fairly quickly, you run the risk of a potentially costly delay waiting for the tax member to be issued.

Because Miller Trusts are used by a small population of people who need nursing home care, most bankers are not familiar with the steps for setting up Miller Trust bank accounts in Texas. We have even experienced where one bank representative at a location knew how the bank should open the trust account and others didn’t. It can be very frustrating. By the way, the type of account I recommend is either a checking account or a money market account with check writing access. Keep these four points in mind when you set up and manage the account:

The Miller Trust bank account must be titled as a trust account. For example, “The John Smith Income Trust”, where John Smith is the grantor of the trust (he grantor is the person for whom the trust is established).
Only the person named as the trustee (the person responsible for managing the trust account) is authorized to sign checks. No other individual can write checks on the trust account, not even the grantor.
Do not attach a debit card or credit card to the account.
As trustee you will receive the monthly statements. Because the State may ask for an accounting, you should safeguard the monthly statements along with an itemized account of how the money is spent on the patient’s behalf.

These are the main points to keep in mind to avoid errors getting your trust established properly. I’ve only skimmed the surface about Miller Trust bank accounts in the short space available here. The main point to understand is accounts set up to fund a Miller Trust are different from regular bank accounts. That’s why it’s a good idea to work with an Texas elder law attorney who understands how and when these accounts should be set up.

5 Ways Miller Trust Bank Accounts Are Different

WPDesigns — Wed, 18 Oct 2023 05:23:50 +0000

If you plan to open a Miller trust bank account, you need to understand how these types of accounts differ from traditional bank accounts.

Difference #1:
The bank accounts opened to fund a miller Trust operate more like a “representative account” for the payment of disabled person’s expenses rather than a typical asset-type trust account. This is an income only trust. Because there are no significant assets placed in the trust there are none of the usual trust management issues.

Difference #2
For income tax purposes, the Miller Trust bank account is considered a “grantors trust”. As such, there is no separate trust tax ID number required. The bank should use the Social Security number of the grantor for the account.

Unfortunately, some bank personnel confuse the setup of an income only trust with that of an asset trust. They will insist that you obtain a separate tax ID number. If the bank insists on a separate tax ID number, you incur potentially costly delay waiting for the tax number to be issued.

We even had experiences at the same bank branch where one bank representative knew how the bank should open the trust account and others didn’t. It can be very frustrating.

Difference#4-
The Miller Trust bank account must be titled as a “trust account.” For example, “the John Smith Income Trust”, where John Smith is the grantor of the trust (the grantor is the person for whom the trust is established).

Difference#5-
Only the person named as the trustee (the person responsible for managing the trust account) is authorized to sign checks. No other individual can write checks on the trust account, not even the grantor. The trustee will receive the monthly statements. Because the State may ask for an accounting, you should safeguard the monthly statements along with an itemized account of how the money is spent on the patient’s behalf.

What Is A Miller Trust Good For?

Michael L. Holland — Wed, 18 Oct 2023 05:23:50 +0000

A Miller Trust solves only one problem when applying for Medicaid: ensuring Medicaid income eligibility when a person applying for Medicaid has too much income. This type of trust is not useful for any other reason. A Miller Trust cannot protect assets and does not allow you to shelter excess money. If a person applying for Medicaid has more than the federally established income limit ($2,313 monthly for 2019) – they would need a Miller Trust to qualify for Medicaid.

How is income directed into the trust bank account?

Once the Miller Trust is created, all of the income of the person needing care must be directed into the trust bank account. Until the income providers can deposit the funds automatically in the trust bank account, you should write checks for the exact amount of income from the receiving bank account to the Miller trust account.

From Medicaid’s perspective, if the trust receives the income, the patient is not receiving it. That’s how the problem of excess income is resolved.

Who can create a Miller trust?

Texas Department of Health and Human Services (the state agency that manages Medicaid) is very lenient regarding who can establish the trust. The problem occurs when bank personnel do not know how to correctly open the trust bank account.

Some banks will demand a financial power of attorney. If so, you have present the power of attorney for the bank’s legal department to approve. Without one, you need to find a bank that will waive that requirement or have one drafted. If the person needing care lacks the competency required to create a new power of attorney, your only recourse is seek a guardianship and petition the probate court to have a Miller Trust created.