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.
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 2018 is $2,250 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.