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 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.

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.