The Basics of a Miller Trust
Updated: Aug 27, 2019
What is a “Miller Trust”? A Miller Trust (also known as a Qualified Income Trust) is an irrevocable trust agreement between a Medicaid recipient and an individual who serves as the Trustee of the trust. It is created to receive the Medicaid recipient’s “excess” income each month. Excess income is that which exceeds the Special Income Limit. What is the Special Income Limit? For 2019, the Special Income Limit is $2,313. This number changes every year on January 1st.
Nursing home residents on Medicaid and individuals receiving Medicaid Waiver services at home or in an assisted living facility must have a Miller Trust if their gross income is more than the Special Income Limit.
The Miller Trust is irrevocable and cannot be changed after you sign it. The Medicaid recipient is the Beneficiary of the trust during his/her lifetime. After the Medicaid recipient dies, the balance of the Miller Trust (if any) will be paid to the State of Indiana up to the total amount of Medicaid payments made on the recipient’s behalf.
In order to set up the Miller Trust account, the Trustee must take a copy of the Miller Trust agreement to a bank or credit union. The Trustee should open a new checking account with the financial institution as follows: “(Trustee’s Name), Trustee of the (Medicaid Recipient’s Name) Qualified Income Trust dated (date Trust was signed).” The Trustee must only deposit the minimum amount which is required to open the account by the bank or credit union; for example, $5.
The Miller Trust checking account must not have any joint owners or Pay on Death Beneficiaries. It is a “grantor trust” under Internal Revenue Code §671 so the Medicaid recipient’s Social Security number is to be used for the Miller Trust checking account. Only the Trustee who is named in the Miller Trust agreement can write checks out of the account.
The amount of the Medicaid recipient’s gross income which exceeds the Special Income Limit must be deposited to the Miller Trust checking account each month. First, all of the income is to be deposited into the regular checking account. Then, the recipient must transfer the amount of the gross income which exceeds the Special Income Limit to a separate checking account, which is titled in the name of the Miller Trust. This transfer must be made every month. Do not deposit anything else into the Miller Trust checking account besides monthly income in excess of the Special Income Limit.
The Trustee is to first pay for the Medicaid recipient’s nursing home bill, medical bills, spousal allowance, and health insurance premiums from the Miller Trust checking account. After these payments are made each month, the Miller Trust checking account balance should then be at the bank or credit union’s minimum; for example, $5.
There won’t be enough in the Miller Trust checking account to pay 100% of the nursing home bill, medical bills, spousal allowance, and health insurance premiums every month. The balance of these expenses are to be paid from the Medicaid recipient’s regular checking account. It is not permissible to pay a fee to the Trustee from the Miller Trust.
You must give the local FSSA Division of Family Resources office a copy of the Miller Trust, a copy of the Miller Trust checking account agreement from the bank or credit union, and written proof that the income in excess of the Special Income Limit is being deposited to the Miller Trust checking account using bank statements and/or deposit slips. Our attorneys are experienced in creating Miller Trusts and can help you step-by-step through the process.