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How are Miller Trust or QIT Funds Spent?

How are Miller Trust or QIT Funds Spent?
Medicaid Planning
Jason Neufeld
January 19, 2020

As a brief overview, Miller Trusts (also known as Qualified Income Trusts / QITs, Medicaid Income Trust, d4B Trusts, or Irrevocable Income Only Trusts) are a necessity when a Florida Medicaid applicant's gross monthly income exceeds the income threshold after adding up all sources of income. 

Previous articles have explained: What is a Qualified Income Trust? - in greater detail. I have also talked about: When is an Income-Only Trust Needed? and answered, "How Much Income Should Go into a Qualified Income Trust?" Click on any of the relevant links to review those concepts. 

This Florida Medicaid Planning articles will focus on what goods and services Medicaid Income Trust funds can be used to pay for; and are there any spending restrictions on how Qualified Income Trust funds can be utilized? 

Restrictions on how to spend money in a Qualified Income Trust or Miller Trust? 

The answer depends on whether the Medicaid applicant is going to be in a nursing home (i.e. rehab facility or long term care skilled nursing facility) or if the Florida Medicaid applicant is seeking home and community based Medicaid waiver benefits while living at home or in an assisted living facility (ALF)?

Remember, these different contexts are important when determining how to spend Miller Trust funds, because they each require applying to Different Medicaid Long-Term Care Programs.

How Miller Trust Funds Can be Spent in a Nursing Home Context

If the Florida Medicaid applicant requires skilled-nursing level of care, they will be applying to the Florida Medicaid Institutional Care Program (referred to as Medicaid ICP).

The qualified income trust will specify that if the Medicaid recipient is in a nursing home or long-term care facility that requires a "patient responsibility" or "share of cost," the trustee of a Miller Trust can pay the beneficiary their personal needs allowance (currently $130.00 per month as of 2022).

Next, if applicable, the QIT trustee can pay for allowed health insurance premiums (e.g. Medicare Advantage or Medicare Supplement premiums that require a monthly premium amount in addition to what is automatically deducted from social security retirement) if they so desire. Oftentimes, the Medicaid recipient will find a Medicaid Managed Care plan that meets their needs and can, if they want, drop their extra Medicare coverage. 

If the Medicaid recipient is married to a non-medicaid recipient (known as the "community spouse"), a portion of the Medicaid recipient's income may be diverted to the community spouse for the community spouse's "minimum monthly maintenance needs allowance" or MMMNA. If the Medicaid recipient does not have a spouse - or if their spouse is also applying for Medicaid, income diversion would not be available.

Other than certain medical expenses that Medicaid doesn't cover, the rest of the Medicaid recipient's income will go to the nursing facility. 

In other words, in a skilled-nursing context, there is very little discretion on how QIT funds can be spent - usually all but the personal needs allowance is going to the nursing home.

Can Qualified Income Trust Funds Be Used Toward Home or Homestead Expenses?

My Medicaid planning clients (or their adult children), in the case of an unmarried Medicaid applicant, often lament: well who is going to pay for mom's mortgage, utility bills, homeowners insurance costs, property taxes, lawn care, etc...? 

Unfortunately, Medicaid does not make exceptions for these expenses when their recipient is receiving nursing-home care. As a result, QIT/ Miller Trust funds cannot be used to pay these kinds of expenses. 

I explain to the adult children that they may want to chip-in and help cover these costs. They may look at it as an investment because, after the Medicaid recipient passes away, the homestead is creditor protected for qualified heirs and will be inherited by whoever is listed in the lady-bird deed or Last Will and Testament or Trust (depending on how the homestead is titled).

If the kids are unable to help financially, it may make sense to rent out the house or sell it (we can then protect the resulting proceeds from the sale using other Medicaid-planning tools).

Your Florida elder law attorney can help you develop a plan to protect the house, along with the Medicaid recipient's benefits, in either case. 

How QIT Funds Are Used if on Medicaid at Home or in an ALF 

If the Florida Medicaid applicant desires Medicaid benefits at home or in an Assisted Living Facility, they will be applying to the Medicaid Waiver Program (also referred to as Home and Community Based Medicaid or SMMC-LTC). This is different than the ICP program and the way QIT funds can be used are also different. 

Those receiving Medicaid long-term care benefits while at home or in an ALF still have limitations on how their Miller Trust income can be spent. 

The income-only trust trustee, in this context, will be allowed to spend the Medicaid income trust funds on the health care or medical expenses of the Florida Medicaid waiver recipient. This is what the law says.

In an ALF, this usually isn't a problem (i.e. the QIT funds can go to help pay for the ALF), but when people are seeking assistance paying for care at home - through the Florida Medicaid Waiver program - people find that Medicaid is covering most (if not all) of their health care or medical related expenses and they are left wondering what to do with funds that are slowly building up within their Qualified Income Trust.

For my clients who are at home, instead of a Miller Trust, instead I may recommend utilizing a Pooled special needs trust.  

Pooled special needs trusts, as an alternative to a QIT, can be used to overcome the income cap. Pooled Trusts have the advantage of fewer spending restriction. Funds held by the PSNT can be used toward non-health or non-medical expenses (such as rent, mortgage, utilities, cable, internet, taxes, etc...). To read more about pooled trusts, please click the link above.

Qualified Income Trust funds can absolutely be used for health-related expenses if the Medicaid recipient is receiving Medicaid waiver benefits at home. An example might be to pay for additional home health care agency hours, durable medical equipment, OTC medications, and therapies not covered by the Florida Medicaid Waiver program.

More often than not, the QIT / income-only trust funds will be used to help cover the cost of care for the Medicaid recipient living at home or in an ALF, but if there are excess funds available, you certainly don't want funds building up and jeopardizing benefits.

These other non-health care related costs should be paid out of the Medicaid recipient's funds that do not go into the Medicaid income trust.

What if the Miller Trust still has funds and there are no additional health or medical related expenses?

If there are no other health or medical related expenses, then the conservative action would be to utilize a pooled special needs trust (which has no category spending limitations).  Medicaid, strictly speaking, doesn't allow QIT funds to be spent on non-medical/health items, BUT they have a history of not complaining when they see that the QIT funds are reasonably being spent on the individual for their necessities. However, just because this has worked fine in the past, does not mean that it will continue to work in the future. Do so only if you accept the risk.

I cannot promise that a Medicaid caseworker wont make an issue about QIT funds being spent no non-medical expenses in the future. If you spend QIT funds on non-medical goods/services - you do so at your own risk.

After the Medicaid recipient passes away

Whether the Medicaid recipient was receiving Medicaid through the ICP program (in a nursing home) or through the Medicaid Waiver (in an ALF or at home), after the Medicaid beneficiary passes away, the Miller Trust trustee has an obligation to notify Medicaid and pay Medicaid back up to the amount of Medicaid's lien. For this reason, its important to underscore that qualified income trusts should not accumulate income. Essentially a QIT account should zero out at the end of each month (income comes in to satisfy Medicaid's income test requirements only and then come right back out to pay the Medicaid beneficiary's expenses.

To discuss more about how qualified income trusts / income only trusts / d4B trusts / miller trusts work, please call to schedule a consultation.

Qualified Income Trust Resources

Jason Neufeld

Jason Neufeld is the Founder and Managing Partner of Elder Needs Law, a Florida estate planning and elder law firm he created in 2017. With more than 15 years of experience practicing law, he represents clients in a wide range of legal matters, including Medicaid planning, estate planning, elder law, probate, Medicare, and life insurance.

Jason received his Juris Doctor from the University of Miami — School of Law and is a member of the Florida Bar and the Broward County Bar Association. He has received numerous accolades for his work, including being named a Rising Star and Super Lawyer by Super Lawyers and among the Florida Legal Elite by Florida Trend in 2024.

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