What is a Miller Trust?
Miller Trusts are also commonly known as a (d)(4)(B) Trust; Medicaid Income-Only Trust; or Irrevocable Qualified Income Trust (QIT). Miller Trusts are solely designed to own income to get around Medicaid’s income caps. In Florida, the income cap established by Medicaid is $2,349.00 per month (as of January 1, 2020 - the Medicaid Income Cap changes periodically). Qualified Income Trusts can be established by the Medicaid applicant, his/her spouse, agent under valid power of attorney, or by a court.
In short - if your income, from all sources together, exceeds the Florida income limits for that year, you will need a qualified income trust or miller trust to qualify for Medicaid's long-term care services (which will help pay for a private home health aide, a portion of an assisted living facility bill, or the entire skilled nursing facility cost).
A Miller Trust / QIT does absolutely nothing to help someone who has assets above Florida's medicaid asset limits (for that we utilize other Medicaid planning strategies), rather an income trust is only for those whose income exceeds applicable thresholds.
Beware: Medicaid Counts Gross Income (not Net Income) | May Require Qualified Income Trust
Medicaid counts gross income (before deductions, e.g. taxes and health insurance premiums such as those deducted for Medicare) from any and all income sources including social security, alimony, employment, distributions from trusts, annuities, retirement plan disbursements, etc… All of this income is added up and counted toward this $2,349.00 income cap. If a Medicaid applicant is over the income cap by even a dollar, their medicaid application will be denied. It is a mistake to only review bank statements - because they will only show deposited net amounts from an applicant's social-security income and pension.
An experienced elder-law attorney will review the social security statement, which will show the deductions that needed to be added back into the income calculation. For example, social security automatically deducts Medicare Part B premiums (typically $145.00 per month). Social security may also be deducting for a Medicare Part D prescription drug plan (perhaps an extra $30.00 per month). The social-security recipient will then typically have the remaining net amount deposited into their bank account.
Pension companies may be withholding income for tax, health insurance or even life insurance purposes. Your elder law attorney will want to review a recent pension statement as well.
What Can a Medicaid Applicant Do With Income that Exceeds Medicaid Income Caps?
Take a typical example, Mr. Smith has $3,000 per month in income, but his nursing home costs $7,500 per month! His income exceeded the Medicaid income cap, so before Mr. Smith sought an Elder Law / Medicaid lawyer, he was ineligible to apply for Medicaid ICP benefits. But he also did not earn enough to pay the steep nursing home bill. In 2019 (when the income cap was $2,313.00), by utilizing a Qualified Income Trust / Miller Trust, we qualified Mr. Smith for Medicaid by placing slightly more than $687.00 per month ($3,000 - $2,313.00) into a Qualified Income Trust.
We advise slightly overfunding the QIT to provide a cushion for any deviations in income from month-to-month.
A qualified income trust must be drafted by an elder care attorney who focuses on medicaid planning. Then the Miller Trust is brought to a bank to open up a qualified income trust bank account (literally, just an account in the name of the trust). The existing checking account, which receives social security and/or pension income will be set up to automatically transfer that income, as it is received, into the new Qualified Income Trust account. From the trust account, the trustee will write a check for the personal-needs allowance either to the medicaid recipient's personal account (or to the nursing home where personal accounts are often opened for residents to use for things like haircuts and other niceties). The trustee can also write a check to the spouse if there is an income allowance. The Miller Trust trustee will then disburse all remaining amounts toward specified health insurance costs, special medial services and the remainder to the skilled nursing facility.
How can Miller Trust Funds be Used when the Medicaid Recipient is at Home or in an Assisted Living Facility?
If the medicaid recipient is not in a skilled nursing facility (but rather an ALF or receiving care at home), the Miller Trust / QIT funds can only be used to pay for health or medical-related expenses (e.g. portion of ALF bill that Medicaid does not pay for, portion of home-health aid that Medicaid does not pay for, home therapies not covered by medicaid, etc...)
The QIT trustee can be anyone (family member, trusted friend) except the medicaid recipient. Professional trustees are also available at an additional cost.
Very specific instructions will be provided by your elder law attorney. I will link to another article that explains the importance of properly funding a qualified income trust.
Qualified Income Trust Limitations
1. Income must be deposited into the QIT / Miller Trust Account in the month such income is received. If the income (that exceeds the acceptable medicaid limit) is not deposited into the Qualified Income Trust bank account in the month it is received, Medicaid will not pay for institutional care, or waiver-program for home health care, for that month.
- TIP: deposit more money than is needed to provide a cushion.
2. All income, less a $130.00 per month “personal needs allowance” goes to the nursing home as the patient’s responsibility amount or cost of care if the Florida medicaid applicant requires nursing home care. This is the case whether the income comes from the Qualified Income Trust or not. Certain exceptions can be made if it is appropriate to divert some or all of the Medicaid recipient’s income to the community spouse in the form of an income allowance and for certain health insurance and medical expenses. The remaining nursing home bill will then be paid for by Medicaid.
- TIP: Your elder law attorney can assist in planning to minimize the amount that will go to the nursing home. This is much easier to do if the Medicaid recipient is married per community spouse rules.
If the Florida medicaid applicant desires Medicaid to help pay for private duty care at home or a portion of their ALF bill, then their excess income still must be filtered through the income trust, but they will then be able to utilize 100% of their own income for their care needs (in other words, QIT funds for those at home or in an ALF, are not given to Medicaid or the facility).
3. The State of Florida retains a lien on all Miller Trust funds that remain in the d4B Trust upon the death of the Medicaid recipient – up to the amount of funds Medicaid has paid for the Medicaid recipient’s long term care. This is referred to as the Medicaid Pay Back.
- TIP: Your Medicaid-planning attorney can explain ways to minimize this lien.
Do I use the Miller Trust beneficiary's social security number or do I need an EIN?
It is proper to establish the Miller Trust Account using the SSN of the beneficiary.
Some banks require an EIN, however the IRS rule on qualified income trusts, Part 21, Chapter 7, Section 13 on "Assigning Employer Identification Numbers (EINs)" states:
If the trust is a Miller type trust
Do not assign an EIN. Instead, inform the trustee that he/she must:
Use the SSN of the beneficiary or trustee to report trust activities
Note: Miller Trusts are treated as grantor trusts under IRC § 671.
However, since the income is solely that of the beneficiary / Medicaid applicant, only the SSN of the beneficiary should be used.
Read more details about how Medicaid treats Qualified Income Trusts / d4B Trusts / Miller Trusts in the Medicaid Programs and Operations Manual.
Read more about different types of elder law special needs trusts here.
Read an article further discussing how much income should go into a Qualified Income Trust?