How Qualified Income Trusts (Miller Trusts) Help ALTCS Applicants Become Eligible for Long-Term Care

Navigating Medicaid eligibility for long-term care can be challenging, especially when dealing with excess income. One effective solution is establishing a Miller Trust, a specific type of trust designed to help individuals become income-eligible for Medicaid benefits. By redirecting gross income into a Miller Trust account, applicants can meet the necessary criteria for Medicaid long-term care. This process involves setting up a checking account and drafting a comprehensive trust document. Given the complexity of Medicaid regulations and the need for precise compliance, it’s crucial to seek legal advice from a reputable law firm. Establishing an irrevocable trust like a Miller Trust ensures that funds are managed correctly and helps applicants avoid the pitfalls of exceeding Medicaid’s asset limit. Additionally, it allows for a smoother process in qualifying for essential community-based services and avoiding potential probate issues. Unlike some states, Arizona does not participate in the Medicaid waiver program, which means that individuals must strictly adhere to income limits without the flexibility of waivers. This makes the proper establishment of a Miller Trust even more critical for meeting eligibility requirements.

What Is a Miller Trust in Arizona?

A Miller Trust, also known as a Qualified Income Trust or Income-Only Trust, is a common method used to redirect income, such as Social Security or retirement income, for individuals applying for Medicaid/ALTCS (Arizona Long Term Care System). Many Medicaid applicants are initially denied Medicaid benefits because their income exceeds the monthly income limit. For 2024, ALTCS sets an income limit of $2,742 per month, and any income over this limit will disqualify an applicant.

By establishing a Miller Trust, applicants can redirect either all or a portion of their income into the trust, ensuring that these funds are not considered disqualifying income by Medicaid/ALTCS. This allows the applicant to keep their income while still qualifying for Medicaid/ALTCS benefits. It’s important to note that while a Miller Trust helps with excess income, it does not assist with assets over the allowable limits. Other estate planning strategies may be necessary to address excess assets.

Many people applying for long-term care through the Medicaid benefits system are denied initially due to not meeting the income requirements. Using a Miller Trust can help applicants who have income exceeding the limit to qualify for Medicaid benefits, allowing them to receive state-paid benefits for long-term care.

How Does a Miller Trust Work?

If you make over the income cap to qualify for Medicaid and do not live in a “spend down” state (Arizona is an income cap state), you must allocate your excess income into a Miller Trust. You can allocate either the entirety of your income or just the amount that exceeds the maximum income limit for benefits. This process helps Medicaid applicants meet the Medicaid eligibility criteria for long-term care.

A Miller Trust must be established as a financial account by a bank. This trust bank account can be set up by the Medicaid recipient, their guardian, or their power of attorney. In some cases, it may be required that the income is directly deposited into the account each month. A trustee must be designated to manage the trust on behalf of the Medicaid recipient.

Once the Miller Trust is created, some or all of the applicant’s income will be deposited into the new trust bank account. A trustee must be appointed to administer the trust income, which can be used for some of the applicant’s monthly expenses, such as medical expenses and care costs. Importantly, the state is named as the beneficiary of the trust. Upon the death of the applicant, any funds remaining in the trust bank account will be paid to AHCCCS (Arizona Health Care Cost Containment System) to reimburse the cost of ALTCS services.

When the Medicaid recipient eventually passes away, any funds left in the trust will go towards reimbursing the state for the cost of care. The state will be listed as a beneficiary of the trust. It is also required that the trust is irrevocable, meaning it cannot be canceled or changed after it is established. The state will only claim the amount that they paid for long-term care services, and it is rare for there to be excess funds in the trust after reimbursement.

Using a Miller Trust ensures that excess income does not disqualify Medicaid applicants from receiving Medicaid benefits for long-term care. This is crucial for individuals who need nursing home care or other care services but have income exceeding the Medicaid income limit. Establishing a Miller Trust with the help of an elder law attorney or a planning attorney can be a critical step in successful Medicaid planning.

What Expenses Can Be Paid from a Miller/QIT Trust?

A Miller Trust in Phoenix, AZ, helps Medicaid applicants manage their excess income to meet Medicaid eligibility for long-term care. Funds in a Miller Trust are primarily used to cover the share of cost, which is the amount the Medicaid recipient must pay for their long-term care before Medicaid covers the remaining expenses. Here are the specific expenses that can be paid from a Miller Trust:

Monthly Personal Needs Allowance: The Personal Needs Allowance provides spending money for the Medicaid recipient for personal expenses such as haircuts, church contributions, and other minor living costs. For 2024, this allowance is set at $141.45.
Medical Expenses: Funds from a Miller Trust can be used to pay for medical expenses that are not covered by the Medicaid program. This includes expenses like Medicare and dental insurance premiums.
Long-Term Care Expenses: A significant portion of the Miller Trust funds is used to cover the share of cost for nursing home care or other long-term care services. This ensures that the Medicaid recipient can meet their financial obligations for care before Medicaid steps in to cover the rest.
Community Spouse Resource Allowance: If the Medicaid applicant is married, additional income might be allocated to the community spouse under the Minimum Monthly Maintenance Needs Allowance (MMMNA). For 2024, the minimum income that a community spouse can receive is set at $2,289.50, with a maximum of $3,435. This allowance helps cover the living expenses of the community spouse.

It’s important to note that the trustee managing the Miller Trust must adhere to complex ALTCS rules governing how the funds are spent. For instance:

The trustee may retain a Personal Needs Allowance for the Medicaid recipient.
The trustee may pay the MMMNA to the community spouse.
The trustee must pay the applicant’s share of cost if the applicant is not at home.
Administrative fees and bank fees associated with the trust must be paid from the applicant’s Individual Personal Needs Allowance, not the Miller Trust funds.

When the Medicaid recipient eventually passes away, any remaining money in the Income-Only Trust must be remitted to the ALTCS program to reimburse the cost of ALTCS services. This ensures that the state recovers the expenses paid for the recipient’s long-term care.

Setting up and managing a Miller Trust requires careful planning and adherence to specific rules. Seeking the help of an elder law attorney or a planning attorney can ensure that the trust is properly established and managed, allowing the Medicaid applicant to qualify for Medicaid benefits and receive the necessary care services.

Who Could Benefit from a Medicaid Income-Only Trust in Arizona?

Individuals who have excess income but are otherwise eligible for Medicaid/ALTCS can benefit from a Miller Trust. This includes applicants whose monthly income exceeds the ALTCS income limit of $2,742/month but still have significant long-term care expenses that their income alone cannot cover.

For example, someone needing to live in an assisted living or memory care community might find that their care costs exceed their income despite earning more than the ALTCS income limit. To qualify for ALTCS and receive the necessary Medicaid benefits, they can use a Miller Trust to redirect part of their income, such as Social Security or pension income, into the trust. This reduces their countable income below the $2,742/month threshold, allowing them to meet the Medicaid eligibility criteria.

The Miller Trust must be established as a financial account by a bank and managed by a designated trustee. The trust can be set up by the Medicaid applicant, their guardian, or their power of attorney. If there is no power of attorney, a court order through conservatorship might be necessary. However, a spouse can create a Miller Trust without needing a power of attorney or conservatorship.

By using a Miller Trust, individuals with excess income can still access Medicaid benefits for long-term care. This ensures they receive the necessary support for their nursing home care or other care services. Establishing a Miller Trust with the help of an elder law attorney or planning attorney can be a critical step in successful Medicaid planning for those with significant medical expenses and long-term care needs.

Income Criteria for a Miller Trust in Phoenix

To be eligible for ALTCS (Arizona Long Term Care System) benefits, a single person can have a maximum income of $2,742 per month. If the applicant’s income exceeds this amount, a Miller Trust or Income-Only Trust is required to meet eligibility criteria. For married couples, the combined income is averaged to determine eligibility, and a Miller Trust can still be used if the average income exceeds the limit.

Certain income sources are excluded when calculating eligibility for ALTCS. These exclusions include:

VA Aid and Attendance
VA reduced pension
Vocational rehabilitation
Income tax refunds
Specific types of annuity payments
Agent Orange payments

Is There a Maximum Amount that Can Be Deposited into the Trust?

There is no maximum amount that can be deposited into a Miller Trust (also known as a Qualified Income Trust), as its primary purpose is to help Medicaid applicants meet Medicaid eligibility by reducing their countable income below the established income cap. The trust can hold any amount necessary to achieve this goal, typically including Social Security, pension payments, and other sources of income. However, if your income is sufficient to privately pay for long-term care, using a Miller Trust may not be beneficial. The income deposited into the trust must be used for allowable expenses, such as the personal needs allowance, Minimum Monthly Maintenance Needs Allowance (MMMNA) for a community spouse, medical expenses, and health insurance premiums. Upon the Medicaid recipient’s death, any remaining funds in the trust must reimburse the state for the cost of long-term care services. Establishing and managing a Miller Trust can be complex, so seeking assistance from an elder law attorney or planning attorney is advisable to ensure compliance with Medicaid regulations and proper administration.

Is Professional Assistance Needed to Establish Miller Trusts / QITs?

Establishing Miller Trusts or Qualified Income Trusts (QITs) can be a complex process that involves intricate legal and financial requirements. These trusts are essential for individuals with excess income to qualify for Medicaid benefits for long-term care. Given the detailed nature of Medicaid regulations and the necessity for proper trust administration, professional assistance is highly recommended.

Mistakes in setting up or managing a Miller Trust can lead to disqualification from Medicaid benefits, potentially leaving you without the necessary support for nursing home care or other care services. An elder law attorney or planning attorney has the expertise to navigate these complexities, tailor the trust to your specific needs, and ensure all legal requirements are met.

For personalized guidance and to secure your eligibility for Medicaid benefits, contact the expert lawyers at Copper State Planning today. Their experienced team can help you establish and manage your Miller Trust, ensuring compliance with Medicaid regulations and providing peace of mind for you and your loved ones. Call Copper State Planning now to get started on your Medicaid planning journey.

Conclusion

Understanding and establishing a Miller Trust can be vital for accessing Medicaid benefits for long-term care, especially for those with income exceeding the asset limit. By properly managing gross income through a Miller Trust account, individuals can secure the necessary care and support while complying with Medicaid regulations. Consulting with a professional law firm ensures that all aspects of the trust, including the trust document and checking account, are handled correctly. This fosters a solid attorney-client relationship, providing the trust and confidence needed to navigate complex Medicaid rules. Moreover, proper setup and management of a Miller Trust can help avoid potential probate issues by ensuring that any remaining funds are used to reimburse the state, thus streamlining the estate settlement process. For personalized assistance and expert legal advice on creating a Miller Trust, contact Copper State Planning today. Their experienced team can guide you through the intricate process, ensuring that you meet all criteria for Medicaid long-term care and securing your financial future.