Premack: My stepfather has two retirement income sources, which put him
over the limit for Medicaid assistance with his nursing home expenses.
I've been advised by the Texas Department of Human Resources to establish
a QIT to "launder" some of this money. I asked my local banker about a
Miller Trust some months ago. He looked at me like I was from another
planet; said he had never heard of such a thing. What is this trust, and
how does it work? Thanks in advance. – J.S. by email
Medicaid is a
federally designed and funded program administered by each state. It
provides basic medical care for people on welfare and it pays for nursing
home care for qualified patients. One requirement to qualify is that the
patient’s income must be lower than $2022 per
month from all sources. (Note: this figure changes
click here to see an update.)
You say your stepfather’s income exceeds the limit. If, for instance,
his monthly income is $2100 -- $1100
from social security and $1000 pension -- he
would fail to qualify for Medicaid. The Qualified Income Trust (QIT),
formerly called a "Miller Trust," is a legal way to get around the
limit. Your banker was right about one thing: someone involved in this
process is from another planet, and it isn’t you. Hint: think
A QIT is an awkward approach. It allows Medicaid to pretend that
certain funds do not exist when asking how much income your stepfather
has. Of course, they know about the funds – and include them in other
calculations. Let’s look at an example:
If your stepfather sets up a QIT and puts in his $1000
pension, then Medicaid only sees his $1100
social security check. This is below the $2022
cut off, so he qualifies for benefits (assuming all the additional
standards, like having modest assets, are also met). Medicaid then
shifts gears, asking "how much does he contribute to the nursing home,
and how much does Medicaid pay?"
To answer that question, they follow certain rules set out in federal
law. The first legal priority is to cover your stepfather’s personal
needs allowance of $60. The second priority is
to cover your mother’s spousal income allowance of $2739.
After that, his must be used to pay for his medical care or nursing home
Now, let’s say that your mother also has some of her own income. If
she get social security of, say, $800, then she is legally allowed to 1)
keep her $800, 2) keep the $1100 from your
step-father’s social security, and 3) draw $839
from the QIT. Then she will have income of $2739
for her own living expenses.
The remaining $161 in the QIT is
used for his $60 needs allowance, then paid to
the nursing home to cover part of his monthly
expenses. If the nursing home’s total bill is $4000,
the Medicaid program will be paying $3899
toward his care. Without a QIT, Medicaid would pay nothing toward his
care. All their combined income would go to pay the nursing home and
your mother would have no money for food or shelter.
You need to hire a knowledgeable attorney to draft
a QIT - it is best to call on a Certified Elder Law Attorney (CELA).
Don’t go to any of the businesses that offer to write QIT’s
or use a form offered by a Medicaid caseworker.
They are illegally practicing law and not giving you
advice that is biased in your favor.