|Dear Mr. 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 annually.
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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 "Congress."
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
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.