How a Qualified Income Trust Operates

A Qualified Income Trust (QIT), often called a Miller Trust, is a legal tool that helps individuals qualify for Medicaid long-term care benefits when their income exceeds the program’s limit. Medicaid has strict financial eligibility rules, including both asset and income caps. Applicants whose monthly income is even slightly above the allowed threshold can be denied coverage for nursing home or long-term care services. A Qualified Income Trust solves this problem by redirecting excess income in a way that complies with Medicaid rules.

The trust is established as an irrevocable legal document, meaning it cannot be changed or revoked once created. The Medicaid applicant creates the trust and appoints a trustee—often a family member or trusted individual—to manage it. A separate bank account is opened in the name of the trust. Each month, enough of the applicant’s income is deposited into this account to bring their countable income below the Medicaid limit. Only income, such as Social Security benefits, pensions, or annuity payments, may be placed into the trust; assets like savings or property cannot be transferred into it.

The trustee must distribute the funds according to Medicaid regulations. Typically, the money is used first for a small personal needs allowance, then for health insurance premiums, and possibly a spousal allowance if the applicant is married. The remaining funds are paid to the nursing home as the individual’s required contribution toward care costs. Medicaid then covers the remaining approved expenses. After the beneficiary’s death, any funds left in the trust must be used to reimburse the state for Medicaid benefits provided.