Properly Using a Qualified Income Trust

A Qualified Income Trust (QIT), also known as a Miller Trust, is a legal tool used to help individuals qualify for Medicaid long-term care benefits when their income exceeds the program’s eligibility limit. Medicaid sets strict monthly income caps, and without a QIT, applicants with income even slightly above the limit may be denied assistance. A QIT allows the excess income to be redirected in a way that satisfies

Woman’s Hand Placing Last Alphabet Of Word Trust Over Wooden Block

Medicaid rules, ensuring the applicant can still receive needed care.

To establish a QIT, the individual or their legal representative creates a trust document in compliance with specific Medicaid guidelines. The trust must be irrevocable and managed by a trustee, often a spouse, adult child, or other trusted person. A dedicated bank account is opened in the name of the trust. Each month, the portion of income exceeding Medicaid’s cap is deposited into this account.

The funds in a QIT can only be used for approved purposes. Typically, these include paying the Medicaid recipient’s share of care costs, a personal needs allowance, medical care not covered by Medicaid, and, in certain cases, spousal income allowances or medical expenses. The trustee must maintain accurate records and ensure that no funds are spent outside of Medicaid’s permitted uses.

Upon the Medicaid recipient’s death, any remaining QIT funds must be used to reimburse the state for Medicaid benefits paid. Misuse of the trust—such as depositing unapproved funds or making unauthorized withdrawals—can jeopardize Medicaid eligibility.

In conclusion, a Qualified Income Trust is a critical planning tool for individuals whose income slightly exceeds Medicaid limits. When set up correctly and used according to regulations, it allows access to vital long-term care coverage without requiring the individual to forfeit eligibility due to excess income. Proper management is essential to maintain compliance and protect benefits.