Qualified Income Trust

A Qualified Income Trust also known as a Miller Trust, is a legal financial arrangement used primarily to help individuals qualify for Medicaid long-term care benefits when their income exceeds Medicaid’s eligibility limits. It is most commonly used by seniors or disabled individuals who require nursing home care or other long-term services but earn too much monthly income to qualify under standard Medicaid rules.

The core purpose of a Qualified Income Trust is to allow excess income to be redirected in a way that complies with Medicaid regulations. When an individual establishes a QIT, their income—such as Social Security benefits, pensions, or retirement distributions—is deposited into the trust each month. Importantly, the trust must be irrevocable, meaning it cannot be changed or canceled once it is created. The individual cannot freely use the funds for personal expenses; instead, the money must be spent according to strict Medicaid guidelines.

Funds in a QIT are typically used for approved expenses, including the cost of long-term care, a personal needs allowance for the individual, health insurance premiums, and, in some cases, support for a spouse living in the community. Any remaining funds in the trust are generally paid to the state upon the individual’s death, up to the amount Medicaid spent on their care. This requirement ensures that Medicaid remains a payer of last resort.

Qualified Income Trusts are not savings tools and do not protect assets; rather, they function as income management mechanisms. They are especially significant in “income cap” states, where Medicaid eligibility is strictly limited by income thresholds. Without a QIT, individuals in these states may be entirely ineligible for assistance regardless of medical need.

In conclusion, a Qualified Income Trust plays a critical role in Medicaid planning for individuals with high medical costs and limited options. By legally redirecting income, it allows access to essential long-term care services while maintaining compliance with federal and state Medicaid laws.