07 Dec 2023 Long Term Care Medicaid Income Cap Increase – When And How To Use A Miller Trust
Applicants for long-term care and Star+ Medicaid must be below an income cap as one of the requirements for eligibility. If the applicant’s income exceeds the income limit of $2,742 (as of January 1, 2023), the eligibility solution for this particular requirement is the creation of a Qualified Income Trust (QIT) formerly known as a Miller Trust. Texas follows the “name on the check” rule in determining income.
Although “Miller” or “Qualified Income” Trusts or “QITs” have been around for twenty-eight years (this author has been doing them since first approved in Texas in 1994), it is often surprising how confusing this income trust is to many – including some banks. Income directed to the trust is disregarded from countable income when testing eligibility for institutional settings such as nursing homes. This is important since if Medicaid eligibility is achieved, the government assists with some (and sometimes pays all when there is a spouse living in the community whose income is below the level described below) of the cost of care (the average cost of a semi-private room in the D/FW area is around $7,000 per month) plus medication. The income of the Medicaid applicant’s spouse is not considered in determining if it exceeds the income cap unless the spouse is also applying for Medicaid and in those cases the income cap is doubled.
All of the Medicaid applicant’s income from a source (not necessarily all of the Medicaid applicant’s income) must be deposited into the trust account. Thus, if the applicant receives gross Social Security income in the amount of $2,800 per month, you must put all of that income into the trust (not just the amount that exceeds $2,742) in the month for which eligibility is sought. Therefore, if you received Social Security in July and did not deposit it into the trust account until August there would not be eligibility for July. Social Security and pensions are the most common income sources deposited into QITs. Resources should never be put into a QIT. If the Medicaid applicant is single, then most of the income (there are few deductions such as a personal needs allowance of $60, Medicare Part B and D premiums, Medicare Supplement premiums, etc.) is used as a co-payment to the nursing home.
If the Medicaid applicant is married and the spouse is living in the community, there can be a diversion of the income from the trust to the community spouse to allow the community spouse to keep up to $3,715.50 (as of January 1, 2023). Although the community spouse can have unlimited income in his or her own name, if the income exceeds $3,715.50 per month, then there would be no diversion of the applicant’s income and the community spouse would not be able to receive any of the applicant’s income from the QIT.
Although the trust is irrevocable, the Social Security number of the applicant should be used in establishing a bank account. The state is required to be a remainder beneficiary of the trust, but that should not be an issue since each month the income should then be paid to the nursing home or to the community spouse. If there is anything left in the trust (other than a nominal amount to establish the trust) at the death of the Medicaid applicant, then it usually means that the trustee made an error.
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