Miller Trusts Are A Vital Planning Tool

Accessing Medicaid benefits for long-term care can be a challenge, especially when income exceeds Medicaid’s strict eligibility limits. For many Texas residents, this financial hurdle can feel overwhelming as a Houston, TX probate lawyer who has been with our firm since its founding in 2021 understands well. A Miller Trust, also known as a Qualified Income Trust, is a practical solution for Texans who need to meet Medicaid’s income requirements while ensuring access to crucial healthcare services.

What Is A Miller Trust?

A Miller Trust is a legal tool designed to help individuals qualify for Medicaid when their income surpasses Medicaid’s strict eligibility thresholds. The trust gets its name from a court case involving a man named Miller and has since become a standard option for individuals with limited resources but income that’s slightly too high for Medicaid.

In Texas, Medicaid’s income limits are stringent, and even earning a few dollars over the limit can disqualify an applicant. For example, if the monthly income limit is $2,742 and a Texan earns $2,800 per month, they would be ineligible for Medicaid. A Miller Trust allows this excess income to be redirected into the trust, effectively reducing their countable income to meet Medicaid’s requirements.

How Miller Trusts Help Texans Qualify For Medicaid

Here’s how a Miller Trust works, specifically benefiting Texas residents:

1. Creating The Trust: The first step is establishing the trust document. In Texas, Medicaid-compliant trusts must meet specific guidelines. Working with an attorney familiar with Texas Medicaid laws ensures the trust is set up correctly.
2. Redirecting Income: Texans place their “excess income” into the trust each month. This includes income sources like Social Security, pensions, or retirement benefits.
3. Restricted Use Of Funds: Funds in the trust are managed by a trustee and are limited to certain expenses:
   1. Paying the individual’s share of Medicaid-covered nursing home or assisted living costs.
   2. Covering medical expenses and health insurance premiums.
   3. Providing a modest personal needs allowance for the beneficiary.
4. Ensuring Medicaid Eligibility: By transferring excess income into the trust, Texans can meet Medicaid’s strict income requirements while still accessing necessary healthcare services.
5. After The Beneficiary’s Death: Any remaining funds in the trust are used to reimburse the Texas Health and Human Services Commission (HHSC) for Medicaid benefits paid on behalf of the individual. Any leftover funds can then go to designated heirs or beneficiaries.

Why Miller Trusts Are Important For Texans

Texas has unique challenges and opportunities when it comes to Medicaid and long-term care planning. The state’s rapidly growing senior population means many families are navigating the complexities of paying for nursing home care or other medical services.

Here are key reasons Miller Trusts are vital for Texans:

1. Managing Long-Term Care Costs: Nursing home care in Texas often costs over $6,000 per month. For many families, this expense can quickly deplete savings. A Miller Trust ensures Medicaid can cover these costs while protecting income for essential needs.
2. Flexibility For Texas Residents: Texas Medicaid rules are specific, but Miller Trusts provide flexibility. For example, the trust can cover premiums for private health insurance or supplemental plans that improve the quality of care.
3. Preserving Dignity And Financial Stability: A Miller Trust allows Texans to maintain dignity and peace of mind. It ensures they can access care without exhausting their resources or burdening family members financially.

Who Needs A Miller Trust In Texas?

Miller Trusts are especially useful for middle-income Texans who earn too much to qualify for Medicaid but don’t have enough resources to pay for long-term care out of pocket. These individuals often find themselves in a financial gap needing assistance but unable to access it due to income restrictions.

For example, let’s consider Maria, a Texas retiree who earns $3,000 per month in Social Security and pension benefits. Because the Texas Medicaid income limit is $2,742, Maria would not qualify for Medicaid. However, by placing $258 of her monthly income into a Miller Trust, Maria can meet the income requirement and receive Medicaid benefits for her nursing home care.

What Is Needed For Texans Setting Up A Miller Trust

If you’re a Texas resident exploring a Miller Trust, there are important factors to keep in mind:

1. Compliance with Texas Laws: Medicaid rules differ from state to state. In Texas, Miller Trusts must adhere to the guidelines set by the HHSC. Consulting a Texas-based attorney ensures your trust meets these standards.
2. Choosing the Right Trustee: The trustee, who manages the trust, plays a crucial role. This person can be a family member, trusted friend, or professional advisor familiar with Texas Medicaid requirements.
3. Regular Income Deposits: Income must be deposited into the trust each month. Missing deposits can jeopardize Medicaid eligibility, so setting up automatic transfers may be helpful.
4. Medicaid Recovery in Texas: After the trust beneficiary’s death, Texas Medicaid has the right to recover funds from the trust for benefits paid. Families should plan for this potential recovery when setting up the trust.

Common Misconceptions About Miller Trusts

Here are some common myths, clarified for Texas residents:

1. “Miller Trusts Are Only For Wealthy People”: In reality, Miller Trusts are designed for middle-income individuals who don’t have enough resources to cover long-term care costs.
2. “The Funds Are Freely Accessible”: Funds in a Miller Trust are restricted and can only be used for approved expenses like medical costs and nursing home payments.
3. “Miller Trusts Are A Way To Avoid Paying Medicaid Back”: This is not true. Any remaining funds in the trust after the beneficiary’s death are used to reimburse the state for Medicaid expenses.

For Texans navigating Medicaid’s complex rules, a Miller Trust can be a lifeline. It bridges the gap for those with income above the Medicaid limit, ensuring access to essential long-term care services.

If you or a loved one in Texas faces challenges with Medicaid eligibility, consider speaking with a qualified Texas attorney. They can help you create a Miller Trust tailored to your needs, ensuring you receive the care you deserve while protecting your financial stability. With proper planning, you can take advantage of this valuable tool and secure a brighter future for yourself and your family. For several years, Stuart Green Law, PLLC has been working on estate plans for families and businesses that protect assets. We are licensed in Texas, Kentucky, Pennsylvania, and South Dakota, so contact us for help today.