Miller Trusts - "Qualifying Income Trusts"

How can the money in the trust be spent?

After the beneficiary receives their living allowance, there may be money remaining in the trust itself.  Many beneficiaries and trustees wonder what expenses the trust can pay for. The rules for spending from the trust are different, depending on which Medicaid program the beneficiary is on.

If a person is on basic Medicaid and is not on a Medicaid Waiver program or in a nursing home, the short answer is that the trust can pay for any expenses that benefit the beneficiary except for food and housing related costs.

However, the money must be paid directly from the trust to the business selling the item or service. For example, the trust could pay a person’s cable TV bill, but the payment must go directly from the trust to the cable company; it cannot pass thru the trust beneficiary.

Expenses that CANNOT be paid from the trust

Here are some examples of costs that the trust cannot pay for:

• Food
• Rent or mortgage payments
• Property taxes
• Heating fuel
• Electricity
• Water
• Sewer
• Garbage collection

Money in the trust cannot be used for these things because they are all related to food and housing costs.

Expenses that CAN be paid from the trust

And, here are some examples of expenses the trust probably can pay – because they benefit the beneficiary and/or improve his or her quality of life:

• Cable TV, Phone and Internet
• Clothing for the beneficiary
• Haircuts
• Eyeglasses
• Cigarettes
• Computer hardware and software, television, or other electronic equipment.
• Entertainment and recreation tickets and fees
• Vacation expenses including transportation and hotel – and travel expenses for a companion if needed because of the beneficiary’s disability.
• Expenses related to owning and operating one car
• Things for the home, like furniture, appliances, curtains, bedding, or other household items.
• Gardening and lawn care
• Magazine subscriptions
• Pet care and services
• Medical equipment
• Medical, nursing, and dental care not covered by another source
• Medications
• Massage therapy
• Personal assistance
• Supplemental dietary needs
• Testing or evaluations (vocational, medical, psychological)
• Education, tuition, books or transportation to same
• Home renovations to improve accessibility and adaptive equipment
• Insurance premiums for homeowner, renter, health, dental, life and car
• Job coaching
• Private counseling and case management
• Private lessons and materials
• Guardianship and/or advocacy services
• Legal fees
• Pre-paid burial expenses of the beneficiary
• Office supplies, stamps and writing supplies

Remember, purchase of these items cannot pass through the beneficiary.  If John is the trust beneficiary, you cannot give him money to buy cigarettes.  And, you can’t give John a check made out to the grocery store where he gets his cigarettes, because he could use that to buy something that is not allowed. But, you can purchase cigarettes and give them to John.  Also, remember that these expenses must be for the benefit of the beneficiary; if John wants to take a vacation, and he requires a travel companion because of his disability, the trust can pay for those travel expenses.  However, if John wants to go on vacation with his travel companion and his wife, the trust cannot pay his wife’s travel expenses. 

Finally, these lists are only a guide, and not meant to be cited as a legal reference.

Spending money in the trust when the beneficiary is on a Medicaid Waiver Program or in a nursing home

As mentioned earlier, under the Choice Waiver model, the beneficiary's income goes into the trust, and a personal needs allowance is given to the beneficiary for living expenses.  Anything remaining in the trust must go toward paying “cost of care” and medical expenses. 

Under the nursing home model, the beneficiary's income is put in the trust, and allowable expenses -- such as insurance co-pays, limited income to the spouse not in a nursing home, and a $200 personal expense allowance to the beneficiary -- are paid. The remaining income must be paid to the nursing home. 

Audits

Every year or so, the Department of Public Assistance (DPA) will ask the trustee to provide copies of the trust bank account statements and other documentation concerning the trust. This is called an audit. DPA wants to make sure that the trust is being managed correctly. Although an expense paid by the trust may be legitimate, the trustee must be able to prove that the money was properly spent. That means keeping receipts and good notes.

Some Final Notes

As mentioned in the beginning, a Miller Trust is a very difficult and complex document that has to be written so that it follows all the rules and regulations of Medicaid, both federal and state. Unless you are an expert in this area, you wouldn’t be able to write a Miller Trust that would be accepted.

The Medicaid program is extremely complicated and the material in this presentation is informational only. It does not constitute legal advice. Every person’s circumstances vary and there may be something about your situation that makes the general information presented here not applicable to you. The information presented here was accurate to the best of our knowledge at the time it was posted. However, the rules for Medicaid change frequently and some of the information may be inaccurate or incomplete based on changes in the law since this presentation was produced.

For these reasons, you are strongly encouraged to seek the services of an attorney for legal advice and strategy regarding your particular situation.