Miller Trusts - "Qualifying Income Trusts"

How Does a Miller Trust Work?

The way the trust is designed to work is that all the beneficiary’s income is deposited into the trust account and then the trustee issues a living allowance (called the personal needs allowance) to the beneficiary of the trust. The amount of the living allowance is set by the State and varies depending upon a person’s living situation.

For example, let’s say you receive social security benefits of $1,400 a month, plus a pension of $200 a month for a total monthly income of $1,600.  For 2017, if you are a single person living in your own home, the income limit for regular Medicaid is $1,366 a month. There is also a $20 income disregard, which brings the total allowed income limit to $1,386 a month. 

In this example, you are $214 over the income limit:

$1,600 income - $1,386 income limit = $214

If a trust were set up, all of the person’s $1,600 income is deposited into the trust account. The trustee then transfers $1,386 to the beneficiary (the person receiving Medicaid), which is the maximum monthly income allowed by Medicaid. The $1,386 can be spent by the beneficiary on anything. However, it is typically used to pay food and housing expenses.

The Medicaid Choice Waiver Program allows people who need nursing home level of care to remain in the community instead of going into an institution.  The Choice Waiver program has a higher income limit, and a higher living allowance – but the person needs to meet both the income guidelines and the level of care needs to be eligible. 

If a person with the same income in our example above -- $1600/month – was applying for the Choice Waiver program, he would be financially eligible for the program without needing an income trust, but he also needs to meet the level of care conditions to qualify for the program. But, if that person’s monthly income was $3000/month, that is over the 2017 income limit for Choice Waiver ($2205), and so he would need a Miller Trust to be financially eligible for the program.  And, he still needs to meet the level of care conditions.

If a trust were set up, all of the person’s $3,000 income is deposited into the trust account. If the beneficiary (the person receiving Medicaid) lives in his own home, the trustee then transfers $1,656 to the beneficiary, which is the living allowance for the Choice Waiver program.  If the beneficiary lives in an assisted living facility, the personal needs allowance is $1396.  The living allowance can be spent by the beneficiary on anything, but it’s typically used to pay food and housing expenses.

Remember, Medicaid income limits can change from year to year, and depend on your household size and living situation, so you need to check with the Division of Public Assistance for the most current figures.  Also, keep in mind, no resources (assets) can be added to the trust. The trust is intended for regular income.

What happens if I have a Miller Trust but don’t need Medicaid anymore?

The trust must be irrevocable, meaning it cannot be cancelled or terminated absent a court order. However, the income going into the trust can be stopped if circumstances change and the beneficiary of the trust no longer needs to be on Medicaid.

What does the State of Alaska get out of this arrangement?

Any money left in the trust account when a person dies will go to the State to compensate it for the medical services it paid through the Medicaid program.

When the beneficiary dies, DPA will inform the trustee whether the beneficiary owes the State money and if so, how much. In most cases, the State will receive all the money left in the trust.