Medicaid Qualifying Income Trust Basics - Miller Trust FAQ and Brochure

A Miller Trust is a type of irrevocable trust used help Alaskan's meet the income limits for Medicaid eligibility.

Miller Trusts are also known as "Medicaid Qualifying Income Trusts" or "Medicaid Qualifying Irrevocable Income Trusts."

Medicaid is a joint Federal/State program providing medical assistance to disabled, elderly, and other low-income Alaskans who cannot afford needed medical care.  Unlike Medicare, Medicaid is a poverty-based program.

Medicaid coverage can be very important for people who need long-term care, which is not covered by Medicare or the Indian Health Service.  It can also be important to help people get expensive prescription medications that are only partially covered by Medicare.
 

There are three basic kinds of Medicaid:

• Nursing Home
• Home and Community Based Waiver (to receive long term care in your own home or assisted living)
• Regular “walking-around” Medicaid (including Adult Public Assistance Medicaid and Expansion Medicaid)

The Alaska Division of Public Assistance (DPA) decides whether someone qualifies for Medicaid. Alaskans submit an application for Medicaid to DPA. 

People who are already receiving Medicaid must recertify their eligibility with DPA every year.

The different kinds of Medicaid have different income and resource limits.  Those limits also can change depending on a person’s household size and marital status.
 
“Income” refers to funds received regularly every month, like wages, Social Security, or pension.  The income limit goes up a little bit each year with the cost of living.

2024 Income Limits:
$1,751-2,593 per month for Regular Medicaid
$2,829 per month for Nursing Home or Medicaid Waiver
 

“Resource” refers to assets held by a person, like cash, bank accounts, non-residential property, investments, and other property that could be turned into cash to pay for care.  The resource limit does not go up.

Resource limit:

$2,000 ($3,000 for a married couple), not counting a primary residence, primary vehicle, and native- owned real property in Alaska

Under Alaska’s Medicaid Expansion, Alaskans age 19- 64 who are not eligible for another type of Medicaid or Medicare can qualify if they make <$2019 per month for single adults or <$2,731 per month for a two-person family.
 

A Miller Trust allows Alaskans who are over- income for Medicaid to become eligible by directing some of their income into a special trust account, which is managed by a trustee.  The money in the trust account can only be spent by the trustee in certain ways to help support the person receiving Medicaid.

A Miller trust is only for excess income, not resources.  There are other types of trusts that can help with resource eligibility, Special Needs Trusts and Pooled Trusts. 
 
Miller Trusts are not used for estate or tax planning or to shield assets.  In fact, a Miller Trust provides that when the person receiving Medicaid passes away, whatever remains in the trust goes to the state.
 

A Miller Trust holds only the part of an Alaskan’s monthly income that makes them over- income for Medicaid.  If that person is on Regular Medicaid, they keep the rest of their income, which is called their “personal needs allowance.”

If the person is receiving Medicaid Waiver to get long term care in the community, the trust allows the person to keep $1,396 or $1,656 of their income as a personal needs allowance, and the rest of their income pays for “cost of care.”

If a person is receiving Medicaid for nursing home care, the person will receive $200 of their income every month as a personal needs allowance, then the trustee can pay for certain allowable expenses, and then the rest will pay a portion of the nursing home care.

For example, for an Alaskan receiving Regular Medicaid, their monthly Social Security check may put them $10 over the Medicaid income limit.  That Alaskan could set up a Miller Trust and direct deposit their Social Security check into a new trust account at the bank.  The trustee of the Miller Trust would set up the trust account to pass through all but $10 of the Alaskan's income every month as a personal needs allowance.  The trustee would follow the Miller Trust's rules to manage the leftover $10.  The trustee can’t give the $10 directly to the Alaskan, but could spend the money on items for the Alaskan's benefit.
 

Any trustworthy adult selected by the Alaskan receiving Medicaid can be the trustee.  There can be more than one trustee (called co-trustees), but at least one trustee has to be in Alaska.  There can be a co-trustee out of state.

The State of Alaska Public Guardian will only serve as trustee for people who have the Public Guardian as their court-appointed guardian or conservator.

People unable to find a trustee can have the trust pay for a private trustee.
 

First, the trustee pays the personal needs allowance to the Alaskan benefiting from the Miller Trust.  It is important to remember that an Alaskan benefitting from a Miller Trust can continue to spend their personal needs allowance on anything they want or need.

For Nursing Home and Waiver Medicaid categories, the “excess” income is used to pay certain expenses and the individual’s cost of care.  Spouses and minor children may also receive spousal and dependent allowances.

For Regular Medicaid, the trustee of a Miller Trust can spend the “excess” income in the trust every month, or as needed during the year, on things that:

• are not food and shelter, and
• are spent for the benefit of the Alaskan who benefits from the trust (i.e. not gifts or donations)

Allowable expenses include:

• telephone, internet, and cable
• insurance premiums and uncovered medical expenses
• transportation
• pet care and supplies

Setting up any trust is a big step, and should not be entered into lightly.

Being an irrevocable trust, any money that goes into a Miller Trust, can only be taken out according to the trust's rules.  A person benefiting from a Miller Trust can always choose to stop using the trust by not putting more money into it, though doing so might make them ineligible for Medicaid.

A Miller Trust is typically more useful to an Alaskan who is just slightly over the income limit, compared to someone far over the limit.

A Miller Trust will also provide more benefit for people needing expensive long term care or particularly expensive medications.

For an Alaskan who does not need institutional care, a Miller Trust will allow Medicaid to cover their medical needs but in exchange the Alaskan will lose some control over part of their income.  The required rules on how money in a Miller Trust account can be spent may make it hard for some people to meet their normal living expenses.

A Miller Trust ends (lawyers say, “terminates”) when the person benefiting from the trust passes away.  The trustee of the trust is responsible for actually ending the trust.  The trust document itself will tell the trustee what they need to do.  Usually those tasks include:

• Stopping any automatic bill payments being made from the trust bank account
• Distributing any funds remaining in the trust account as instructed by the trust document (most likely to the State of Alaska).
• Closing the trust bank account.
• Notifying the Alaska State Court where the trust was registered that the trust beneficiary has died.