Miller Trusts Explained & Why They Are Crucial for Medicaid Eligibility

When a loved one needs a nursing home or long-term careLong-Term CareOngoing assistance with daily living due to aging or health conditions.View full definition →, families often face one of life’s hardest financial realities: the cost can drain a lifetime of savings in just a few years. According to the Genworth & CareScout Cost of Care Survey 2025, the national median annual cost for a private nursing home room exceeds $110,000, while it’s much lower in Texas, just over $7000 per month, that’s still a high price tag and growing quickly with inflation.

For many older adults, MedicaidMedicaidMedicaid is a joint federal and state program that provides healthcare coverage for individuals with limited income and resources, including long-term nursing home care.View full definition → is the only program that can help pay for these long-term care expenses. But Medicaid’s eligibility rules are strict—especially in states that set fixed income limits, often called “income-cap states.” In those jurisdictions, even a few dollars above the income capIncome CapThe maximum monthly income allowed to qualify for Medicaid in certain states.View full definition → can make someone entirely ineligible for benefits.

A Miller TrustMiller TrustA Miller Trust (also known as a Qualified Income Trust) is a special type of irrevocable trust used in certain states to help individuals qualify for Medicaid when their income exc…View full definition →, also known as a Qualified Income TrustTrustA trust is a legal arrangement in which assets are managed by one person (the trustee) for the benefit of another person or group (the beneficiaries), according to written instruct…View full definition → (QIT), provides a lawful way for individuals with income slightly over the Medicaid limit to qualify for assistance. Understanding how these trusts work can be the difference between financial stability and hardship.

Why Miller Trusts Matter Today

Medicaid is a joint federal–state program that provides medical assistance to individuals and families with limited income and resources. Each state administers its own Medicaid plan under federal guidelines established by the Centers for Medicare & Medicaid Services (CMS).

Under federal law, states that enforce income limits may recognize Miller Trusts as a way for applicants to meet eligibility requirements. These trusts allow individuals to deposit part or all of their income into a designated account that Medicaid disregards when determining eligibility. It is important to understand that while these are an important tool to help people qualify for benefits who would otherwise be denied for being over the income limit, a Miller Trust does not shield the applicant’s income from being spent on care expenses.

As of 2025, the monthly income cap for Medicaid long-term care eligibility in these states is $2,829 per month for an individual—three times the federal Supplemental Security Income (SSI) rate set by the Social Security Administration. Without a Miller Trust, any amount over that limit could make a person ineligible for benefits.

What Is a Miller Trust & How Does It Work?

A Miller Trust is an irrevocable legal arrangement designed to hold income for a Medicaid applicant whose earnings exceed the state’s limit.

Here’s how it works:

1. The applicant’s income (Social Security, pension, annuity, etc.) is deposited into the trust each month.
2. A trusteeTrusteeThe individual or institution responsible for managing a trust according to its terms.View full definition →—often a family member—uses the funds to pay approved expenses such as the nursing home’s share of cost, health insurance premiums, and a small personal needs allowancePersonal Needs AllowanceA small monthly amount Medicaid recipients may keep for personal expenses.View full definition →.
3. After the beneficiary’s death, any remaining funds are used to reimburse the state Medicaid agency for care costs paid during life.

Federal Medicaid policy, as outlined in CMS’s State Medicaid Manual, confirms that income properly deposited into a Miller Trust is not counted toward Medicaid’s income limit, provided the trust meets specific requirements. In essence, the trust acts as a financial filter, allowing eligibility without breaking income-cap rules.

It’s important to note that only income (not assets) may go into a Miller Trust. Savings, property, or investment accounts cannot be transferred into it, as doing so would violate Medicaid regulations and could cause ineligibility.

Legal Requirements & Key Rules

Federal and state Medicaid agencies impose detailed conditions on Miller Trusts:

• Irrevocability: Once created, the trust cannot be revoked or amended.
• State Beneficiary: The state Medicaid agency must be named as the remainder beneficiaryRemainder BeneficiaryThe person or entity entitled to receive remaining trust assets after the primary beneficiary’s death.View full definition → to recover funds up to the amount Medicaid paid.
• Allowable Expenses: Funds can only be used for approved costs—nursing home care, medical expenses, health premiums, and a modest personal allowance (usually $60–$100 per month).
• Timely DepositsTimely DepositsThe requirement that income be deposited into certain trusts (such as a Miller Trust) within the same month it is received.View full definition →: Income must be deposited into the trust during the same month it is received; late deposits may cause ineligibility for that month.
• Documentation: Trustees must keep accurate records of all deposits and payments, as state Medicaid agencies may review the account.

These requirements are reinforced in the CMS State Medicaid Director Letter 14-001 and the Medicaid Eligibility Policy guidelines.

A Practical Example

Robert, a retired teacher in Texas, receives $3,000 per month in income—$2,200 from Social Security and $800 from a pension. Under Texas Medicaid rules, the 2025 income cap for nursing home care is $2,901 per month, based on federal SSI standards.

Because Robert’s income exceeds the limit by $99, he would normally be ineligible for Medicaid coverage—even though he cannot afford $7,100 per month for long-term care.

With guidance from his elder law attorney, Robert establishes a Miller Trust (Qualified Income Trust). Each month, his income is deposited into the trust. His daughter, serving as trustee, uses the funds to pay his nursing home share, health insurance premiums, and small personal allowance—exactly as permitted by Texas Health and Human Services (HHS) Medicaid policy.

Result: Robert becomes fully eligible for Medicaid. His care is covered, his finances remain compliant, and his family avoids a devastating financial burden.

Integrating Miller Trusts into Broader Planning

A Miller Trust addresses income limits but not asset limits. Medicaid applicants must still meet the resource cap, typically $2,000 in countable assets for an individual.

That’s why a Miller Trust should be part of a comprehensive long-term care and estate plan, which may include:

• Asset protection strategies, such as irrevocable trusts or compliant transfers;
• IncapacityIncapacityThe inability to make informed decisions due to illness, injury, or cognitive decline.View full definition → planning, including durable powers of attorney and advance health care directives;
• Spousal protection, following federal spousal impoverishment rules (Medicaid.gov; and
• Estate recoveryEstate RecoveryA state’s legal right to seek reimbursement for Medicaid benefits from a person’s estate after death.View full definition → planning, to anticipate how Medicaid may seek reimbursement after death.

At Ziegler Estate Law Group, these components are integrated into cohesive, personalized plans that protect both care and legacy—providing clarity and confidence for families at every stage.

Common Pitfalls to Avoid

Mistakes in setting up or managing a Miller Trust can lead to Medicaid denial or delay. Common errors include:

• Depositing income late or inconsistently;
• Mixing non-income funds (like savings) into the trust;
• Failing to name the state as the remainder beneficiary;
• Using funds for non-approved purposes; or
• Lacking proper documentation.

Even small procedural mistakes can disrupt eligibility or trigger repayment demands. Professional legal guidance ensures full compliance with federal- and state-specific Medicaid rules.

Taking the Next Step

If your income slightly exceeds your state’s Medicaid limit—or if you’re planning for a loved one’s future care—early planning can make all the difference.

Here’s how to begin:

1. Gather your financial documents, including Social Security and pension statements.
2. Consult an experienced elder law attorney to establish a compliant Miller Trust, if needed, as part of a comprehensive plan for eligibility.
3. Maintain monthly records of deposits and expenses.
4. Integrate your trust into a broader estate plan, and review it as laws or income change.

Your Partner in Clarity & Care

Planning for the future can feel complex—but you don’t have to face it alone.

We’ve been guiding families with clarity, compassion, and integrity for over 20 years. Whether you’re preparing for long-term care, protecting your assets, or ensuring your family’s legacy, our team is here to help you every step of the way.Request your consultation today and let’s build a plan that protects what matters most: your family, your dignity, and your peace of mind.