What Is a Qualified Income Trust (Miller Trust) and Why Might You Need One?

When applying for Medicaid long-term care in Texas, income eligibility can become a roadblock for many families. Even if your assets are within the limits, having “too much income” can still disqualify you from receiving much-needed benefits.

That’s where a Qualified Income Trust, also known as a Miller Trust, comes in.

If this is your first experience with trusts, you’re not alone—many families are confused when terms like “revocable trust,” “living trust,” and “qualified income trust” start flying around. So let’s simplify what this particular trust is, what it’s not, and how it can help your family.

What a Qualified Income Trust Is Not

Before we dive into the details, it’s helpful to clarify a common misconception: a Qualified Income Trust is not a revocable or living trust.

• A living trust or revocable trust is typically used for estate planning—to manage and transfer assets after someone passes away.
  

• A Qualified Income Trust (QIT), on the other hand, is used while someone is still alive, and is purely a tool to meet Medicaid’s income limits.

When Do You Need a Qualified Income Trust?

You need a QIT when your parent or loved one has income over Medicaid’s monthly limit, but they still need Medicaid to help cover the cost of a nursing home or home health care (also known as the waiver program).

For Example:

If Dad’s monthly income is just a few hundred dollars over the Medicaid limit, he’s technically ineligible—even if he can’t afford long-term care. A QIT allows that excess income to be rerouted, making Dad eligible.

How Does a Qualified Income Trust Work?

Here’s how the process typically goes:

1. Create the Trust  Your elder law attorney will draft the QIT documents, which legally establish the trust. You’ll then take these documents to a bank and open a checking account in the name of the trust.

   
   

2. Deposit Income Into the QIT Account  Every month, all of the institutionalized spouse’s income (or at least the portion that exceeds Medicaid limits) must be deposited into this trust account.

   
   

3. Pay from the Trust  The money in the QIT is used to pay for a few specific items:
   

   • Personal Needs Allowance ($60/month): This small amount is reserved for the Medicaid recipient’s basic personal expenses, like haircuts or toiletries.
     

   • Spousal Maintenance (if applicable): If there is a community spouse (the one living outside the nursing home), some funds may be allocated for their support. This gets complex and varies by case.
     

   • Nursing Home Costs: The remaining funds go toward the cost of care.
     

   • Medicaid Covers the Rest: Once the income in the trust is used up each month, Medicaid pays the balance of the nursing home bill.

Important Rules to Remember

• The QIT must be irrevocable: Once set up, it cannot be changed or canceled.
  

• Texas must be the beneficiary: If any funds are left in the QIT upon the Medicaid recipient’s death, the State of Texas has the right to claim those remaining funds.
  

• Monthly balance should go to zero: If there's leftover money in the QIT account each month, something is wrong. The trust should be emptied each month through the appropriate payments.
  

• The Trustee has a legal responsibility: If you're the trustee—often a spouse or adult child—you are legally obligated to ensure the trust is funded and used correctly every month.

Why You Should Work With an Elder Law Attorney

Setting up and managing a QIT isn’t something to take lightly. Missteps in the setup or maintenance of the trust could lead to Medicaid denial or penalties. That’s why working with an experienced elder law attorney is crucial.

When we help clients set up a QIT, we always provide detailed written instructions and guidance on how to use it correctly. Unfortunately, many people don’t read them—but trust us, a few minutes of focus can make all the difference in avoiding costly mistakes.

Final Thoughts

A Qualified Income Trust is one of the most powerful tools in Texas Medicaid planning, particularly for families where the applicant’s income is just over the limit. With proper legal guidance, a QIT can preserve eligibility and provide peace of mind knowing that long-term care needs will be met.

If you believe your loved one might need a QIT, or you're unsure how their income affects Medicaid eligibility, contact our firm for a consultation. We’re here to help guide you through every step of this process.