Miller Trust Tennessee: Setting Up a Qualified Income Trust to Qualify for TennCare

Your father's Social Security plus his small pension puts him at $3,200 a month. The TennCare CHOICES income limit is $2,982. He's $218 over the cap — and in Tennessee, being even one dollar over the income cap disqualifies you from TennCare long-term care entirely.

Unless you set up a Qualified Income Trust.

Tennessee Is an Income Cap State

Most states allow a Medicaid applicant with income above the limit to "spend down" their excess — paying medical bills each month until they reduce their income to the eligible level. Tennessee does not offer this pathway for adults applying for CHOICES long-term care services.

In Tennessee, if a CHOICES applicant's gross monthly income exceeds $2,982 (300% of the SSI Federal Benefit Rate in 2026), there is no eligibility — period. The spend-down route doesn't exist for this program.

The only solution is a Qualified Income Trust, commonly called a Miller Trust (after the federal court case that established their legality).

What Is a Miller Trust?

A Qualified Income Trust (QIT) is an irrevocable trust specifically authorized under federal Medicaid law (42 U.S.C. § 1396p(d)(4)(B)) that solves the income cap problem. The mechanics are straightforward:

1. An attorney drafts the trust document — a QIT must meet specific legal requirements to be valid for TennCare purposes
2. A separate bank account is opened in the trust's name
3. Each month, the TennCare beneficiary deposits their excess income (the amount above the eligibility limit) into the trust account
4. For that month's eligibility determination, TennCare "disregards" the amount deposited into the QIT — the applicant's countable income is now at or below the $2,982 limit
5. The trust funds are used each month for specific allowed purposes

The trust doesn't make the income disappear — it controls how it's used, in a way that TennCare recognizes for eligibility purposes.

What Miller Trust Funds Can Be Used For

Money deposited into the QIT each month can be used for limited, TennCare-approved purposes:

Personal Needs Allowance: $70/month for the beneficiary's personal use (for nursing facility residents)

Community Spouse Monthly Maintenance Needs Allowance (MMMNA): If the beneficiary has a community spouse, the MMMNA ($2,705 to $4,066.50/month in 2026) is paid from the trust to support the spouse living at home

Incurred medical expenses: Ongoing medical costs not covered by TennCare or Medicare (co-pays, certain dental, etc.)

TennCare's cost of care: Any remaining balance each month goes to TennCare as the beneficiary's "patient pay amount" — the portion of their care cost they must contribute

At the end of each month, the QIT account balance should be near zero. It's not a savings vehicle; it's a passthrough mechanism.

Who Cannot Set Up a Miller Trust

A Miller Trust must be established by:

• The TennCare applicant themselves (if they have capacity), or
• A court (if the person lacks capacity), or
• A person with durable power of attorney that includes specific authority to create trusts

This is an important limitation: if your parent has already lost capacity and doesn't have a POA with trust-creation authority, the Miller Trust must be established by court order, adding time and cost to the process.

This is one of the reasons elder law attorneys emphasize getting power of attorney documents in place early — a properly drafted POA includes explicit authority to create trusts, specifically for this situation.

The Trust Document Requirements

For a Miller Trust to be accepted by TennCare, the document must:

• Name TennCare as the primary beneficiary for any funds remaining at the beneficiary's death (up to the amount TennCare paid)
• Be irrevocable during the beneficiary's lifetime
• Include Tennessee-specific language consistent with state's QIT requirements
• Designate a trustee (typically the TennCare beneficiary themselves, or a family member acting as trustee)

A generic trust template is not sufficient. Tennessee has specific requirements, and TennCare reviewers check trust documents carefully. An error in the trust language can result in TennCare rejecting the trust and denying eligibility.

The Monthly Process

Every month for as long as the person is enrolled in TennCare CHOICES:

1. Deposit excess income into the QIT account (timing matters — it must be deposited before the end of the month to count for that month's eligibility)
2. Pay the Personal Needs Allowance and any MMMNA to the appropriate recipient
3. Pay any allowed incurred medical expenses
4. Remit remaining balance to TennCare as the patient pay amount

The trustee is responsible for maintaining records of all deposits and disbursements. TennCare may audit trust activity, especially during annual eligibility reviews.

This is ongoing administrative work. For some families, having an elder law attorney or accountant review the monthly process for the first few months is worthwhile to ensure it's being done correctly.

Setting Up the Trust: Costs and Timeline

Attorney cost: $300–$800 is a typical range for Miller Trust drafting in Tennessee, though this varies by attorney and whether the trust is part of a comprehensive Medicaid planning package.

Bank account: A separate checking account must be opened in the trust's name at any FDIC-insured bank. The trust document (or a certified copy) is required to open the account.

Timeline: Allow 2–4 weeks to have the trust drafted, reviewed, executed, and the bank account established. The trust and account must be in place before the TennCare CHOICES application is submitted (or before the income excess begins, if the person is already enrolled and income changes).

Important: A Miller Trust does not retroactively fix eligibility for past months. It only works going forward from the month the trust is established and deposits begin.

Is a Miller Trust Necessary for Home Care (Group 2)?

Yes. The income cap applies to all CHOICES groups, including Group 2 home and community-based services. If your parent's income exceeds $2,982 and they need CHOICES Group 2 home care services, a Miller Trust is required for eligibility.

The OPTIONS for Community Living program (state-funded, not TennCare) has no hard income cap — it's a sliding cost share instead. But OPTIONS has lower service caps and different funding. For full CHOICES benefits, income compliance (with a Miller Trust if necessary) is required.

The QIT/Miller Trust is one of the more technical aspects of TennCare planning for Tennessee families. The Tennessee Home Care & Aging in Place Guide covers income eligibility, Miller Trust setup, the monthly administration process, and how the trust interacts with spousal protection rules — so you have the full picture before your parent's application is submitted.

See more Tennessee guides →