Nebraska Medicaid Miller Trust

Nebraska Doesn't Use Miller Trusts

If you've been researching Medicaid long-term care eligibility and came across the term "Miller Trust" or "Qualified Income Trust," there's good news: Nebraska does not require them. This is one of the most important distinctions between Nebraska's Medicaid program and those of many neighboring states, and it can save your family both legal fees and administrative complexity.

Why Some States Require Miller Trusts

About half of U.S. states use what's called an "income cap" system for Medicaid long-term care eligibility. In those states, if an applicant's gross monthly income exceeds a fixed threshold — typically 300% of the federal Supplemental Security Income benefit rate (roughly $2,901 per month in 2026) — they are completely disqualified from Medicaid unless they establish a Miller Trust.

A Miller Trust is an irrevocable trust that receives the applicant's income each month and distributes it according to specific rules. The trust must be set up with an attorney, requires its own bank account, and adds an ongoing administrative burden for as long as the person receives Medicaid benefits. After the beneficiary's death, any remaining trust balance must be repaid to the state up to the amount of Medicaid benefits received.

States like Colorado, Oklahoma, and Iowa use this income cap system. If your parent lived in one of those states, a Miller Trust might cost $1,500 to $3,000 to establish through an elder law attorney.

How Nebraska's System Works Instead

Nebraska is classified as a "medically needy" state. Instead of a hard income cap that locks people out, Nebraska uses a spend-down system where income above the Medically Needy Income Level ($392 per month) is applied toward the cost of the applicant's care.

Here's a practical example: if your parent has $3,000 per month in Social Security and pension income, and their monthly nursing home bill is $7,000, Nebraska Medicaid calculates their "share of cost" as follows:

1. Start with gross monthly income: $3,000
2. Subtract the Personal Needs Allowance: $75 (the amount the resident keeps for personal items like clothing and toiletries)
3. Subtract any Medicare premiums the resident pays
4. The remaining income goes directly to the nursing facility as the resident's share of cost
5. Medicaid pays the difference between the share of cost and the facility's full rate

No trust required. No attorney needed to set up a separate income vehicle. No ongoing trust administration.

Why This Matters for Your Family

The medically needy designation eliminates one of the biggest procedural barriers families face in income-cap states. In Nebraska:

• No income-based disqualification: your parent can have $5,000, $8,000, or even $15,000 in monthly income and still qualify for Medicaid long-term care. Higher income just means a higher share of cost.
• No trust setup costs: you don't need to hire an attorney to create a Qualified Income Trust, saving $1,500 to $3,000 in legal fees.
• No trust administration: there's no separate bank account to manage, no monthly transfers to execute, and no trust accounting to file.
• Simpler application: the Medicaid application through iServe Nebraska is already complex enough without adding trust documentation to the requirements.

The Financial Hurdle That Does Exist

While Nebraska doesn't have an income cap, the asset limit is strict. A single applicant can have no more than $4,000 in countable assets. This includes bank accounts, investments, IRAs, 401(k) plans, and non-residential real estate. The primary home is exempt up to $752,000 in equity value, and irrevocable burial trusts up to $6,696 are also excluded.

For married couples where one spouse needs care, the Community Spouse Resource Allowance protects 50% of joint countable assets up to a ceiling of $162,660 for 2026, with a floor of $32,532.

So while income won't block your parent from qualifying, assets very well might. The spend-down process — converting countable assets to exempt resources before applying — is where most of the Medicaid planning work happens in Nebraska.

What You Should Focus On Instead

Since Miller Trust preparation isn't on your list, direct your planning energy toward:

Understanding the asset rules: know what's countable versus exempt, and plan any compliant spend-down well before the application date.

The 60-month look-back: Nebraska examines five years of financial transactions for gifts, below-market transfers, and trust funding that could trigger a penalty period.

Expanded estate recovery: under L.B. 268, Nebraska can recover Medicaid costs from assets that pass outside probate, including joint tenancy property, TOD deeds, and living trust assets. Asset protection strategies that worked before 2017 may no longer be effective.

Legal authority documents: you'll need a durable financial power of attorney with the right "hot powers" (authority to make gifts, alter trusts, and manage retirement accounts) to handle a parent's assets during the Medicaid application process. The Nebraska Power of Attorney & Guardianship Kit covers the full financial POA with Nebraska-specific hot powers provisions, along with the healthcare POA and guardianship process for families who need comprehensive legal authority.

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