Qualified Income Trust (Miller Trust): How It Works for Medicaid

Your parent's income is too high for Medicaid but nowhere near high enough to pay a $10,000-a-month nursing home bill. That's the gap the Qualified Income Trust — usually called a Miller Trust — exists to close. In "income cap" states, it's often the single document that stands between your parent and Medicaid coverage of nursing home care.

The problem: the income cap

About half the states set a hard income cap for Medicaid long-term care: if an applicant's gross monthly income exceeds roughly $2,982 (the 2026 figure — it's set at 300% of the SSI federal benefit rate and adjusts annually), they're ineligible for Medicaid nursing home coverage. Full stop. It doesn't matter that the nursing home costs three times their income; the test is mechanical.

The other states are "medically needy" or spend-down states, where excess income simply goes toward the cost of care and no trust is needed. The first step is confirming which type of state your parent is in — income-cap states include Texas, Florida, Georgia, Alabama, and much of the South and Mountain West, among others.

What a Miller Trust does

A Qualified Income Trust is a simple legal arrangement that holds the portion of your parent's income that exceeds the cap. The mechanics:

1. Your parent's income (Social Security, pension) is deposited into the trust account each month.
2. Because the income is legally assigned to the trust rather than received directly by your parent, the state no longer counts it toward the income cap.
3. The trust pays out according to strict Medicaid rules: your parent's personal needs allowance, a spousal income allowance if married, and the rest to the nursing home as your parent's share of cost.
4. Medicaid pays the remainder of the facility bill.

The trust doesn't hide money or reduce what your parent contributes — they'll still pay nearly all their income toward care. It simply routes that income through a legal container so the eligibility test is satisfied.

The rules that trip families up

The trust must be drafted correctly. It's an irrevocable trust naming the state Medicaid agency as the remainder beneficiary — after your parent dies, the state recovers what it paid from anything left (usually nothing, since the account is spent down monthly). A generic living trust or a joint bank account does not work. Most families have an elder law attorney or a Medicaid planning service draft it for a few hundred to a couple thousand dollars, and many banks have handled Miller Trust accounts before.

Timing matters. The trust must be established and the income actually deposited for the trust to work in a given month. Setting up the trust document but leaving the Social Security check going to your parent's old account means the income still counts. Most states require the deposit in the month coverage is sought — though some allow the income to flow for eligibility purposes once the trust exists. Confirm your state's practice with the caseworker.

All capped income should flow through it. Partial deposits leave excess countable income and can sink the application.

The bank account is the hard part. Surprisingly, the most common delay isn't the legal document — it's finding a bank that will open a small trust checking account. Call ahead; credit unions and community banks are often easier than national chains.

Who needs one — and who doesn't

Your parent needs a Miller Trust only if all three are true:

• They live in an income-cap state
• Their gross monthly income exceeds the cap (~$2,982 in 2026)
• They're applying for Medicaid long-term care (nursing home or an HCBS waiver)

If income is under the cap, or the state is a spend-down state, skip it entirely — the trust adds administrative burden with no benefit.

Miller Trust vs. asset planning: don't confuse them

The Miller Trust solves an income problem only. It does nothing for the asset test (about $2,000 in countable assets in most states) or the five-year look-back on gifts. A parent with $80,000 in savings and $3,400/month income needs both asset spend-down planning and a Miller Trust. Conversely, dumping assets into a Miller Trust does not shelter them — it's an income conduit, not asset protection.

For married couples, note the interaction with spousal protections: before money goes to the nursing home, the community spouse can receive a monthly maintenance allowance (2026: $2,705 floor to $4,066.50 ceiling) from the institutionalized spouse's income, routed through the trust. That transfer happens through the QIT payout rules, so the trust setup and the spousal allowance calculation should be done together.

The setup sequence

1. Confirm your state is an income-cap state and get the current cap figure.
2. Have the trust drafted by an elder law attorney or reputable Medicaid planning service — with the state named as remainder beneficiary.
3. Open the trust checking account (expect to visit several banks).
4. Redirect the income: change Social Security and pension direct deposits to the trust account.
5. File the Medicaid application referencing the trust, with the trust document and bank statements attached.
6. Each month, pay out per the Medicaid rules: personal needs allowance, spousal allowance if applicable, remainder to the facility.

Get the sequence wrong — application before the trust exists, deposits not redirected — and you can lose a month of coverage to a fixable technicality.

The Medicare and Long-Term Care coverage guide covers the full Medicaid application sequence including income-cap states, the spousal allowance math, and the spend-down rules that run alongside a Miller Trust. If your parent is over the income cap, it's the map for the whole process, not just this one document.

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