Introduction
Setting up a Miller Trust is a complicated process and the purpose of such a trust is to ensure that an applicant can meet the income requirements to receive Medicaid in Arizona, also known as ALTCS. We highly recommend consulting one of our experienced attorneys here in Arizona so that you do not violate any of Medicaid’s rules. To learn more about what rules apply to medicaid, check out our ALTCS Eligibility page.
What is a Miller Trust?
A Miller Trust is the most common way of solving the problem of exceeding the income limit for ALTCS. This trust goes by several other names, but ALTCS officially recognizes a Miller Trust Account as an Income Only Trust.
It has also been known as an Income Cap Trust or an Income Assignment Trust, the reason being that the patient assigns their right to receive social security, pension, or any excess income to the trust.
The purpose of such an account is to help an applicant for Medicaid in Arizona (ALTCS) meet the income requirements of the program. Specifically, such a trust is created if the applicant exceeds the monthly income limit set by ALTCS but does not earn enough to pay for skilled nursing home care or other long-term costs.
How Does a Miller Trust Work?
ALTCS has a set income cap of what a patient is allowed to earn on a monthly basis and still qualify for the benefits. For a single patient in 2024, that limit is set at $2,829. If the patient is married, they add the income of the two individuals and then divide by two.
If you exceed this limit then your application will be denied by ALTCS. This is when setting up a Miller Trust can become beneficial.
The applicant can become eligible by redirecting some or all of their sources of income into a Miller Trust fund. Redirecting, in this case, means having a source of income directly deposited into a checking account titled under the name of the trust instead of directly into the applicants account.
If you exceed the income limit set by ALTCS, but your monthly income is less than $7867.16 per month (Pima, Pinal, Maricopa County, $7319.03 in all other Arizona counties) then you would be eligible to set up a qualified income trust that allows you to funnel your excess income in to a trust in order to qualify.
The above maximum numbers are calculated by ALTCS and represents the average monthly cost of care in a nursing facility.
Who Can Establish an Income Trust?
Any person that is eligible for Medicaid, regardless of age, may establish an Income Trust Account. However, the trust itself can only be used if the ALTCS applicant resides or will be residing in a living arrangement where long term care can be provided.
If an applicant has become disabled, physically or mentally, and has previously granted a power of attorney to make financial decisions, the agent can create a Miller Trust.
If the applicant has not granted a power of attorney and is deemed too disabled to understand that they are creating a trust account, they must obtain court conservatorship. The only exception to this is if the applicant is married, in which case the spouse would be able to create the Income Trust on the patient’s behalf.
How to Establish a Miller Trust
Due to the fact that most patients that require long term care are or eventually will become physically or mentally incapable of making financial decisions, it is usually best practice to designate a trustee and establish a bank account in the name of the trust. Once this has been done you can direct the applicant’s sources of income to be directly-deposited in to the trust account.
ALTCS patients have the option to either direct all of their income to the trust or just whatever is necessary in order for them to drop below the income cap.
An important factor in redirecting income to the trust account is that all of the money acquired from a specific source of income must be directly-deposited in to the account, not just a portion of it.
It is not uncommon for applicants to forward their entire income to the trust account and then the trustee can set the monthly personal needs allowance to the appropriate amount of funds necessary for the patient to meet their lifestyle (this cannot be greater than the income cap amount).
Rules to consider:
- The qualified income trust account must be opened with a $0 balance, this can be an issue depending on the bank you use
- Only income going to the applicant can be added to this type of trust, no resources or another person’s income can be directed to the account
- The following are excluded sources of income defined by Medicaid:
- VA Aid and Attendance
- VA reduced pension
- Vocational rehabilitation
- Income Tax Refunds
- Specific Types of Annuity Payments
- Agent Orange Payments
Individuals Over Income
Individuals who would like to apply for the ALTCS benefit, but whose income is too high, might be able to establish a Miller/Income-Only Trust to help them qualify. Like other types of trusts, Miller/Income-Only Trusts must comply with strict legal formalities to be valid. Applicants whose income exceeds the limit ought to consult with an attorney about whether this strategy could
help them qualify.
The fear of being over the income limit shouldn’t keep individuals from applying for ALTCS. There are ways to help. The Miller/Income-Only Trust is a prime example to a work-around for a hard-and-fast rule.
How the Income Trust Funds are Spent
Share of Cost
While the purpose of ALTCS is to help patients that cannot afford the high costs of long term medical care, in some circumstances the benefit does not cover the entire amount needed. This portion of the medical expenses remains as the patient’s responsibility to cover and is referred to as the share of cost.
A Miller Trust can then benefit the trustee by using the funds in the account to pay the remaining balance before requiring the patient to pay from their personal bank account.
Share of cost is only applicable if the patient will be residing an institutional nursing facility, if the patient will be using home or community based services (HCBS) generally there is no share of cost, but this can vary depending on your personal needs.
HCBS includes health or personal care services provided in the patient’s home by a skilled nurse, personal care attendant or the patient’s spouse. If the patient is in an alternative residential setting, such as an adult day health care or behavioral health facility, this would also be considered as HCBS and have no share of cost associated with it.
Personal Needs Allowance and Community Spouse Allowance
Before paying the ALTCS member’s share of cost, an income trust can also pay for a small personal allowance, and if the member is married, it can also pay a monthly allowance for the patient’s spouse (if the spouse qualifies for it).
The enrollee’s spouse is referred to as the community spouse and the amount that can be paid to them is referred to the Minimum Monthly Maintenance Needs Allowance, or MMMNA for short. Currently, the minimum income that a community spouse can receive MMMNA is set at $2,555 and the maximum is $3,853.50.
Miller Trust Payback Provision
When the Medicaid beneficiary stops receiving support from ALTCS (either upon death or cancellation of services) the state of Arizona has priority in recovering expenses they paid for on behalf of the beneficiary.
In the rare circumstance that funds still remain in the account after all expenses have been paid for, then the funds will be distributed to the beneficiaries named on the trust.
Contact the JacksonWhite ALTCS team today at (480)467-4337 and learn more your options for long term care.
