Comprehensive Estate Planning is about much more than what happens to your assets after you die. Many of us will need additional care as we age, so a competent estate planning attorney will strongly encourage you to prepare for your future. While many overlook long-term care planning, it can ultimately determine your quality of life. Qualified Income Trust, also known as a Miller Trust, can help individuals who exceed the permittable monthly income threshold for Medicaid qualification.
Long-term skilled nursing care can cost individuals anywhere between $7,000-$12,000 monthly
Depending on the facility, Medicare and Social Security will not cover these expenses. At these rates, the cost of care for an individual at a skilled nursing home can easily drain everything they have worked our entire lives for. Since few families can afford the price of long-term care, they frequently turn to Medicaid, which has strict financial limitations concerning applicants’ total assets and monthly income.
These public resources are intended for genuinely needy people, but the requirements leave many middle-class families in a bind. They’re too well-off to receive public assistance and not well-off enough to cover the costs themselves. This article is intended to provide answers for individuals who do not meet Medicaid’s monthly income threshold.
Qualified Income Trust eligibility
In Tennessee, the 2025 eligibility limit for an individual’s monthly income is $2,901 per month. A Qualified Income Trust (also known as a Miller Trust) can help individuals who exceed the permittable monthly income threshold for Medicaid qualification.
A Qualified Income Trust is a trust consisting of the individual’s income. Income placed in a valid Qualified Income Trust will be treated as unavailable with federal Medicaid standards. The amount of income placed in a Qualified Income Trust cannot be limited, nor can it be counted when testing income for Medicaid eligibility. For example, a person with a $4,000 monthly income may be able to have the excess $1,258 transferred directly to the Qualified Income Trust to be eligible for Medicaid.
Qualified Income Trusts follow strict rules.
- They must be irrevocable, and the grantor (the person creating the Trust) must appoint a trustee to manage the funds.
- The trustee is usually a trusted friend or family member.
- The grantor cannot access any of the trust funds.
- Funds in the Trust can only be used for specific, qualified expenses, which your attorney will list in the Trust documents.
If the grantor meets Medicaid eligibility requirements, most of the funds in the Qualified Income Trust generally reimburse Medicaid for long-term care. However, trustees can also use the funds to pay for insurance premiums, a spouse’s financial needs, and a small personal allowance. The beneficiary of the Trust will usually be in the state of Tennessee or the grantor’s long-term care facility upon their death.
Qualified Income Trusts can be a highly beneficial tool for families that need help with long-term care expenses, but the guidelines leave no room for error. Mistakes can affect your Medicaid eligibility in the future, so you should always consult a qualified estate planning attorney. Douglass & Runger has extensive Medicaid planning experience. Call us at (901) 388-5805 to learn how we can help.
