What Is a Miller Trust (Qualified Income Trust)?

What Is a Miller Trust?

By Brevy Care Team · Last verified April 16, 2026

A Miller Trust, more formally called a Qualified Income Trust (QIT), is a legal arrangement that lets a person whose income is over the Medicaid long-term care limit still qualify for Medicaid. Excess income is deposited into the trust each month; the state ignores that income when deciding eligibility. The trust then pays out for approved expenses (the applicant's share of the nursing home bill, Medicare premiums, spousal support), and whatever remains at the applicant's death is repaid to the state.

Miller Trusts are authorized by federal statute at 42 U.S.C. § 1396p(d)(4)(B), enacted in the Omnibus Budget Reconciliation Act of 1993. The name comes from Miller v. Ibarra, the 1990 Colorado federal court case in which Jeanette Miller (as trustee for her mother) successfully argued that income routed through an irrevocable trust should not be counted for Medicaid eligibility. Congress codified the holding three years later.

As of late 2024, roughly 23 to 25 states (the "income-cap states") rely on Miller Trusts as the main way for over-income applicants to qualify for Medicaid long-term care, including Texas, Florida, Arizona, New Jersey, Oregon, Georgia, and Alabama. The other ~27 states use a "medically needy" spend-down pathway instead and don't need the trust.

Why It Matters

Without a Miller Trust, a senior living in an income-cap state can be stuck in what the Miller v. Ibarra court called the "Utah Gap": too much income to qualify for Medicaid, not nearly enough to pay the $8,000 to $12,000 monthly cost of nursing home care.

In 2026, the Medicaid long-term care income limit in a typical income-cap state is $2,982 per month (300% of the SSI Federal Benefit Rate) for an individual. A senior earning even a few dollars over that limit would be denied. A Miller Trust closes the gap, usually for a one-time attorney fee of a few hundred dollars.

The Utah Gap and Why the Trust Exists

Before 1993, federal Medicaid rules counted every dollar of a person's income when determining eligibility for long-term care. In states that adopted the 300%-of-SSI income cap, this created a harsh cliff. Someone with $3,000 per month in pension and Social Security had too much income to qualify, but far too little to pay for nursing home care out of pocket.

In Miller v. Ibarra, the U.S. District Court for the District of Colorado held that income deposited into an irrevocable trust was not "available" to the applicant and therefore should not count. Congress codified the result in OBRA 93 at 42 U.S.C. § 1396p(d)(4)(B). The statute lays out three non-negotiable rules for the trust:

1. The trust can only hold the applicant's income (Social Security, pension, annuity payments). It cannot hold assets like savings accounts or investments.
2. The trust must be irrevocable. Once money is in, the applicant cannot take it back.
3. The state must be named the remainder beneficiary and must receive, up to the amount Medicaid paid for the applicant's long-term care, whatever is left in the trust when the applicant dies.

How the Trust Works Each Month

Under most state rules, the applicant (or their legally authorized representative) sets up a new dedicated bank account in the name of the trust, with an independent trustee (usually an adult child or elder-law attorney) named. Each month the mechanics go like this:

1. Income comes in. The applicant's Social Security, pension, and other fixed income deposits into the trust account. Some states require all the applicant's income to flow through the trust; others allow only the excess above the limit.
2. The trust pays out. Within the same month, the trustee writes checks or schedules transfers for:
   • The applicant's personal needs allowance (usually $75 to $160 per month; in Texas, $75).
   • Medicare Part B and Part D premiums and any supplemental insurance.
   • The monthly maintenance needs allowance (MMNA) for a non-applicant spouse still living at home, up to $4,066.50 per month in 2026.
   • Any unreimbursed medical expenses Medicaid doesn't cover.
   • The applicant's share of cost to the nursing facility, assisted living provider, or HCBS waiver — the amount Medicaid expects the applicant to contribute each month.
3. The balance rolls to zero. After the approved payouts, the trust should have little or nothing left. A trust that accumulates a balance can jeopardize eligibility in some states.

The trustee keeps every bank statement and every distribution record. Medicaid recertification audits can and do reach back years.

Who Needs a Miller Trust

You probably need a Miller Trust if all four of these are true:

• You live in an income-cap state (Alabama, Alaska, Arizona, Arkansas, Colorado, Delaware, Florida, Georgia, Idaho, Iowa, Kentucky, Louisiana, Mississippi, Nevada, New Jersey, New Mexico, Oklahoma, Oregon, South Carolina, South Dakota, Tennessee, Texas, and a handful of others).
• Your income exceeds the state's Medicaid institutional income limit (commonly $2,982/month in 2026, though a few states use different figures).
• You are applying for nursing facility Medicaid, a Medicaid HCBS waiver, or PACE. Miller Trusts are for long-term care Medicaid, not general (acute care) Medicaid.
• Your assets are already at or below the state's resource limit (typically $2,000 for a single applicant).

You do not need a Miller Trust if you live in a medically-needy state (where you can spend down excess income on medical bills instead) or if your income is already below the limit.

Cost and How to Set One Up

Setting up a Miller Trust is not a do-it-yourself project. A single drafting mistake can disqualify the applicant, sometimes for months.

• Typical cost: $400 to $500 through an elder-law attorney.
• More complex situations (second marriages, multiple income sources, applicant in early-stage dementia): $1,000 to $2,000.
• Some states publish approved template language (Texas publishes one in Appendix XXXVI of the MEPD handbook) that can reduce attorney time. An attorney is still recommended to customize the trust and oversee initial funding.

The trust has to exist, have a bank account, and receive the first deposit before the Medicaid application month. Funding the trust even one day late usually causes Medicaid to deny that month of benefits.

Common Mistakes

Funding the trust late. The most common mistake. Every dollar of the applicant's income for the application month must flow through the trust, not the applicant's personal account. If Social Security hits the personal account on the third of the month and the trust on the fourth, Medicaid can deny that month.

Mixing income types. Only income belongs in the trust. If a family member accidentally deposits a savings withdrawal or a gift, the trust is "polluted" and the state can argue the whole arrangement fails.

Letting the balance grow. The trust is not a savings vehicle. Every month's distributions should bring the balance back near zero. A rising balance can be interpreted as available resources and cause eligibility problems.

Using the applicant as trustee. Most states require an independent trustee. Serving as your own trustee defeats the purpose of separating the income from your control.

Reusing an existing trust. A Miller Trust must be a new, irrevocable trust set up specifically for Medicaid eligibility purposes. A pre-existing living trust or family trust cannot be repurposed.

Miller Trust vs. Spend-Down

Both tools solve the same problem (income above the Medicaid limit) through opposite mechanisms:

Texas, Florida, and most Southern and Western states use Miller Trusts. New York, Illinois, Pennsylvania, California, and most Northern states use spend-down. If you don't know which your state uses, assume Miller Trust in the South and West, spend-down in the Northeast and Midwest, and verify with your state Medicaid agency before filing.

Common Misconceptions

"A Miller Trust protects my assets." It doesn't. Miller Trusts handle income only. Asset protection requires separate tools (annuities, irrevocable asset protection trusts, spousal refusal planning in some states). Don't confuse the two.

"I can keep whatever is in the trust when I die." You can't. Federal law (42 U.S.C. § 1396p(d)(4)(B)) requires the state to be repaid from the trust, up to the amount Medicaid paid for the applicant's long-term care, before any family member inherits anything. Only after the state recoups does any remaining balance pass to heirs, and in practice there's usually nothing left.

"My spouse's income has to go in the trust too." It doesn't. Only the applicant's own income goes into the trust. The community (at-home) spouse's income is not counted against the applicant for eligibility purposes.

"The trust saves me money." It doesn't save money directly. The trust makes Medicaid eligibility possible. The savings come from Medicaid then picking up the nursing home bill that would have been $8,000+ per month out of pocket.

Related Terms

• 42 U.S.C. § 1396p(d)(4)(B): The federal statute authorizing Qualified Income Trusts.
• Miller v. Ibarra: The 1990 Colorado federal case the trust is named after.
• Income-cap state: A state where Medicaid long-term care income eligibility uses a hard cap (usually 300% of SSI). In these states, over-income applicants generally need a Miller Trust.
• Medically needy state: A state that allows applicants to "spend down" excess income on medical bills to become Medicaid-eligible. These states don't use Miller Trusts.
• Personal Needs Allowance (PNA): The portion of income the applicant keeps each month for personal expenses. $75/month in Texas; varies elsewhere.
• Monthly Maintenance Needs Allowance (MMNA): The income the trust pays to support a non-applicant spouse. Up to $4,066.50 in 2026.
• Medicaid spend-down: The alternative pathway used in medically-needy states.
• HCBS waiver: A Miller Trust is also used to qualify for HCBS waivers in income-cap states, not just nursing home Medicaid.

Learn More

• Texas Medicaid Nursing Home Coverage
• Texas Medicaid Programs for Seniors
• STAR+PLUS Waiver Program
• How to Pay for Senior Care in Texas

The information on Brevy.com is for educational purposes only and is not a substitute for professional legal, financial, or medical advice. Miller Trust rules vary significantly by state, and a drafting mistake can cost months of Medicaid eligibility. Always work with a licensed elder-law attorney in your state when setting up a Qualified Income Trust. Brevy is not a law firm, financial advisor, or healthcare provider.