While many people have heard of the Miller Trust, few know what they are for and what role they play in Medicaid long term care eligibility. (ALTCS in Arizona) The Miller Trust serves one very limited purpose—for Medicaid/ALTCS income eligibility.
A Miller Trust is also known as an Income Only Trust. As the name implies, the trust is for income only—no other funds or assets should be transferred into the Miller Trust. The purpose of the Miller Trust is to help individuals qualify for Medicaid/ALTCS benefits when their income exceeds the limit. It is not the kind of trust used to protect assets or for estate planning to leave a legacy for your loved ones after your death. The Miller Trust is for those who make too much income to qualify for ALTCS but not enough to pay for their care. ALTCS will not count the income deposited in the Miller Trust which is spent on medical expenses against income eligibility.
How does it work? The Miller Trust is essentially a conduit of income. The ALTCS recipients transfer their income into a Miller Trust account, then their trustees pay their income out of the trust for expenses of the ALTCS recipients, in accordance with an ALTCS-approved monthly budget (form DE-313 Anticipated Disbursements). In most cases, income should not accumulate in the trust. Again, the Miller Trust can help ALTCS recipients qualify for the benefit because trust funds paid out for medical or care expenses reduces the countable income hopefully enough to meet the ALTCS income eligibility limit.
What is the catch? How is it that ALTCS allows someone who exceeds the income limit to still qualify? First, it is the law, under 42 U.S.C. 1396p(d)(4)(B). Secondly, on the death of the ALTCS recipient, the
State of Arizona is beneficiary of any income that has accumulated in the Miller Trust. Proper planning and administration of the Miller Trust may minimize or eliminate accumulation of income in the trust. Because the State of Arizona is a beneficiary, ALTCS limits and strictly monitors how the trust funds can be spent. (ALTCS does not directly manage the trust, just monitors it. The ALTCS recipients select the trustee, who will manage the Miller Trust for them.)
Some people are under the misconception that a Miller Trust is a way to shelter assets, such as their homes or savings, from consideration in ALTCS eligibility. The Miller Trust will not serve that purpose at all—however, there may be other types of trusts, such as a Special Needs Trust or Asset Protection Trust, or other methods of asset protection available to them. Our experienced attorneys can help you consider your options and determine whether a Miller Trust is appropriate for your specific situation.
Note, ALTCS has complicated rules for the establishment and administration of Miller Trusts that may disqualify the ALTCS applicant if not followed precisely—it is not as simple as signing a document. We strongly recommend you work with an experienced attorney.