What Expenses Can Be Paid from a Miller Trust or Qualified Income Trust (QIT)?

For seniors or disabled individuals who need Medicaid's long-term care benefits but have too much monthly income to qualify, a Miller Trust or Qualified Income Trust (QIT) can be a powerful tool. Depositing the excess income into this special trust each month, allows them to meet Medicaid's strict income limits while preserving funds to cover certain expenses.

However, there are specific rules governing how the money in a QIT can and cannot be used - a distinction that's crucial to maintaining eligibility for Medicaid services.

How Medicaid Determines Income Eligibility

Medicaid looks at all your income sources combined - Social Security, pensions, IRA distributions, annuity payments, whatever it is. When they combine all of that, if that number exceeds a certain monthly amount that changes every year, then you're not eligible for Medicaid.

It doesn't matter if you don't have two other pennies to rub together. Some people, just based on their Social Security check, are not financially eligible for Medicaid even though they may be otherwise flat broke because their income is simply too high.

Using a Qualified Income Trust (QIT) to Qualify for Medicaid

For those who have too much income, we have the QIT or the Miller trust, which is what allows us to still qualify for Medicaid and satisfy that income test requirement. Currently, as of 2024, the monthly income cap from all sources combined, gross, is $2,829.

Just to use a nice round number, if your income were really $2,929 per month from all sources combined, you would be $100 over the income cap. You would then need an income trust just to place that $100 into the trust every calendar month that you're looking to be eligible for Medicaid.

This applies whether it's to help pay for care at home or help to pay for care in an assisted living facility or a nursing home.

Allowed Uses of QIT Funds

Sometimes, my clients think they lose access to that money in the QIT, but that's not true. You don't actually lose access. You just have to transfer the excess income into the trust every month. The money can then come right back out to pay for:

• Health expenses
  
  
• Wellness expenses
  
  
• Medical-related expenses
  
  
• Costs for additional care
  
  

The key is that the QIT funds can be accessed and used for health, wellness, medical needs, and more care services. The money doesn't get locked away permanently.

However, there are some things that they can not be used for like your property taxes, utilities, vacations or credit card bills (unless it’s to cover the cost of care).

Using a Pooled Special Needs Trust Instead

Every once in a while, I have clients who say, "Well, Medicaid is covering all of my care expenses, so what do I spend this money on if I don't have health, wellness, or medical-related expenses?" Well, you do have one other option.

You could forgo the income trust altogether and instead use what's known as a pooled Special Needs Trust. A pooled Special Needs Trust can be used to hold assets or excess income, much like a Miller trust.

Some people have pooled Special Needs Trusts just because their income is too high and because they're professionally managed. Maybe they use it because they don't have a family member or a friend that they trust to be their trustee, so they wanted a professional anyway.

Either way, one of the big differences is that pooled Special Needs Trust funds can be used on anything the client needs or wants. It could be for: 

• Health,
  
  
• Wellness,
  
  
• Medical expenses,
  
  
• Entertainment,
  
  
• Plane tickets,
  
  
• Paying property taxes,
  
  
• Paying the utility bill, or
  
  
• Anything else
  
  

Right, so you would use a pooled Special Needs Trust if you are concerned that you don't have medical or health-related expenses for the QIT.

Medicaid's Approach to QIT Fund Usage

To date, Medicaid has not seemed to care how qualified income trust funds are spent. As long as the funds are spent on the Medicaid recipient and not given away or spent for any other purpose outside of the recipient's needs, Medicaid seems to be ignoring the legal requirement that those funds can only be spent on medical or health-related expenses.

In other words, while technically, the QIT funds are supposed to be used solely for medical/health costs, in practice, Medicaid has allowed them to cover a broader range of the recipient's expenses.

I advise people that if they don't have health, medical, or wellness-related expenses, they should use a pooled trust to avoid any issues. I am not advising you to use a qualified income trust for non-healthcare-related expenses (as that is technically prohibited), but I can tell you that historically, Medicaid hasn't seemed to care about how the funds are used. To put it another way: using a QIT / Miller Trust on non-healthcare expenses is a risk.

Ultimately, you have to determine your own risk tolerance. For those who want to be completely above reproach, using a pooled special needs trust is recommended. However, some clients take the stance that since Medicaid hasn't cracked down on this for a while now, and as long as the income trust funds continue being used solely for the Medicaid recipient's purposes, they're willing to take the risk that it won't be an issue. That decision is up to each client.

Contact Elder Needs Law for Your Medicaid Planning Needs

Qualified income trust funds are really only supposed to be spent on health or medical-related expenses, but as long as it's spent on the recipient, historically, Medicaid hasn't delved too deeply into how they're spent, and they've been allowing it to be used for really any purpose that serves the Medicaid recipient.

So take that for what it's worth. If you're interested in discussing Medicaid planning anywhere in the State of Florida, contact our attorneys at Elder Needs Law today.