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Trust Law/Level IV · Trusts that care/4.2 Old age and long-term care/Lesson 4

Income trusts (Miller trusts)

How a qualified income trust lets a person with income over a state’s cap qualify for Medicaid long-term care, and what it does not do.

Education, not legal advice. Trust law changes from country to country and state to state, and the right structure depends on your situation. Anything you sign should be drafted or reviewed by a qualified lawyer where you live.

The lean path

The cheapest, lowest-tax, simplest and most private route the law allows, best first. Each step names the rule it rests on and the condition that keeps it lawful.

  1. Check first whether a trust is needed: only income-cap states require one. The 2026 federal maximum is $2,982 a month (300% of the $994 SSI rate); states with medically needy programs let excess income be spent on care instead.
  2. Ask the state Medicaid agency for its qualified income trust requirements; where it provides a form, using it avoids drafting fees. The trust under 42 U.S.C. §1396p(d)(4)(B) may hold only income, never savings or property.
  3. Open a separate account and deposit the over-cap income every month; a missed deposit or payment the state does not allow can cost eligibility for that month.
  4. For a married applicant, 2026 rules let income pass to the spouse at home: at least $2,643.75 a month (from 1 July 2025), up to $4,066.50, as the state allows.
  5. Whatever remains at death repays the state up to Medicaid paid, so a qualified income trust never passes money to heirs; paying out each month as the state’s rules direct keeps the balance near zero.

MaterialsA list of all monthly income sources and their gross amounts, such as Social Security and pensionsYour state Medicaid agency’s income limit for long-term care and whether it requires a qualified income trustYour state’s rules or sample form for qualified income trusts, if it publishes one

Wonder

  1. Does my state have an income cap for Medicaid nursing-home care?
  2. What happens to the money left in the trust when I pass away?
  3. Can I use this trust to protect other assets like my home or savings?

Explore

  1. In the United States, some states use an income cap for Medicaid long-term care: a person whose monthly income is over the limit cannot qualify in that group, however few assets they have. Federal law allows this special income limit to be up to 300% of the SSI federal benefit rate; CMS lists that figure as $2,901 a month for 2025 and $2,982 for 2026, and states may set it lower. So someone whose pension and Social Security add up to a little more than the cap could be ineligible even though their care costs far more than their income.
  2. A qualified income trust (QIT), often called a Miller trust after the 1990 Colorado case Miller v. Ibarra, addresses this gap. Congress added it to federal law in 1993 as 42 U.S.C. §1396p(d)(4)(B), which is section 1917(d)(4)(B) of the Social Security Act. The trust may be made up only of pension, Social Security and other income of the person, plus income accumulated in it. Each month the income, or the part over the cap, is paid into the trust account, and income placed in a qualifying trust is generally not counted against the cap.
  3. The money in the trust is not saved for the family. The trustee pays it out each month under the state’s rules, generally toward the person’s share of the cost of care, after allowances the state permits, such as a small personal-needs amount and, in some cases, an allowance for a spouse living at home. A QIT therefore changes how income is counted for eligibility; it does not usually let the person keep more of it. A trustee who misses deposits or makes payments the state does not allow can put eligibility at risk.
  4. The statute requires payback. Under §1396p(d)(4)(B)(ii), the state must receive all amounts remaining in the trust when the person dies, up to the total medical assistance it paid for them. This mirrors the payback for first-party special needs trusts under §1396p(d)(4)(A) (lesson 4.1.5), although a QIT usually holds little at death because income passes through it each month. A QIT is not a way to pass money to heirs.
  5. A QIT does not solve an asset problem. It may hold only income, so savings, a house or investments cannot be placed in it, and the person must still meet the state’s resource limit and the transfer-of-assets rules (lesson 4.2.3). Families sometimes assume any ‘Medicaid trust’ protects everything; a QIT does not. It also does nothing about estate recovery from the person’s other assets after death, which lesson 4.2.5 covers.
  6. Whether a QIT is relevant depends on the state. Under §1396p(d)(4)(B)(iii), the exception applies in states that cover people under the special income limit for nursing-home care but do not cover nursing-facility services through a ‘medically needy’ program. States with a medically needy program instead let people with higher income qualify by spending income on care. Which states use income caps changes over time, so families typically check with the state Medicaid agency, an elder-law attorney or a benefits counsellor.

Key facts

  • A qualified income trust (Miller trust) is authorized by 42 U.S.C. §1396p(d)(4)(B), which is section 1917(d)(4)(B) of the Social Security Act.
  • It may hold only pension, Social Security and other income of the person, plus accumulated income; savings and property cannot go in.
  • CMS lists the 300% income cap as $2,901 a month in 2025 and $2,982 in 2026; states may set a lower limit.
  • At the person’s death, the state receives what remains in the trust, up to the total Medicaid it paid for them.
  • Trust income is generally still paid toward the cost of care under state rules; the trust affects eligibility, not who ultimately keeps the income.
  • The (d)(4)(B) exception applies only in states that use the special income limit and do not cover nursing-facility care through a medically needy program.

Exercise nine, six, three, one

9CollectList up to 9 sources of monthly income for the person (some people have fewer), such as Social Security, pensions, annuities, rental income or interest, with the gross amount of each.
6ClusterSort them into 6 categories: Social Security, pensions, other regular payments, investment income, irregular income, and amounts you are unsure about.
3DistillReduce the 6 categories to 3 questions for the state Medicaid agency or a benefits counsellor: whether the state uses an income cap, how each source is counted, and what the trustee would have to pay out each month.
1CrystallizeWrite 1 sentence explaining how a qualified income trust affects the income test without changing the asset test.

Fact check

Dates, figures and claims checked against the published sources listed below.

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