Miller Trusts and the Medicaid Income Cap

What a qualified income trust actually does

A qualified income trust, or Miller trust, is a legal arrangement that lets a person qualify for Medicaid long-term care in a state where their monthly income is too high. Income above the state's limit is routed into the trust each month, and money held in the trust is not counted when Medicaid tests eligibility. The person qualifies, and the trust money is then spent on their care.

A qualified income trust (QIT) — the name Miller trust comes from the court case that established it — is an irrevocable trust that receives a person's excess income so it no longer counts against Medicaid's income limit. It does not make the income disappear; it changes how that income is treated.

This matters because Medicaid pays for a large share of long-term care. Even in assisted living, which Medicaid covers far less often than nursing homes, nearly 2 in 10 residents are Medicaid beneficiaries 1Ref 1Caffrey C, Sengupta M, Melekin A (National Center for Health Statistics, CDC) (2021).Residential Care Community Resident Characteristics: United States, 2018.That Medicaid is a common payer for long-term care — nearly 2 in 10 residential-care (assisted-living) residents were Medicaid beneficiaries in 2018.. For someone whose income sits just above the line, a Miller trust is often the only way in.

Income-cap states versus spend-down states

A Miller trust is only used in "income-cap" states — states where earning even a dollar over the monthly limit makes a person ineligible for long-term-care Medicaid, with no way to fix it by spending the excess on care. Other states are "medically needy" and let applicants spend income down on medical bills to qualify. The trust exists to solve the first situation, not the second.

A Miller trust only helps in income-cap states — where being slightly over the limit disqualifies you outright, and there is no spend-down option to fall back on. In a spend-down state, the same person would simply apply their excess income to their care costs and qualify that way, and no trust would be needed.

Which kind of state someone lives in, and the exact income limit, are not safe to assume. Medicaid eligibility rules and the authorities states use to run these programs vary from state to state 2Ref 2Centers for Medicare & Medicaid Services (2025).Home & Community Based Services Authorities.That Medicaid eligibility rules and the authorities states use to run long-term-care programs, including home- and community-based waivers, vary from state to state.. The starting question is always whether your state uses a hard income cap at all.

How the trust is funded and used each month

The trust is funded with income, not assets, and it has to be funded every month to work. Typically enough of one income source — often a pension or Social Security — is directed into the trust to bring countable income below the cap. Skipping a month, or depositing the wrong amount, can break eligibility for that month, which is why the mechanics matter as much as the setup.

Money that flows through the trust does not vanish; it is spent under Medicaid's rules, usually in a set order:

• A personal needs allowance the person keeps for small expenses.
• A monthly maintenance allowance for a spouse still living at home, where one qualifies.
• The person's share of the cost paid to the nursing home or care provider.
• Certain medical expenses Medicaid does not cover.

The spousal piece connects to Medicaid's spousal-impoverishment protections, which are designed to leave a community spouse enough income and assets to live on when the other spouse needs institutional or waiver care 3Ref 3Centers for Medicare & Medicaid Services (2025).Spousal Impoverishment.That spousal-impoverishment rules preserve a portion of income and assets for a community spouse when the other spouse needs institutional or waiver long-term care, which governs the spousal maintenance allowance paid from the trust.. A Miller trust has to be run consistently with those rules.

Why it must be irrevocable and name the state

A qualified income trust has to be irrevocable — it cannot be changed or undone once created — and it must name the state Medicaid agency to receive whatever remains in it when the person dies, up to the total Medicaid spent on their care. Those two features are what make the state treat the trust as legitimate rather than as a way to shelter income.

The state-as-remainder-beneficiary rule is part of a broader principle: Medicaid expects to be repaid from what is left. States are required to recover the cost of nursing-facility and home- and community-based long-term care from the estates of people who received it after age 55, with protections for a surviving spouse or a minor or disabled child 4Ref 4Centers for Medicare & Medicaid Services (2025).Estate Recovery.That states must recover the cost of nursing-facility and home- and community-based long-term care from the estates of enrollees who received it after age 55, with protections for a surviving spouse or a minor or disabled child.. Leftover trust funds are one of the places that repayment can come from.

Because the trust is irrevocable and tightly governed, it is almost always drafted with an elder-law attorney and set up before or right as the Medicaid application is filed, not years in advance.

A Miller trust is not an asset-protection trust

A qualified income trust solves the income test only. It does nothing about Medicaid's separate asset limit, and it protects none of the person's savings, home, or other property. Families sometimes assume that "putting money in a trust" shields it — with a Miller trust, it does not. Every dollar that goes in is spent on care.

A Miller trust fixes too much income; it does not protect assets — that is a completely different tool with completely different rules. The instrument people mean when they talk about shielding a house or savings is a Medicaid asset protection trust, an irrevocable trust that must be set up well ahead of time because transfers into it are subject to Medicaid's look-back, unlike the income routed through a Miller trust.

Confusing the two is common and costly. A Miller trust can be created in the same month someone applies; an irrevocable asset-protection trust set up too late offers no protection at all and can create a penalty. They answer different questions, and many families need to understand both.

It applies to home care, not just nursing homes

The income cap and the Miller-trust fix are not limited to nursing-home Medicaid. The same rules generally apply to Medicaid that pays for care at home through a waiver — the home- and community-based programs that let someone who would otherwise need an institutional level of care receive services in their own home instead 5Ref 5Centers for Medicare & Medicaid Services (2025).Home & Community-Based Services 1915(c).That 1915(c) waivers let states provide long-term services and supports at home or in the community for people who would otherwise need an institutional level of care.. If income is over the cap, the trust is often needed to unlock waiver eligibility too.

Because these waivers are run under different Medicaid authorities that each state selects, the specifics — income limits, whether there is a waiting list, exactly how the trust interacts with the waiver — differ by state 2Ref 2Centers for Medicare & Medicaid Services (2025).Home & Community Based Services Authorities.That Medicaid eligibility rules and the authorities states use to run long-term-care programs, including home- and community-based waivers, vary from state to state.. Anyone comparing Medicaid waivers by state will find the income-eligibility mechanics are not uniform.

The practical sequence is usually the same everywhere: confirm the state uses an income cap, confirm the person's income exceeds it, and, if both are true, set up and fund the trust with an elder-law attorney's help as part of the application rather than after a denial.