Aging often comes with increased healthcare costs and healthcare costs impact everyone—regardless of income level. Miller Trusts are a legal tool that helps individuals with high income qualify for Medicaid long-term care benefits. With a Miller Trust in Tennesee, you can become eligible for TennCare even if you are over the “income cap” set by the state.
What is a Miller Trust?
The Medicaid program (called TennCare here in Tennessee) typically requires limited income to qualify. A Miller Trust is a legal arrangement designed to help those with high income qualify for Medicaid long-term care benefits. By establishing a Miller Trust, also known as a Qualified Income Trust, you can redirect your income into the trust, your income then becomes exempt from Medicaid income calculations.
Why are Miller Trusts Used in Tennessee?
Tennessee is an “income cap” state for Medicaid. That means that those who have income above the cap will not qualify for TennCare. Miller Trusts are used primarily as a tool to create eligibility for Medicaid/TennCare even when you might have too much income. There are times when assets may fall within Medicaid eligibility requirements while income exceeds eligibility limits. In this case, a Miller Trust can help.
Without a Miller Trust even when assets meet eligibility requirements, income may exceed the limits for Medicaid eligibility. By redirecting income into a Miller Trust, you can effectively reduce your income for Medicaid eligibility purposes, ensuring you can receive necessary long-term care benefits.
The Benefits of Miller Trusts
There are several key benefits associated with establishing a Miller Trust.
Qualifying for Medicaid
The primary benefit of a Miller Trust is that it allows individuals with middle to high income to qualify for Medicaid long-term care benefits. A Miller Trust provides a way to legally redirect income into the trust effectively lowering income for Medicaid eligibility purposes.
Miller Trusts also provide a means to preserve income. Instead of having to find a way to reduce your income to meet Medicaid’s income requirements, you can redirect your income into the trust. This ensures you can continue to receive your income while still qualifying for Medicaid long-term care benefits. It provides a way to maintain some financial flexibility while accessing the necessary healthcare coverage.
The Process of Setting Up a Miller Trust
The process of setting up a Miller Trust involves several key steps.
Gathering Financial Information
The first step in setting up a Miller Trust is gathering all relevant financial information. Financial information must be thorough including all income sources and other financial details to create a comprehensive financial report. An effective Miller Trust helps you meet income qualifications for Medicaid. In order for a Miller Trust to work for you it is critical to have an accurate understanding of your current financial situation.
Selecting a Trustee
The next step, in setting up a Miller Trust is to select a trustee. It is important to choose someone who possesses good organizational skills, excellent financial management, and will always prioritize your best interests. Opting for a trustee (typically a family member) who works with a lawyer who has a focus on Medicaid planning to set up the trust ensures they can adeptly navigate the intricacies involved in establishing a Miller Trust. Once the trust is established, it’s usually not too difficult to care for the account.
Creating the Trust Agreement
Once a trustee has been selected the next step is to create the trust agreement outlining the terms and conditions of the trust, including how income will be deposited into the trust and how it will be used for qualified expenses. Consulting an attorney experienced in Medicaid planning is crucial to ensure that the trust agreement is drafted correctly and in compliance with all applicable regulations.
Funding the Trust
After the trust agreement has been created and signed, the next step is to fund the trust. This involves transferring income into the trust, which will then become exempt from Medicaid’s income calculations. This typically involves setting up your Social Security to be direct-deposited to the trust account. You can likely do this online if you have an online account with the Social Security Administration.
It is essential to follow all necessary procedures and guidelines when funding the trust to ensure that it is done correctly and in compliance with Medicaid regulations. Make sure you work with a banker who is familiar with Miller Trusts to be sure that all regulations are followed and ensure that all necessary documentation is provided. Your attorney should be able to provide recommendations for banks they have successfully worked with in the past.
Meeting Medicaid Requirements
Finally, meeting all Medicaid requirements is essential. Income limits, reporting, documentation and any other Medicaid requirements must be met for a Miller trust to be effective. Consulting with an attorney with experience in Medicaid planning can help ensure all requirements are met.
Managing a Miller Trust
Once a Miller Trust has been established, proper management is essential. Here are a few key considerations.
Using Trust Funds for Qualified Expenses
The funds in a Miller Trust should be used exclusively for qualified expenses. This includes medical and long-term care costs that are not covered by Medicaid/TennCare. For example, if Medicaid covers one set of dentures every two years but you lose yours before it’s time to get a new set, you can use it to cover another set of dentures. It is important to keep accurate records of all expenses paid from the trust to ensure compliance with Medicaid regulations.
A trust can also be used for professional expenses. For example, a Miller Trust can be used to pay for legal fees.
Keeping Accurate Records
Record keeping is a vital aspect of managing a Miller Trust. Accurate records of all income deposits, expenses paid and other trust related financial transactions are necessary for proper trust management. The records are required for ongoing compliance as well as the TennCare redetermination period when you will need to submit proof that you still financially qualify for TennCare/Medicaid.
Reporting to TennCare/Medicaid
As a Miller Trust beneficiary it is important to report any changes in income or financial circumstances to TennCare/Medicaid if there is a significant increase. This includes significant increases in income sources, the amount of income deposited into the trust, and any other relevant financial changes. By keeping Medicaid informed – and by getting in touch with an experienced Medicaid attorney – beneficiaries can maintain their eligibility and continue to receive the necessary healthcare coverage.
For example, if you get a Miller Trust and then get an inheritance, you may no longer be eligible for TennCare/Medicaid. However, at that point, it would be wise to talk to an experienced Medicaid attorney, because they may be able to help you if you notify them quickly and before the inheritance is received.
Potential Challenges and Considerations
While Miller Trusts can be a valuable tool for Medicaid planning, there are some challenges and considerations to keep in mind.
Legal and Financial Implications
When establishing a Miller Trust there are serious legal and financial considerations making it vital to consult with an attorney who has Medicaid planning experience. An experienced attorney will help ensure all legal requirements are met and help you fully understand the implications of a Miller Trust.
In all cases, Medicaid will seek to recover expenses paid on behalf of a Miller Trust beneficiary from the beneficiary’s estate after their passing. In other words, anything in the Miller Trust at the end of life will go to the TennCare/Medicaid office This is known as estate recovery. It is important to understand the potential implications of estate recovery and to plan accordingly when establishing a Miller Trust.
Monitoring Eligibility Requirements
Medicaid eligibility requirements can change over time and it is important to monitor these changes to ensure ongoing eligibility. It’s in your best interest to stay informed about updates and changes to Medicaid requirements.
Consult Graceful Aging Legal Services for Your Miller Trust
Miller Trusts provide an option for individuals who have significant income and want to qualify for Medicaid long term care benefits. If you or someone you love falls into this category, a Miller Trust is an option to divert your income.
In addition to the often difficult conversations surrounding estate planning, establishing and managing a Miller Trust can be quite complex and challenging. It is advisable to seek assistance from a lawyer who focuses on Medicaid planning to navigate the process of establishing and managing a Miller Trust.
If you have more questions about Miller Trusts and would like to know if it’s a good option for you or your family, click here to schedule an initial call with our office. We’d love to work with you!