A Qualified Income Trust, often called a Miller trust or QIT, can help a person whose income exceeds Florida Medicaid’s limit satisfy the income requirement for certain long-term care programs. It gives that income a specific path through a trust account each month.
For a family arranging care, that can be an important part of making the finances work. The trust document, bank account, monthly deposits and payments must all fit together. Spiro Verras helps clients understand those steps and coordinate the trust with the broader care and estate plan.
The essential points
- A QIT addresses an income eligibility requirement for particular Medicaid programs.
- It holds the recipient’s income and accumulated income, rather than savings, investments or gifts from relatives.
- Deposits must be made in the month the income is received.
- The income remains relevant to the recipient’s required contribution toward care.
- Other Medicaid eligibility requirements still apply.
When might you need one?
Florida’s Department of Children and Families identifies QIT use for programs including institutional nursing-home care, institutional hospice, PACE and qualifying home- and community-based services. The relevant income calculation generally begins before deductions such as taxes or Medicare premiums.
We compare the person’s income sources with the rules for the particular program. A QIT may resolve excess income, while medical eligibility, assets, transfers, residency and other requirements receive their own review. Establishing a trust does not itself secure a place in a program or complete the application.
How the trust works
The arrangement begins with a written, irrevocable trust meeting the applicable requirements. An authorized person signs it, a trustee is named, and an appropriate bank account is established. The trust must include the required provision for the state’s interest in funds remaining at death.
The executed document is submitted for DCF review. The trustee then deposits sufficient income each month to bring the income remaining outside the trust within the applicable program standard. DCF’s guidance emphasizes that income cannot be excluded until it is actually deposited.
The practical details deserve attention: Which income arrives on which date, who makes the transfer, how deposits are documented, and how required payments are made. A clear monthly routine is more useful than a document that nobody knows how to administer.
What should go into the account?
A QIT is funded with the Medicaid recipient’s income, such as qualifying pension or Social Security income. DCF’s rules require the trust to contain only the individual’s income and accumulated income in the trust. Savings, sale proceeds from existing investments, a house and gifts from family members belong in a separate planning discussion.
This makes the appreciated-assets question straightforward for a QIT: It is not the vehicle for transferring an investment portfolio or choosing between low-basis stock and cash savings. Its job is to receive the appropriate monthly income. An asset-planning trust addresses different questions.
How much must be deposited?
The required amount depends on the person’s countable income and the current program limit. DCF advises depositing enough so that income outside the QIT meets the program standard. The plan should also address changes in pension payments, Social Security adjustments or other recurring income.
For illustration, suppose a person’s countable monthly income is above the applicable limit. An approved QIT can receive enough of that month’s income to bring the amount outside the trust within the limit. The actual calculation and deposit instructions must use the recipient’s income and the rules then in effect.
Deposits cannot be made retroactively for an earlier month, or in advance to qualify a later month. A missed or insufficient deposit can affect eligibility for the month concerned. Establishing a workable reminder and recordkeeping system helps the trustee manage this responsibility confidently.
What happens to the income?
The QIT changes how income is treated for the eligibility test. Income inside and outside the trust is still considered when determining the recipient’s patient responsibility, after applicable allowances and deductions.
The trustee follows the approved instructions for the recipient’s contribution toward care and any authorized allowances or payments. Returning money directly to the recipient can cause it to be counted as income again. The family should understand the monthly payment schedule before the account begins operating.
Does it reduce taxes or protect an inheritance?
A QIT serves a Medicaid income-eligibility purpose. It does not make pension or other income tax-free, remove an investment portfolio from an estate, or serve as a general creditor-protection trust. Income-tax treatment continues to depend on the source of the income and the applicable tax rules.
The trustee should establish the correct tax-identification and reporting method with the bank and tax adviser. Grantor-trust rules may allow income to remain reportable by the recipient, with the appropriate reporting procedure. The words “Miller trust” do not by themselves answer every filing question.
What remains at death?
The trust must provide for payment to the state from the remaining balance, up to the applicable Medicaid reimbursement amount. DCF also instructs the trustee to identify refunds due back to the account, including any refund from the care facility for the month of death.
The trustee should obtain current instructions before closing the account or making final payments. This repayment provision is part of the QIT structure and differs from the treatment of a properly funded third-party supplemental needs trust.
Questions families often ask
Must the trust be established five years in advance?
No. A QIT handles monthly income eligibility and has its own funding rules. The five-year transfer review relevant to some Medicaid asset transfers is a different issue. Coordinate the QIT with the application timeline so the document, account and required deposits are ready for the month involved.
Can a family member serve as trustee?
A suitable family member may be able to serve. Reliability, clear records and the ability to follow the deposit and payment instructions are important. The signer must also have the necessary legal authority to establish the arrangement.
Does a QIT solve excess assets too?
No. The asset review remains separate. Spiro can help the family consider Medicaid planning options alongside the income trust, taking account of the person’s needs and available resources.
Make the monthly process clear
A useful QIT plan leaves the trustee knowing what to deposit, when to deposit it, what to pay and what to keep. We can coordinate the legal documents with the professionals assisting with the Medicaid application and care arrangements.
Contact Verras Law to arrange a conversation with Spiro Verras in Palm Harbor, by appointment in Tampa or St. Petersburg, or by Zoom or teleconference.