Miller Trusts: Helping Pay for Nursing Home Care
by: Legal Hotline for Older Iowans
Many people worry about how they will pay for nursing home care if it becomes necessary. The Iowa Department of Human Services says that for 2006, nursing home care in Iowa averages $3,737 per month. This is an amount most elderly Iowans cannot afford.
Medicaid will pay nursing home costs if a person's income and assets are below certain limits. In 2007, non-exempt assets must be less than $2,000 and income must be less than $1,869 per month. (Married couples should note that if one spouse lives outside of the nursing home, the spouse in the nursing home can qualify for Medicaid even if the couple has more than $2,000 in assets.)
If you meet the asset limit but have income above $1,869 per month, you may still qualify for Medicaid if your monthly income is not over $3,737 per month (or possibly higher if you are receiving specialized care for a condition such as Alzheimer's disease). To qualify, you must set up a special kind of trust known as a "Miller Trust." (Miller Trusts are also called "Medical Assistance Income Trusts" in state and federal statutes or regulations.)
These trusts can resolve the problem facing people with too much income to get Medicaid, but not enough to pay for nursing home care. (Miller trusts can also be used to qualify for in-home assistance under the Medicaid Elderly Waiver program.) This resource explains what Miller Trusts are and how they are used.
A Miller Trust can contain only certain funds. It is a trust that only includes income, such as pension and Social Security income. Savings or other resources cannot go into a Miller Trust. The person who benefits from the trust is the "beneficiary."
For Miller Trusts, the beneficiary is the nursing home resident. The person who administers the trust and pays out money is the "trustee." The trustee is usually the beneficiary's spouse or other family member. Normally, a Miller Trust lets the trustee pay the beneficiary a monthly amount so that the beneficiary's income is just under the income limit to qualify for Medicaid.
For example, suppose Mr. Jones has $1,000 in savings and needs to move to a nursing home. His only income is Social Security and pension benefits of $2,000 each month. He is eligible to use a Miller Trust. The first step is to set up a Miller Trust on his behalf. His Social Security and pension income, but no savings, will then start going into the trust. Mr. Jones will be the beneficiary.
A trustee will administer the trust to benefit Mr. Jones. If the trustee pays Mr. Jones $1,869 per month, Mr. Jones will be eligible for Medicaid because his countable income will not exceed the $1,869 limit. (Although beyond the scope of this article, there is also a minimum amount the trustee must pay to be sure that Mr. Jones is eligible for Medicaid.)
The $1,869 would be paid to the nursing home, except for $50 that must be used for Mr. Jones' personal needs. If Mr. Jones has a spouse, all or a portion of the $1,869 may be diverted to her.
Since the trust collects $2,000 each month and Mr. Jones receives $1,869, the trust has $131 left. Under Iowa law, this amount may only be spent in certain ways. First, up to $10 per month (more with a court order) may be paid to the trustee for trust expenses. The rest of the money in the account would normally be paid to the nursing home. Medicaid would then pay the balance of Mr. Jones' nursing home expenses. Upon Mr. Jones' death, any income left in the trust will go to the state, up to the amount spent by the state on his care.
It is very important to realize not all trusts qualify as Miller Trusts. Trusts that do not meet the specific criteria of a "Miller Trust" could make a person ineligible for Medicaid. Many rules apply to anyone entering a nursing home, including restrictions on transfers of assets.
Anyone thinking about setting up a Miller Trust or any other type of trust should contact the Legal Hotline for Older Iowans or a lawyer familiar with estate planning and Medicaid rules. You may obtain additional information on Miller Trusts and other programs that may provide assistance to older Iowans by contacting the Legal Hotline for Older Iowans at 1-800-992-8161. The Legal Hotline for Older Iowans is a project of Iowa Legal Aid.
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