Many people hope they’ll live well into old age. However, a significant portion of older adults will need some level of medical assistance. If you’re a Medicaid recipient who needs long-term care, you may qualify for Nursing Facility or Home- and Community-Based Services.
However, the income cap to qualify for Medicaid benefits is fairly low. Most people whose income is too high for Medicaid can’t afford the expense of long-term care. So what happens if you need some level of long-term care and can’t afford it?
The good news is that with a little planning, you can take advantage of the many Medicaid planning opportunities available in Texas. One of the most effective trusts for Texas Medicaid eligibility is the Miller Trust, also known as a qualified income trust.
Navigating Medicaid eligibility requirements can be confusing. Fortunately, you don’t have to figure out how to qualify for Medicaid on your own. Hunter Sargent, PLLC, has helped Texans plan for the future and secure their legacies for seven generations, and we’re confident we can help you, too.
Here’s a closer look at how Miller Trusts help with Medicaid eligibility in Texas.
The Basics of Texas Medicaid Eligibility
Before diving into the specifics of opening a Miller Trust for Texas Medicaid, you first need to understand Medicaid’s long-term care programs and their eligibility requirements.
A Medicaid applicant applying for long-term care can typically choose between two programs:
- Nursing Home Medicaid: Provides care in a nursing home or similar facility
- Home- and Community-Based Services (HCBS) Waivers: Pays for long-term care for older adults living at home or in the community
Medicaid started offering HCBS waivers in 1983. This expansion of the program proved to be beneficial for senior community members and the government. Home- and community-based care is typically far less costly than institutional care, and many Medicaid applicants preferred to remain in their homes if possible.
Medicaid Income Limits and Miller Trust in TX
Like many states, Texas’s Medicaid program has low limits for both income and assets. To qualify for the Nursing Facility and the Home- and Community-Based Services Waiver Programs in 2025, an applicant’s gross income may not exceed the following amounts:
- Individual: $2,901
- Couple: $5,802
Total assets (excluding a Texas homestead, a vehicle, and certain other assets) may not exceed the following amounts:
- Individual: $2,000
- Couple: $3,000
Some states are “spend-down” states (or “medically needy” states), meaning anyone who is over the special income limit for Medicaid may pay for their own medical expenses until they qualify.
Texas is an “income cap” (or “categorically needy”) state, so if you’re above Medicaid’s income limit, spending down excess income on medical expenses won’t allow you to qualify. In Texas and other income cap states, Miller Trusts offer a way for those who exceed the asset limits to qualify.
Introduction to Miller Trusts in Texas Medicaid Planning
You may have heard Miller Trusts or qualified income trusts referred to by other names, including:
- QITs
- Income cap trusts
- Income diversion trusts
- Income trusts
- Irrevocable income trusts
- Income-only trusts
- d4B trusts
The specific name used often varies by region. For instance, South Carolina typically refers to Miller trusts as “qualified income trusts” or “QITs.” In Arizona, they’re usually called “income-only trusts.”
Income Cap Trust: Texas Medicaid Explained
What is a Miller Trust in Texas? A Miller Trust (or qualified income trust) is an irrevocable trust created for Medicaid eligibility purposes. If you exceed Medicaid’s income limit, you may open a Miller Trust and deposit all income over the limit into the trust.
The income you put into the trust won’t count as income when determining your eligibility for Medicaid. Once you qualify for Medicaid and move into a nursing home or start working with an in-home caregiver, the funds in the trust will be used to pay for your care.
If you’re over the Medicaid income guidelines and are interested in setting up a Miller Trust to preserve your eligibility, it’s important to work with a lawyer who can ensure that the trust is executed properly.
If it’s later discovered that your Miller Trust wasn’t a valid written trust instrument, you may be ineligible for long-term care through Medicaid.
How a Miller Trust Works in Practice
Here’s a brief overview of how a Miller trust for Texas Medicaid generally works:
Setting Up the Trust
The Medicaid applicant, their legal guardian, or their agent (as established in a power of attorney document) may begin the process of opening the trust. They must select a trustee to oversee the funds. The applicant may not serve as their own trustee, but in many cases, they’ll choose an adult child or other relative.
Funding the Trust
Once the trust has been established, all of the applicant’s income exceeding the Medicaid income limits must be deposited into the trust every month. Notably, the trust may only be funded with the applicant’s or their spouse’s income. No assets may be transferred directly into the trust.
Disbursing Funds
The trustee is responsible for using the trust bank account to pay for specific monthly expenses. Those costs will usually include the following:
- Any copays due to the nursing home
- Any medical expenses Medicaid doesn’t cover
- A monthly personal needs allowance of $75
If the Medicaid recipient has a low-income spouse who isn’t being cared for in an institution, that spouse may receive a minimum monthly maintenance needs allowance (MMMNA) from the trust.
Handling Trust Funds After Death
Texas Miller Trust rules and guidelines require every Miller Trust to contain a reversion clause. This is a provision that allows the state to recover remaining trust funds (up to the total cost of medical assistance provided) after the beneficiary’s death.
If there are any funds remaining in the trust after the state has been reimbursed, they’ll be distributed to the beneficiary’s heirs.
Steps to Set Up a Miller Trust in Texas
Here’s a closer look at how to set up a Miller Trust for Medicaid in Texas:
Hire an Estate Planning or Elder Law Attorney
The importance of having dependable legal guidance when setting up a Miller Trust can’t be overstated. An experienced lawyer can help you determine your Medicaid eligibility and ensure that the trust document is drafted properly.
Open a Bank Account and Create the Trust Document
Your attorney can help you open a trust account at a reputable financial institution. They can also help you choose a trustee before drafting the trust document.
Select an Income Stream to Fund the Trust
All of a Medicaid recipient’s monthly income above the special income limit must be deposited into the trust. However, the Miller Trust requirements in TX may present a problem for some beneficiaries.
If the money going into the trust is from a particular income stream, the entirety of that stream must be deposited into the trust. You can’t deposit only part of an income stream, but you can choose which types of income you use to fund the trust.
Here’s an example: Imagine your monthly Social Security check is $2,000, and you also receive a monthly pension of $1,000. Although the monthly income limit is $2,901, you can’t deposit part of one income stream and keep the rest.
In this case, it would make the most sense to keep receiving your Social Security checks and deposit your pension into the Miller Trust each month.
Set Up Monthly Deposits
Once you’ve determined which income stream you want to use to fund the trust, you can arrange monthly deposits. The simplest way to do this is to have your Social Security check, pension, or other income deposited directly into the trust account.
Key Benefits of Using a Miller Trust
Although creating and funding a Miller Trust might be more complicated than spending down to qualify for Medicaid, it offers several important benefits.
It Lets You Qualify for Medicaid When You Otherwise Wouldn’t
If there were no option to open a Miller Trust and divert income above the Medicaid limit, countless Texans would struggle to afford the cost of long-term care.
It Preserves Assets
In income cap states like Texas, you don’t have to deplete your income and savings to qualify for Medicaid. Instead, your assets will be preserved in the trust, and any remaining funds will be returned to your family.
It Can Help You Manage Your Income
Because the disbursement of funds from a Miller Trust is strictly regulated, it can ensure that your hard-earned money is put to good use.
Common Misconceptions About Miller Trusts
If you anticipate needing Medicaid assistance but exceed the income cap for Texas Medicaid, opening a qualified income trust might be wise. These trusts can be immensely helpful under the right conditions.
However, many people misunderstand how qualified income trusts work. Here are some of the most pervasive misconceptions out there.
They Shield Assets From Medicaid
Although some types of trusts are meant to protect assets from Medicaid estate recovery, Miller Trusts were made for the opposite purpose. Instead of shielding assets from Medicaid, a Miller Trust is used to reimburse the state.
You Have to Put All of Your Income Into the Trust Account
Some people read that they must direct an entire income stream to the trust account and believe that means they must deposit all of their money. This is untrue — you’re only required to deposit income in excess of the Medicaid limit.
You Can Quickly Set One Up Yourself
This misconception is a particularly risky one. Miller Trusts are highly complex, so you should consult a qualified attorney to make sure yours is set up properly.
Why Legal Guidance Matters for Miller Trusts
Qualified income trusts present an outstanding opportunity for Texas residents to qualify for Medicaid. Before you jump into creating your trust, however, it’s essential to take advantage of trustworthy legal services for Medicaid eligibility in TX.
Not all attorneys understand how to adhere to the stringent legal requirements or assist trustees with the administration process. The stakes are high — even a seemingly small error in the creation or administration of the trust could cause you to lose your eligibility for Medicaid assistance.
Get Help With Setting Up a Miller Trust in TX
Whether you’re still weighing your options or you’ve decided that a Miller Trust is right for you, proper legal guidance is critical. At Hunter Sargent, PLLC, we take pride in helping clients plan for their financial future and build a proud legacy.
If you’re considering establishing a Miller Trust for Texas Medicaid or want to discuss your Medicaid eligibility, we can help. Contact us today to schedule your initial consultation.
