We all hope we won’t need expensive long-term care. The reality, though, is that about one-third of people turning 65 now will end up at a nursing home. Many people will be forced to turn to Medicaid to cover the high cost of that care, after they’ve run through their savings and assets. When looking ahead to meeting Medicaid eligibility requirements, people may want to consider setting up a Miller trust.
Medicaid Financial Requirements Regarding Institutionalized Care
For an elderly or disabled individual to qualify for Medicaid benefits to cover nursing home care, certain requirements must be met, including:
- Income must be $2,205 per month or less.
- Resource limit must be $2,000 or less as of the first day of the month.
The monthly income limit is set each year in January. Income is the gross amount of all income sources, like pensions, Social Security, Veteran benefits, annuities, and rental payments.
‘Resources’ includes things like cash, bank accounts, cash value of life insurance, investment income. However, certain resources are not considered when calculating the $2,000 monthly amount: household goods and personal effects, items related to burial, one car if used by a family member, and, under certain circumstances, real property.
If a person’s income exceeds the monthly limit set by the government, they may not be eligible for Medicaid. However, it’s possible that excess income may be paid into a Miller Trust to lower income and increase the chances they’ll qualify for Medicaid. Also known as a Medicaid Income Trust or a Qualified Income Trust (QIT), a Miller Trust is available in certain states, including Alabama.
When the Trust is set up, a trustee is named, and a trust bank account is opened. The income that exceeds Medicaid’s monthly limit will be paid into the Miller Trust, and will be disregarded for purposes of Medicaid eligibility. Medicaid does consider the excess income toward your eligibility for the Nursing Home Medicaid Program.
The trustee then uses the money in the Trust to pay expenses like:
- Your share of the nursing home costs as determined by Medicaid;
- Personal needs; and
- A spouse’s monthly maintenance, if married.
It may seem fairly easy to set up a Miller Trust. However, rules and restrictions apply and it’s best to get the advice of an attorney who understands how the Medicaid system and how Miller Trusts work.
Don’t let Medicaid eligibility issues give you an unpleasant surprise. Know where you stand now, and how to plan for the future. Talk to an Alabama attorney with experience and training to handle your concerns. Contact Adams Miller, LLP at 256-251-2137 to schedule an appointment. We help clients in Anniston, Talladega, Birmingham, Gadsden and surrounding communities.