Thus, the Medicaid program varies considerably from State to State, as well
as within each State over time.
Miller Trusts (now called Qualified Income
Trusts) in very simple terms, allow people who earn too much money to qualify for Medicaid.
Many people hear about Qualified Income Trusts and think they need one. But
after learning more about the Medicaid eligibility rules, they quickly discover
they are far too "wealthy" to qualify for Medicaid even with a Qualified Income
Here's the reason: To qualify for Medicaid in Texas, you must have both
limited resources and limited income.
Resources Test: If you have more than $2,000 worth of assets (excluding
certain exempt property, but including cash, stocks, bonds, retirement accounts,
nonhomestead real estate and other investments), you are too wealthy to qualify
for Medicaid. Creating a Qualified Income Trust won't help you pass the
Importantly, though, many assets are excluded in calculating your available
resources. For instance, the $2,000 figure generally does not include a
homestead (no matter how much it is worth), $2,000 of personal property, a
burial plot, a small amount of life insurance and a car worth no more than
$4,500, unless it is used for medical transportation, in which case it can be
If you want to qualify for Medicaid and you own more than the $2,000 resource
limit, you can give away assets or convert them into properties that are not
counted as part of the $2,000. But be careful. When you make gifts, there is a
36-month look-back rule (60 months when gifts are made to a trust) to keep you
from giving away your property and then applying for Medicaid the next day.
Also, to complicate matters, there are spousal impoverishment rules that
generally allow the spouse of someone trying to qualify for Medicaid to retain
about $87,000 worth of property. A spouse's property is not counted when
determining the total value of assets for the $2,000 resources test. With proper
planning, though, more than $87,000 can be protected.
Income Test: Assuming you pass the resources test, you must also earn less
than $1,593 per month to qualify for Medicaid. But the problem for many people
is that their pension and Social Security checks add up to more than $1,593,
thereby making them too wealthy to qualify for Medicaid but too poor to pay for
nursing home care (which on average costs $2,908 per month in Texas). And that
is where Qualified Income Trusts come in handy, because they operate to limit
the amount of money you are treated as earning so that you can qualify for
What you do is assign your income to the Qualified Income Trust, which then
limits how much of the income can be distributed. This way, a person who makes
more than $1,593 each month will be treated as earning less than that amount,
thereby satisfying the Medicaid income test. The trust can allow for certain
payments, including insurance premium payments, other payments to support the
person's spouse, and $60 for the beneficiary's personal needs. Money remaining
in the trust after those payments must be paid to the nursing home for the
beneficiary's care, with Medicaid picking up the balance.
If you are married, the rule in Texas is that you are treated as earning only
the income which is payable directly to you.
This so-called "name-on-the-check" rule completely ignores Texas community
property laws, but it's the rule. Therefore, if a husband is receiving a pension
and Social Security, and his wife is receiving only Social Security, when he
tries to qualify for Medicaid, both his pension check and his Social Security
check will be counted in determining if he earns too much money. This is the
rule despite the fact that he would be considered as earning only half of their
total income under Texas law.
If you want to learn more about Qualified Income Trusts, one of the easiest
ways is to search the Internet for the words "Texas qualified income trust." You
will instantly be presented with a list of Web sites which discuss the subject.
You can also call the Texas Department of Human Services at 888-834-7406 . The agency has a summary of
Qualified Income Trusts, and it publishes a Medicaid Eligibility Handbook, which
may prove helpful.
Note: Most of the dollar figures in this answer change at least once each
year, and they may have already changed from the time of this printing.