by Kristen Ishihara and Chris Parker with Ishihara & Parker Law Firm PLLC

When it comes to Medicaid eligibility in Texas, one of the most common concerns people have is whether their income is too high to qualify. If you've been told you make too much money to receive Medicaid benefits, don’t panic—there’s a solution.

The Texas Medicaid Income Limit

For 2024, the monthly income limit for Texas Medicaid is $2,829. Many people see that number and assume that if they earn more than that, they won’t qualify. However, that’s not entirely true. If your income is over the limit, you’re not automatically disqualified. Instead, there’s a tool you can use to work around the income limit called a Miller Trust, also known as a Qualified Income Trust (QIT).

The Gap Problem: Too Much for Medicaid, Not Enough for Private Pay

Many people find themselves in a tricky financial situation where they don’t qualify for Medicaid due to income but also don’t earn enough to afford private nursing home care. For example, if you earn $3,000 a month but the nursing home costs $5,000 to $6,000 a month, you’re stuck in the middle. This is where a Miller Trust comes into play.

What is a Miller Trust?

A Miller Trust (QIT) is a legal arrangement that allows you to qualify for Medicaid even if your income is above the limit. It works by redirecting your income into a special bank account, which effectively reduces your countable income for Medicaid purposes.

What Counts as Monthly Income?

Some common sources of income that Medicaid considers include:

• Social Security benefits
• Pensions
• Required Minimum Distributions (RMDs) from retirement accounts (if you’re over 73)
• Annuities and other retirement benefits

The key thing to remember is that Medicaid looks at your gross income, not what actually hits your bank account after deductions. For example, Social Security withholds Medicare premiums (about $174 per month), and Teacher Retirement System (TRS) pensions often withhold for federal taxes. These amounts are still counted toward your Medicaid income limit, even though you never see them in your bank account.

Setting Up a Miller Trust: The Step-by-Step Process

If your income exceeds the Medicaid limit, setting up a Miller Trust is essential. Here’s how it works:

1. Set Up the Trust Document – This is a legal document that establishes the trust. It must be properly drafted, and it’s best to have a professional handle it to ensure compliance.
2. Open a Dedicated Bank Account – The trust needs its own bank account, separate from your personal finances.
3. Deposit an Entire Income Source into the Trust – Medicaid requires that 100% of a specific income stream (like your Social Security check) be deposited into the trust.
4. Pay Out of the Trust – The money in the trust can only be used for specific expenses, like co-payments to the nursing home, spousal allowances, or health insurance premiums.
5. Maintain the Trust Monthly – Each month, income must go in and be properly distributed. If there’s money left in the trust when the Medicaid recipient passes away, it must be paid back to the state.

Timing Matters!

A Miller Trust must be in place before Medicaid eligibility is determined. If you apply for Medicaid in September, for example, you need to have the trust set up and active within that same month. Medicaid can take months to process applications, and if they later determine you were even one dollar over the income limit without a Miller Trust, they can deny your benefits retroactively—leaving you responsible for thousands of dollars in nursing home costs.

What Happens to the Money in a Miller Trust?

It’s important to understand that a Miller Trust does not shield money from Medicaid. All funds deposited into the trust must be used for approved expenses. If you pass away with funds remaining in the trust, those funds will go to the state to reimburse Medicaid expenses.

Key Takeaways

• If your income exceeds the $2,829 Medicaid limit, you can still qualify using a Miller Trust.
• Medicaid counts gross income, not net income, so be sure to check Social Security and pension withholdings.
• Setting up a Miller Trust involves creating a legal document, opening a separate bank account, and properly managing the funds each month.
• The trust must be active the same month you apply for Medicaid.
• Any leftover funds in the trust after death go to reimburse Medicaid.

Final Thoughts

Understanding Medicaid rules can be confusing, but the good news is that there are solutions available. If you think you might be over the income limit, don’t assume you’re out of luck. A properly set-up and managed Miller Trust can be the key to securing Medicaid benefits while ensuring your nursing home costs are covered. If you need help, consulting an experienced professional can make the process much smoother.

If you have any questions about Medicaid eligibility, income limits, or setting up a Miller Trust, feel free to reach out to a trusted attorney or Medicaid planning expert for guidance!

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