Qualified Income Trust (Miller Trust): The Document That Makes Medicaid Possible When a Parent Is 'Over Income'

If you only read this: If a parent lives in an income-cap state (Florida, Texas, Arizona, Alabama, and ~20 others) and earns more than roughly $2,900 a month, Medicaid will reject the nursing-home application — even if every penny is going to care that costs $9,000+ a month. A Qualified Income Trust, sometimes called a Miller Trust, is the legal mechanism that fixes this. It's not optional in those states; it's the only path to Medicaid eligibility for "over income" applicants. Setup runs $1,500–$3,500 and takes weeks, so it has to start before the nursing-home admission, not after.

What a Qualified Income Trust actually is

A Qualified Income Trust (QIT) — also called a Miller Trust after the 1990 case that established the mechanism — is an irrevocable trust authorized under federal Medicaid law at 42 U.S.C. § 1396p(d)(4)(B). It exists for one purpose: to make Medicaid eligibility possible for applicants whose monthly income exceeds their state's hard Medicaid income cap but who still cannot afford long-term care out of pocket.

In states that use this mechanism, the applicant's monthly income (Social Security, pension, annuity payments, rental income, etc.) is deposited into a dedicated bank account titled in the name of the trust. The trustee — usually an adult child, attorney, or trust company — then disburses the money each month in tightly limited ways:

• Personal needs allowance — typically $50–$200/month for personal items the nursing home doesn't supply (haircuts, magazines, snacks). Each state sets the exact figure.
• Health insurance premiums — Medicare Part B, supplemental coverage, prescription drug plans.
• Spousal support ("monthly maintenance needs allowance") — if there's a non-applicant spouse still living in the community, federal law guarantees them a minimum monthly income drawn from the applicant's income before Medicaid's share.
• Medicaid copayment — also called "patient liability" or "share of cost." This is what's left after the deductions above, and it goes to the nursing home each month.

When the applicant dies, any residual funds in the QIT must be paid to the state as reimbursement for Medicaid benefits paid (Medicaid Estate Recovery). The trust cannot pass to heirs.

The states where this matters

Roughly 23 U.S. states are income-cap states — they enforce a hard income limit for nursing-home Medicaid eligibility with no spend-down option. In these states, the QIT/Miller Trust is the standard workaround. The list shifts slightly with state policy but commonly includes:

Alabama, Alaska, Arizona, Arkansas, Colorado, Delaware, Florida, Georgia, Idaho, Iowa, Kentucky, Louisiana, Mississippi, Nevada, New Jersey, New Mexico, Oklahoma, Oregon, South Carolina, South Dakota, Tennessee, Texas, Wyoming.

The remaining ~27 states + DC are medically-needy states. In those, an over-income applicant doesn't need a trust — they simply spend down their excess income on medical expenses each month (the "share of cost" model). The mechanics differ but the result is similar: most of the income goes to care, Medicaid covers the rest.

The Kaiser Family Foundation's state Medicaid eligibility tracker maintains current-year information on which state uses which model. Texas, Florida, and Arizona are the three largest income-cap states by population, and they're where most QIT/Miller Trust traffic originates.

How the income cap works in 2026

The federal income cap for nursing-home Medicaid eligibility is set at 300% of the SSI Federal Benefit Rate. The exact dollar figure updates each January when SSI cost-of-living adjustments take effect.

For 2026, the cap is in the neighborhood of $2,900/month for an individual — meaning anyone whose monthly income exceeds that amount is "over income" and ineligible for nursing-home Medicaid in an income-cap state, full stop. Verify the current-year figure with the parent's state Medicaid agency before relying on it; SSI updates publish in October for the following year, and state implementation timing varies.

The brutal arithmetic this creates: a parent with $3,500/month of Social Security + pension income — comfortable while healthy — becomes ineligible for nursing-home Medicaid in Texas if they need care that costs $9,000+/month. Without a QIT, the only path is paying out of pocket until assets are exhausted, then re-applying. With a QIT properly executed, the parent qualifies on day one.

How to set one up

The mechanics differ slightly by state, but the standard sequence:

1. Confirm the state's QIT requirement and template language. Some states (Texas, Florida) publish their own statutory template. Others require an elder law attorney to draft custom language meeting state-specific provisions. The NAELA directory lists practitioners by state.
2. Engage an elder law attorney to draft the trust document. Cost: typically $1,500–$3,500 depending on state and complexity. Generic online templates are routinely rejected by Medicaid eligibility workers in QIT states; the document has to meet state-specific provisions that change periodically.
3. Name a trustee. Usually an adult child, the elder law attorney, or (rarely) a commercial trust company. The trustee has fiduciary obligations — they must keep the trust account separate, document every disbursement, and never use trust funds for anything outside the permitted categories.
4. Open a dedicated bank account titled in the trust's name. "John Smith Qualified Income Trust" — not the applicant's personal name. Banks unfamiliar with QITs sometimes resist; bring a copy of the trust document and reference the state Medicaid agency's QIT guidance if needed.
5. Begin depositing income. Once the trust is operational, the applicant's monthly income flows to the QIT account each month. The trustee disburses according to the permitted categories.
6. Apply for Medicaid. The QIT funding has to be in place before or contemporaneous with the application; retroactive funding doesn't fix an over-income application. Medicaid will review trust documentation as part of the eligibility determination.

The most common failure mode isn't the document — it's the monthly administration. If income is deposited in the wrong account, or the trustee disburses outside the permitted categories, Medicaid eligibility is at risk. Many families hire a fee-only fiduciary or use a "pooled" QIT (a commercial trust company that administers many QITs together) for $100–$300/month to avoid administrative mistakes.

The traps families fall into

Setting up the QIT after the nursing-home admission. Medicaid in income-cap states does not retroactively cover months before the trust was funded. Every month of delay is a month the family pays out of pocket. The strongest move is to draft the QIT before a parent is admitted, even if they don't think they'll need Medicaid soon.

Using a generic online "Miller Trust" template. State-specific provisions matter. A generic template is usually rejected and the family discovers this only after a Medicaid denial — losing months in the process.

Treating the trust account like a regular bank account. The trustee paying for groceries, restaurant meals, or a relative's expense from the QIT can trigger a Medicaid penalty, an Estate Recovery clawback, or in severe cases a fraud charge. The permitted disbursement categories are narrow.

Forgetting to file annual accountings. Some states require trustees to submit annual reports to the Medicaid agency or probate court documenting trust activity. Failure to file can trigger eligibility review and back-billing.

Spousal income confusion. If the applicant is married and the non-applicant spouse has their own income, the federal "spousal impoverishment" rules let the spouse keep a minimum monthly amount (~$2,500–$4,000/month depending on state and year). Only the applicant's income flows through the QIT. Sole reliance on the applicant's elder law attorney to model this correctly is essential.

What to do this week

1. Confirm the state. If the parent lives in any of the income-cap states above, this guide applies; if they're in a medically-needy state, see our Medicaid look-back explainer instead.
2. Check the parent's gross monthly income against the current cap. Add up Social Security, any pension, annuity payments, rental income, dividends, and required minimum distributions. If it exceeds ~$2,900/month (verify against the current year's figure), a QIT will be required for nursing-home Medicaid.
3. Engage an elder law attorney in the parent's state before a nursing-home admission is needed. Same reasoning as the durable POA guide: the planning has to happen before the crisis, not during it. $1,500–$3,500 for setup is dramatically less than weeks of $9,000/month out-of-pocket care.
4. Ask the attorney about the state-specific trustee requirements, annual accounting requirements, and pooled-trust options. Each of these has long-tail administrative implications.
5. If a nursing-home admission is imminent and no QIT exists yet: elder law attorneys typically have an expedited process. Some states allow QIT funding to begin immediately upon trust execution and recognize eligibility from that date.

Talk to a qualified elder law attorney in the parent's state. QIT rules are state-specific in important ways; generic advice from any web page (including this one) is no substitute for state-specific counsel.

Sources

• Medicaid.gov — Seniors, Medicare, and Medicaid Enrollees — federal program overview
• Kaiser Family Foundation — Medicaid — state-by-state eligibility tracker
• 42 U.S.C. § 1396p(d)(4)(B) — the federal statute authorizing Qualified Income Trusts
• National Academy of Elder Law Attorneys — Find a Lawyer — state-specific elder law practitioners
• Medicaid Planning Assistance — Qualified Income Trust overview — non-profit aging-services portal

The Care Letter publishes general educational information. It is not legal, medical, financial, or tax advice. Consult a qualified professional for guidance on your specific situation.