What is a Miller Trust and do I need one?
In some states, a person who is applying for Medicaid is only allowed to have the income to a certain level. If their income is above the level set by Medicaid, they are excluded from receiving any Medicaid benefits. These States are referred to as “Income Cap States”. In those states, if a person has income above the set limit, they would need to put any excess income into a “Qualified Income Trust” or what is commonly called a “Miller Trust”. The Miller trust can pay the Medicaid recipient a small personal needs allowance, and the trust can also be used to pay the recipient’s spouse a monthly allowance. Any additional money is used to pay the recipient’s share of his or her cost of care. If there is any money left in the trust when the recipient dies, Medicaid has a right to the money to recover the cost of care.
North Carolina has no income cap. As a result, a Medicaid applicant is not precluded from receiving benefits strictly based upon their income. However, the applicant’s income will be used to determine the extent of the benefits they are entitled to. In most situations, the applicant’s benefits will be reduced by the amount of income they are receiving, with consideration from any spousal needs. In short, while North Carolina will not exclude all benefits if the applicant’s income is above a certain level, the applicant’s benefits may be reduced depending on their level of income. While North Carolina does not have an income cap, it does have caps on assets. In those cases where an applicant has available assets above the set limits, they could be excluded from receiving benefits. Since there is a five (5) year look back period for uncompensated transfer of assets, it is important that a potential Medicaid applicant start planning the transfer of assets before the need for Medicaid arises.
When planning ahead, there are several types of Trust available to protect one’s assets and to qualify for Medicaid. In most cases, we at Oak City Estate Planning can help you with creating a Trust that will not only help you to qualify for Medicaid but will also immediately protect your assets from your creditors.
If you are interested in learning about how we can protect your assets, please watch this link to our prerecorded workshop by clicking on the following link.