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Types of Trusts Allowed Under Medicaid Rules

Special Needs Trust - Miller Trust - Pool Trust

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If you're concerned about how all your assets are going to be distributed after you die, or how much tax your heirs will have to pay, you might want to look into opening a trust. MEDICAID QUALIFIED INCOME TRUSTS are used to help people qualify for Medicaid. When a person has countable income or resources that would normally prevent Medicaid eligibility, but they have high-cost medical or prescription needs that are not covered by Medicare or private health insurance, Medicaid rules allow them to establish a Medicaid Qualifying Trust.

Property in a trust may or may not be countable, depending on the terms of the trust and the source of the money. The following are the three types of EXEMPT TRUSTS allowed under Medicaid rules. In most cases, you will need to consult an attorney about setting up a trust. In all cases, the state must be named as a residuary beneficiary of the trust.

Types of Trusts Allowed Under Medicaid Rules:

A SPECIAL NEEDS TRUST can be established by a parent, grandparent, legal guardian, or the court using the client's assets. You will need to consult an attorney to set up this type of trust. To qualify as exempt, the trust must benefit someone under age 65 who meets SSI disability criteria. Normally, this type of trust is used in the settlement of personal injury or malpractice tort litigation. Property in this trust is not counted as a resource.

Distributions made for medical or social services not included in the state Medicaid program will not be counted as income. Distributions for food, clothing, shelter, or cash will be counted as income to the client.

A QUALIFIED INCOME TRUST, also known as a MILLER TRUST, is necessary to receive Medicaid benefits for long-term nursing home care if the income of the Medicaid applicant income exceeds the maximum allowable amount. You will need an attorney to set up a Qualified Income Trust (QIT). Only income, not property, may be placed in this trust. In addition, income must be placed in the trust in the month it was received and it must be spent no later than the month following receipt. While not all your income must be placed in the trust, all the income from a particular source must be. For example, if you receive a pension and Social Security benefits, you could choose to place only your pension in the trust, but you must put in the whole amount. Income in a Miller Trust does not count toward the income cap in determining eligibility. However, it is considered in determining your co-payment for services.

Texas is considered an “income cap” state when determining eligibility for Medicaid nursing home benefits. Income guidelines change frequently, but Texas has an income cap for nursing home residents. Nursing home residents whose incomes exceed the monthly cap will not qualify for Medicaid unless an attorney helps them make special arrangements.

A POOL TRUST is a collection of small special-needs trusts that are centrally managed. The only pool trust approved in Texas is the Master Pooled Trust through The ARC of Texas. The Texas Department of Aging and Disability Services (DADS) has approved this pool trust. It is exempt only for persons under age 65. The ARC of Texas is located at 8001 Centre Park Dr., Suite 100, Austin, TX 78754-5107 1-800-252-9729.

SOURCE: Texas Health and Human Services

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