what is a qualified income trust?

---

You may have received a letter from Medicaid that you need a Qualified Income Trust in order to be eligible for benefits under Tenncare.  A Qualified Income Trust (Q.I.T.) is a type of irrevocable trust that is also often called a "Miller" Trust.  This type of trust is used for Medicaid applicants whose income is too high to qualify for Medicaid but is not enough to cover their monthly bill in a skilled nursing facility. Silva Law, LLC is experienced in setting up Qualified Income Trusts and advising clients on both the legal requirements of the trust and how the trust must be managed in order to continue to receive Medicaid benefits.

In order to qualify for Medicaid/Tenncare benefits, both the Medicaid applicant's assets and income must be under a certain amount or they are disqualified from receiving Medicaid benefits.  The "income cap" is $2,901.00 in 2025 in Tennessee and changes yearly.  If a Medicaid applicant's income is above that amount, federal law allows the applicant to place their income in a Qualified Income Trust to avoid disqualification, as the income placed in the trust is not counted as income for the purposes of determining Tenncare eligibility.  

What are the legal requirements for a Qualified Income Trust in Tennessee?

1. The trust must be irrevocable and cannot be amended or changed by the Grantor (Medicaid recipient).

2. All disbursements or payments from the QIT are made for:

   a.  A personal needs allowance of $50 per month

   b. Up to $20 per month for trust management expenses such as bank charges

   c.  A spousal income allocation permitted by Tennessee Medicaid

   d.  Expenses for health insurance premiums for the Grantor 

   e.  Expenses for other qualifying medical or remedial care for the Grantor

3. All income of the Grantor generally must be placed in the Trust

4.  The sole beneficiaries of the Trust are the Grantor during the Grantor's lifetime and the State of Tennessee.  

5.  The State of Tennessee (Bureau of TennCare) is paid or reimbursed for the total amount of medical assistance paid by the State to the Medicaid Recipient. 

How do I set up a Qualified Income Trust?

In order to set up a Qualified Income Trust, there must be a Grantor, a beneficiary (the Medicaid applicant) and a Trustee.  The trustee is responsible for controlling the account and is often the Conservator or Power of Attorney for the beneficiary.

Both the applicant and the trustee must sign the document in front of a notary public.  Then the applicant or their Attorney-in-Fact must take the QIT to a bank to set up the trust account.

How do I manage the Qualified Income Trust?

Every month, the Medicaid applicant's income is deposited in the Qualified Income Trust account.  The trustee may use the money in the account for limited purposes:  a $50 Personal Needs Allowance, monthly supplemental health insurance premiums, residential care facility costs, a community spouse allocation and up to $20 to pay for bank charges.   Any extra income held in the trust must be used exclusively for care-related expenses, and if it is not used for those purposes, it is returned to the State after the applicant dies.

Please contact Silva Law, LLC at 615-258-5541 for any questions related to Qualified Income Trusts.