What is a Qualified Income Trust (QIT)?

A qualified income trust (QIT), also known as a Miller Trust, is an irrevocable trust specially designed to legally divert an individual or married couple’s income into a trust resulting in the income being excluded for purposes of determining eligibility for nursing home (“institutional”) Medicaid and §1915(c) home and community-based waiver services.

Texas is one of several states which permits the use of a QIT when a Medicaid applicant’s income exceeds the special income limit. In Texas, the special income limit for an individual is 300 percent of the Social Security Income (SSI) benefit rate. Effective January 1, 2024, the special income limit for an individual applicant is $2,829. For a married couple, both of whom are applying for Medicaid, the special income limit is doubled. Therefore, effective January 1, 2024, the special income limit for married applicants is $5,658 per month.

The QIT is not to be confused with other types of trusts such as a special needs trust, living trust or Medicaid qualifying trust. The QIT serves one purpose – to create a legal pathway to Medicaid eligibility for applicants who have too much income to qualify for assistance but insufficient funds to pay for needed care. Congress addressed this problem in 1993 by amending Section 1917 of the Social Security Act to permit the use of an income diversion trust (QIT). See 42 USC §1396p(d)(4)(B).

When a QIT is submitted with an application for Medicaid assistance, the HHSC caseworker assigned to the case is required to forward a copy of the trust instrument in the regional HHSC attorney for review. The regional attorney will review the trust to determine if the following QIT requirements have been satisfied:

1. The trust must be irrevocable. In other words, the trust cannot be changed.

2. The trust must contain only a person’s income. However, in order to open a trust bank account, HHSC will permit the individual to deposit a nominal amount (such as $20) into the account.

3. The trust must receive any or all sources of a person’s income which would otherwise cause an individual to be income ineligible. Importantly, whatever source of income that is deposited into the trust must be done so in its entirety in the month of its receipt by the individual. The income does not have to be initially received by the trust; it can be received by the person and then transferred (in its entirety) to the trust account.

4. The trust must include a reversion clause providing that upon the death of the trust beneficiary, the trustee is to distribute the remaining trust funds to the State of Texas, up to the full amount of Medicaid assistance that was provided but not otherwise repaid.

5. The trust should require the trustee to pay:

a monthly personal needs allowance to the beneficiary ($60 for an individual recipient and $120 for a married couple both of whom are receiving Medicaid institutional or §1915(c) assistance);
a monthly spousal minimum monthly need allowance, if applicable; and
the cost of medical assistance provided to the beneficiary from remaining funds.

Once the trust instrument meeting all of HHSC’s QIT requirements is signed and dated, a trust account must be opened by the QIT trustee. The trustee must take care to timely administer the trust according to its terms. Failure to do so will likely result in one or more months of Medicaid ineligibility.

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