Using an Income Cap Trust (Miller Trust) to Qualify for Oregon Medicaid

Discovering that you make too much money to qualify for Medicaid, but not nearly enough to pay for a $10,000-per-month nursing home in Oregon, is a terrifying realization for many families. Because Oregon applies a strict limit to the amount of monthly income an applicant can have, seniors who are over this limit are caught in a financial trap. Fortunately, federal and state laws offer a clear solution: the Income Cap Trust (ICT).

Creating and administering a trust involves strict banking rules and precise legal drafting. One mistake can result in the immediate denial of your Medicaid benefits. We highly encourage you to search our directory to find a qualified Oregon elder law attorney who can help you draft a valid trust and protect your life savings.

What is an Income Cap Trust?

An Income Cap Trust, sometimes referred to nationally as a Miller Trust due to early court rulings, is an irrevocable trust designed specifically to hold a Medicaid applicant's excess income. By transferring your income into this trust, the Oregon Department of Human Services, Salem no longer counts that money towards the strict Medicaid income limit. The statutory basis for this trust is found under 42 U.S.C. § 1396p(d)(4)(B) at the federal level, and administered locally under Or. Admin. R. 461-145-0540.

Setting Up and Funding an ICT in Oregon

The mechanics of an ICT must be handled flawlessly every single month. It is not enough to simply draft the document; the trust must be funded properly to keep you eligible.

What Income Must Go Into the Trust?

You cannot just put a few dollars into the trust to get below the cap. Oregon rules generally require that if a specific source of income (like a Social Security check or a private pension) pushes you over the limit, the entire amount of that specific check must be deposited directly into the trust account each month. For example, you cannot deposit half of your pension; the full pension payment must go into the ICT account.

Allowed Deductions and Patient Liability

Money that goes into the ICT does not just sit there. The trustee (usually a trusted family member) must distribute the money every month according to a strict formula set by the state. First, the trust pays out the Personal Needs Allowance, which is a small amount you are allowed to keep for personal items. Next, it pays your Medicare premiums and out-of-pocket medical expenses. It may also distribute a state-approved allowance to your healthy spouse living at home (the Monthly Maintenance Needs Allowance, or MMMNA). After these strict deductions, every remaining dollar in the trust must be paid to the nursing home or care facility as your portion of the bill (known as Patient Liability).

What Happens to Residual Funds Upon Death?

Because the government is helping to pay for your expensive nursing home care, the state requires a payback provision. Under the law, when the Medicaid recipient passes away, any money remaining in the Income Cap Trust must be paid directly to the state of Oregon, up to the total amount that Medicaid spent on your care. The state enforces this through the Estate Administration Unit of the Oregon Department of Human Services, Estate Administration Unit, Salem. Courts have consistently upheld these state payback requirements, as seen in precedents like Department of Human Services v. Hobart, 318 Or. App. 52 (OR Court of Appeals 2022), which emphasize the state's right to recover public assistance funds.

How Much Does it Cost to Set Up?

How Long Does the Process Take?

Drafting the trust document can be done by a lawyer in a matter of days. However, opening the trust bank account and getting the Form OHP 7210, Oregon, Oregon Health Authority, Application for Oregon Health Plan (OHP) Benefits processed by the state can take 45 to 90 days. It is critical to start the process the month before you need Medicaid to pay for your care.

Frequently Asked Questions (FAQ)