Using a Miller Trust (QIT) to Qualify for TennCare Over the Income Limit

Step-by-Step Process in Tennessee

Many middle-class families in Tennessee find themselves caught in a frustrating legal trap. They have worked hard their entire lives, earning a solid pension and decent Social Security benefits, only to find that this modest income disqualifies them from receiving TennCare assistance. Yet, their income is nowhere near enough to actually cover the catastrophic costs of modern long-term care facilities. Tennessee is what is known as an income cap state. This means that to qualify for the TennCare CHOICES long-term care program, the applicant's gross monthly income cannot exceed a strict federal limit (calculated as 300% of the Supplemental Security Income Federal Benefit Rate, approximately $2,982 per month). If your monthly income is even one dollar over this threshold, you will be denied coverage, even if you clearly cannot afford the $7,000 monthly cost of a nursing home in Nashville, Memphis, or Franklin. Fortunately, federal and state laws allow a highly effective legal workaround. You can establish a Qualified Income Trust (QIT), commonly referred to as a Miller Trust, to safely divert the excess income and successfully qualify for the vital medical care you need.

Step 1: Establishing the Qualified Income Trust

A Miller Trust is a very specific, irrevocable legal document authorized under 42 U.S.C. § 1396p(d)(4)(B). You cannot just use a standard living trust or a family revocable trust. An attorney must draft the QIT to meet strict state criteria. The trust must name the Medicaid applicant as the beneficiary and designate a trusted family member or friend as the trustee who will manage the account. The document explicitly states that it is being created solely for the purpose of establishing eligibility for Medicaid in Tennessee, ensuring the state recognizes its validity.

Step 2: Opening a Specific Bank Account

Once the trust is legally drafted and signed, the trustee must take the trust document to a local bank in Tennessee to open a new checking account in the name of the Qualified Income Trust. It is critical that this account is entirely separate from all other personal accounts. You cannot mix savings, inheritance, or any other assets into this specific account; it is strictly meant to receive monthly income only. Providing the bank with the proper legal documentation is essential to avoid any banking errors.

Step 3: Directing Social Security into the Trust

To reduce your countable income below the cap, you must deposit your income directly into the QIT bank account every single month. For example, if your total income is $3,500, you must deposit at least the excess amount into the trust. However, the safest and most common practice advised by attorneys is to have your entire Social Security check and any other steady income directly deposited into the trust account every month. This strategy completely avoids any accidental disqualifications caused by failing to manually transfer the correct amount on time.

Step 4: Handling Teacher and State Pensions

Many seniors in Tennessee receive pensions from the Tennessee Consolidated Retirement System, Nashville (TCRS) after working as teachers or state employees for decades. These pensions, combined with Social Security, frequently push applicants over the strict income limit. Just like Social Security, TCRS pension payments must be properly routed into the Miller Trust. It is essential to coordinate with the pension administrator to ensure the deposits are legally assigned to the trust account without triggering complex tax complications or withholding issues.

Step 5: Allowable Medical Deductions from the QIT

Once the money is inside the trust, it does not just sit there forever. The trustee is legally required to pay the money out every month for specific, allowable expenses. Under TennCare rules, the trustee can pay the applicant's monthly Medicare premiums, supplemental health insurance premiums, and the mandatory Patient Liability amount, which is your required monthly contribution to the nursing home. The trustee must keep meticulous records, as the Division of TennCare, Nashville will actively audit the account to ensure the funds were used properly for medical and care expenses.

Step 6: What Happens to the QIT Funds Upon Death

A Miller Trust has a mandatory payback provision. Under Tenn. Code Ann. § 71-5-116, when the Medicaid recipient eventually passes away, any funds remaining in the trust account cannot simply be inherited by the family. The state of Tennessee must be legally listed as the primary beneficiary of the trust up to the total amount of medical assistance paid on the individual's behalf. Precedents like In re Estate of Trigg, 368 S.W.3d 483 (TN Supreme Court 2012) reinforce the state's absolute right to recover funds from Medicaid-qualifying trusts before any money goes to the heirs.

How Much Does it Cost in Tennessee?

Because the language required in a Miller Trust is highly specific and must pass state scrutiny, you must hire a professional. Having a qualified elder law attorney draft a QIT typically costs between $1,500 and $3,500. This fee often includes assistance with properly opening the bank account and instructing the trustee on their complex monthly duties. You can find an experienced attorney to help draft your trust through our comprehensive US Lawyer Directory.

How Long Does the Process Take?

Drafting the document itself is relatively fast; an attorney can usually prepare a Miller Trust within one to two weeks. The delay often comes from opening the bank account and coordinating with the Social Security Administration or state pension boards to redirect the direct deposits. Generally, you should plan for the entire setup process to take 3 to 4 weeks before you can safely file your electronic application for long-term services and supports (TennCare CHOICES) through TennCare Connect, or submit the state's official paper Form Application for Health Coverage & Help Paying Costs, Tennessee, Division of TennCare, Application for Health Coverage & Help Paying Costs.

Frequently Asked Questions (FAQ)