The Miller Trust and the Utah Gap

In 1989, Ms. Jeanette Miller, as representative of Medicaid Applicant Lottie Ham, filed a lawsuit against Colorado’s Department of Social Services (the “Department”) seeking to constrain the Department to recognize Ms. Ham’s Court-created income trust as unavailable in considering Ms. Ham’s eligibility for Medicaid in that state. See Miller v. Ibarra, 746 F. Supp. 19 (D. Colo. 1990). Ms. Ham was the victim of the “Utah Gap,” a phrase used to denote a situation in which a medically needy individual makes too much money to qualify for Medicaid, but not enough to pay for nursing home care.

Ms. Miller and her co-plaintiff’s argued that income deposited into certain kinds of trusts was unavailable to the person and therefore not countable towards the person’s income limit when applying for Medicaid benefits. The Court agreed with Ms. Miller, and because of this, these trusts became widely known as “Miller Trusts.”

This “Miller Trust” exception was codified into Federal Law at 42 U.S.C. Sec. 1396p(d)(4)(B), making it applicable in all states that impose an income limit on persons seeking Medicaid benefits.

In Texas, this kind of trust is referred to as a Qualified Income Trust or QIT. It can be used to fix an over-income problem and get someone eligible for Medicaid regardless of his or her monthly income level. However, QIT’s follow specific rules, which must be considered in the drafting and implementation of the Trust for it to have the desired eligibility effects.

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