New Medicaid Requirements will have significant effect on Nursing Homes & Home and Community Based Services Providers

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Effective June 1, 2014, the State of Indiana is changing the Medicaid eligibility/determination process.  Among other changes, Medicaid-eligible nursing home residents or those receiving Home and Community Based Services under a Medicaid waiver may have gross income up to $2,163.00 per month. Waiver recipients and nursing home residents with income exceeding the $2,163.00 limit must establish a valid Qualified Income Trust (“QIT”), also known as a “Miller trust”, to maintain Medicaid eligibility. Existing Medicaid members whose gross income exceeds the limit and who do not establish a Miller trust will lose their eligibility.  New applicants with gross income above the limit must establish a Miller trust before applying for Medicaid in order to be eligible.

What are the requirements for a Miller Trust?
  • A Miller trust is a legal arrangement which allows a Medicaid recipient to place a portion or all of his or her income into the trust and thereby exclude it from income for eligibility purposes.
  • Establishing a Miller trust requires completion of three steps.
    • Step 1 - Establish a valid Miller trust document.
    • Step 2 - Set up a bank account that will be the trust account.
    • Step 3 - Take action to deposit at least the portion of the gross income exceeding $2,163.00 into the trust account.
  • A Miller trust must be irrevocable.
  • The Miller trust must state that, upon the primary beneficiary’s death, the Indiana Family and Social Services Administration or its successor agency becomes beneficiary of any remaining trust property up to an amount equal to the total medical assistance paid on behalf of the primary beneficiary by the State of Indiana. 
Is a separate bank account required?
  • Not necessarily however best practice is to set this up as a separate account and only deposit the amount in excess of the $2,163. 
  • Only the beneficiary’s income can be deposited into the account.
  • The Miller trust may be emptied-out each month except for the minimum amount required to maintain the account.
What type of account should be used?
  • A no minimum, no fee account should be used.  However funds in the Miller trust may only be used for certain allowable expenses.
Who can serve as the trustee of the Miller Trust?
  • An attorney-in-fact, guardian or authorized representative are the most common choices to serve as the trustee. 
  • Some nursing homes are allowing a representative of the facility to serve as the trustee however note that a trustee is a fiduciary, who under the law has a special duty to the beneficiary of the trust. This duty is a strict duty. 
  • The resident may not be the trustee of the trust. 
Who can be the Settlor of the Miller Trust?
  • A Settlor is the person who creates the trust. The settlor can be the resident, a legal guardian or resident’s power of attorney if the granted the authority to establish trusts on the individual’s behalf.
  • Concerns regarding the unauthorized practice of law if the facility is filing out the Miller trust form and explaining the terms and process.
  • Incapacitated residents should already be under a guardianship. If not, the best course of action it to establish a guardianship so the guardian can appoint a trustee.  
Will all banks allow for the creation of a Miller Trust?
  • Unfortunately, not all banks are willing to create Miller Trusts. 
  • FSSA has indicated that the nursing home’s resident fund management system may be used to set up a Miller Trust. However special care should be used to not co-mingle these funds with other funds held on behalf of the resident.
FSSA Resources
Although FSSA notified those Medicaid recipients affected by this change, Providers were not copied on the notices. Therefore, it is recommended that Providers proactively inform their residents of the new requirements. According to FSSA, existing Medicaid recipients subject to the Miller Trust requirements will continue to be eligible for the month of June and beyond as long as all Miller trust materials are submitted by June 30, 2014.

For those Providers who serve beneficiaries that will subject to these new requirements, we recommend that you educate your key staff members on the Miller Trusts as well as the timing issues to minimize adverse Medicaid eligibility issues for your beneficiaries.  There are important operational considerations and best practices that can be established.  

Please contact Lori McLaughlin at lmclaughlin@kdlegal.com, Laura Bonadies at lbonadies@kdlegal.com or any member of the Krieg Devault Health Care Practice Group if you wish to schedule an in-service for your staff or need assistance in reviewing and updating your Medicaid protocols to incorporate the Miller Trust requirements.  
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