His Pension and Social Security Total $3,050 a Month, $68 Over the Limit. In Roughly Two-Dozen States, He’s Disqualified From Medicaid Nursing Home Coverage Unless the Money Runs Through a Trust First

A widower in Florida collects $2,050 in Social Security and a $1,000 pension. The nursing home he just moved into bills roughly $10,000 a month. His combined $3,050 in monthly income won’t cover a third of the bill, yet Medicaid still denies his nursing home application. The reason: he sits $68 over the 2026 income cap of $2,982, and in his state, Medicaid doesn’t care that the excess is meaningless against the actual cost of care.

The fix is a Qualified Income Trust, almost always called a Miller Trust. An elder law attorney drafts it, the applicant routes income through it, and Medicaid then treats the income as if it never counted against the cap. Roughly two-dozen states use an income cap for nursing home Medicaid, where a properly funded Miller Trust can turn an income-based denial into eligibility as long as the applicant meets the program’s requirements.

Why $68 Blocks Nursing Home Medicaid in Income Cap States

Income cap states set the nursing home Medicaid limit at 300% of the federal Supplemental Security Income (SSI) benefit rate, which works out to $994 times 3, or $2,982 a month in 2026. The test harnesses gross income before Medicare premiums and other deductions come out. One dollar over the threshold is a denial. Sixty eight dollars over is also a denial.

This is where the Medicaid and Medicare distinction matters. Medicare is federal health insurance and pays for at most a limited period of skilled nursing after a qualifying hospital stay. Long-term custodial care in a nursing home falls to Medicaid, which is state administered. In income cap states, the applicant either fits under the number or uses the trust. Spending the excess $68 on a prescription doesn’t work.

At last check, income cap states include Alabama, Alaska, Arizona, Arkansas, Colorado, Delaware, Florida, Georgia, Idaho, Indiana, Iowa, Kentucky, Mississippi, Nevada, New Mexico, New Jersey, Ohio, Oklahoma, Oregon, South Carolina, South Dakota, Tennessee, Texas, and Wyoming. Medically needy states, by contrast, let applicants deduct medical expenses to get under a lower income figure, a different system entirely.

How a Miller Trust Works and Its Limits

Enter the Miller Trust, which changes how Medicaid treats income deposited into the account, while leaving the pension and Social Security check intact. The federal code is 42 U.S.C. §1396p(d)(4)(B).

To work, the trust generally must be irrevocable, contain only the applicant’s income, and name the state as remainder beneficiary up to the total Medicaid benefits paid. Depending on the state, the applicant either deposits all income or just enough to drop countable income under $2,982.

Once he qualifies, the widower doesn’t get to keep the money. Medicaid lets him retain a small personal needs allowance, an approved deduction for his $202.90 Part B premium, and, if there’s a spouse at home, a monthly maintenance allowance. Everything else, including money that ran through the trust, becomes his patient pay contribution to the nursing home. Medicaid picks up the balance.

Where Families Blow It

Elder law attorneys document the same mistakes repeatedly. Families open an ordinary checking account and label it a Miller Trust. They deposit savings or CDs into an income only trust, comingling it. They miss the required monthly deposit or make it after the state’s deadline, which invalidates that month’s eligibility. They assume the trust can retroactively fix months that already passed. It can’t.

Perhaps the most expensive error: copying another state’s form. Florida’s requirements differ from Texas’s, which differ from New Jersey’s. A template pulled off the internet frequently omits the specific remainder language a given state’s Medicaid office demands.

Three steps handle most of this.

1. First, verify whether the state actually uses an income cap, because a medically needy state doesn’t need this trust at all.
2. Second, have the state specific trust prepared before eligibility is needed, not the week the deposit is due.
3. Third, arrange automatic monthly deposits with records the Medicaid office can follow.

The trust moved the widower’s $3,050 through the one channel Medicaid was permitted to disregard, with most of the money still flowing to the nursing home.

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