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, a total of $3,050 a month. The nursing home he just moved into bills roughly $10,000 a month. His combined income won’t cover a third of that bill, yet Medicaid still denies his application. The reason: he sits $68 over the 2026 income cap of $2,982, and Florida Medicaid does not factor in whether the excess is meaningful 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 each month, and Medicaid then treats that income as though it never counted against the cap. Roughly two dozen states use a hard income cap for nursing home Medicaid, and a properly funded Miller Trust can flip an income-based denial into eligibility, as long as the applicant also meets the program’s other 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 three, or $2,982 a month in 2026. The test applies to 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 also where the distinction between Medicaid and Medicare becomes critical. Medicare is federal health insurance, and it pays for at most a limited period of skilled nursing care following a qualifying hospital stay. Long-term custodial care in a nursing home falls to Medicaid, which is state-administered and far stricter about who qualifies. In income cap states, the applicant either fits under the number or uses the trust. Paying the excess $68 toward a prescription does not solve the problem.

Nationally, Medicaid covers roughly two-thirds of nursing home residents who meet state income and asset limits. The national median cost of a nursing home runs about $9,600 a month for a semi-private room and around $10,800 for a private room, according to CareScout’s Cost of Care Survey. Against those figures, a $3,050 monthly income leaves an enormous gap, which makes the income cap rule feel especially arbitrary to families who encounter it for the first time.

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 qualifying medical expenses to bring their countable income under a lower threshold, a different system that does not require a trust.

How a Miller Trust Works and Its Limits

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

To function correctly, the trust generally must be irrevocable, hold only the applicant’s income, and name the state as remainder beneficiary for the total Medicaid benefits paid on the applicant’s behalf. Depending on the state, the applicant either deposits all income or deposits just enough each month to bring countable income below $2,982.

Once he qualifies, the widower does not simply keep the money he routed through the trust. Medicaid lets him retain a small personal needs allowance, an approved deduction for his $202.90 Part B premium, and, if a spouse remains at home, a monthly maintenance allowance for that spouse. Everything else, including funds that flowed through the trust, becomes his patient pay contribution toward the nursing home bill. Medicaid covers the balance.

Where Families Blow It

Elder law attorneys document the same errors repeatedly. Families open a standard checking account, label it a Miller Trust, and proceed as though the label is enough. They deposit savings or CD proceeds into an income-only trust, commingling assets that disqualify the account. They miss a required monthly deposit, or make it after the state’s deadline, which voids eligibility for that month alone. They assume the trust can repair months that have already passed. It cannot.

Perhaps the costliest mistake is copying another state’s trust form. Florida’s requirements differ from Texas’s, and Texas’s differ from New Jersey’s. A template downloaded from the internet regularly omits the specific remainder-beneficiary language a given state Medicaid office requires to accept the trust. One drafting flaw can mean a month of privately paid nursing home care while the document is corrected, which at $10,000 or more per month is a hard lesson.

Three steps handle most of this:

1. First, verify whether the state actually uses a hard income cap. An applicant in a medically needy state does not need this trust and should consult an attorney about the spend-down process instead.
2. Second, have a state-specific trust prepared before eligibility is needed, not the same week the first deposit is due.
3. Third, arrange automatic monthly deposits and keep records the Medicaid office can trace, so no month is inadvertently skipped.

The widower’s $3,050 ran through the one channel Medicaid was permitted to disregard. Most of that income still flowed to the nursing home as his patient contribution. The trust did not reduce what he paid toward his care. It changed only whether Medicaid paid the rest.

Editor’s note: This update refreshes the national nursing home cost figures to the current CareScout/Genworth Cost of Care Survey median of approximately $9,600 a month for a semi-private room and $10,800 for a private room, and adds context that Medicaid covers roughly two-thirds of nursing home residents nationally who meet eligibility requirements.

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