A Qualified Income Trust — also called a Miller Trust or QIT — is a legal tool that allows people whose monthly income exceeds the Medicaid income limit to qualify for Medicaid long term care benefits. Without this tool many seniors with moderate incomes would be unable to qualify for Medicaid nursing home coverage even though they have limited assets and genuinely cannot afford the cost of nursing home care.
This guide explains what a Qualified Income Trust is how it works who needs one and how to set one up.
Why Qualified Income Trusts Exist
To understand why a Qualified Income Trust exists you first need to understand the Medicaid income cap problem.
In approximately 37 states — called income cap states — there is a hard monthly income limit for Medicaid long term care eligibility. In 2026 that limit is $2,982 per month for most states. If a Medicaid applicant’s monthly income exceeds this amount they are categorically ineligible for Medicaid long term care benefits in these states — regardless of how limited their assets are and regardless of how expensive their care is.
This creates a significant problem for seniors with moderate incomes. Consider a retired teacher whose monthly income from a pension and Social Security is $3,200 per month. Her income exceeds the $2,982 Medicaid cap by only $218 per month — yet without a solution she would be completely ineligible for Medicaid nursing home coverage. At $10,000 per month for nursing home care she would exhaust her savings within months — but Medicaid would not help her.
The Qualified Income Trust is the solution Congress created for exactly this situation. By depositing excess income into a properly structured QIT each month the applicant’s countable income for Medicaid purposes is reduced to below the cap — making them eligible for Medicaid long term care benefits.
What Is a Qualified Income Trust?
A Qualified Income Trust is a specific type of irrevocable trust created under federal Medicaid law — specifically 42 U.S.C. Section 1396p(d)(4)(B) — that holds a Medicaid applicant’s excess income each month for the purpose of qualifying for Medicaid long term care benefits.
The trust is called a Qualified Income Trust because it holds income — not assets — and it qualifies the applicant for Medicaid by reducing their countable income below the cap. It is called a Miller Trust after the court case — Miller v. Ibarra — that first established the validity of this planning strategy in 1992. It is called a QIT as an abbreviation.
The QIT is not a savings vehicle. The money that goes into the QIT each month is distributed out each month according to strict Medicaid rules. The trust does not accumulate a significant balance. Its purpose is purely to restructure how income is counted for Medicaid eligibility purposes.
How a Qualified Income Trust Works — Step by Step
The mechanics of a QIT work as follows.
Step 1 — The trust is established
An elder law attorney drafts an irrevocable QIT that meets all federal and state requirements. The trust names the Medicaid applicant as the beneficiary during their lifetime and names the state Medicaid agency as the primary remainder beneficiary at death — up to the amount of Medicaid benefits paid. A trustee — typically a trusted family member or the elder law attorney — is named to administer the trust.
Step 2 — Income is deposited into the trust each month
Each month the Medicaid recipient deposits their excess income — the amount above the Medicaid income cap — into the QIT bank account. Some states require that all income be deposited into the QIT — not just the excess. The specific deposit requirement varies by state.
Step 3 — The trustee distributes funds according to Medicaid rules
The trustee then distributes the funds from the QIT according to a specific priority order established by Medicaid rules. Distributions typically go in the following order — a small personal needs allowance for the nursing home resident — health insurance premiums including Medicare premiums — a Monthly Maintenance Needs Allowance for the community spouse if applicable — and the patient pay amount — the amount the nursing home resident must contribute toward the cost of care.
Step 4 — Medicaid pays the balance
After the patient pay amount is applied toward the nursing home bill Medicaid pays the remaining cost of care. The QIT makes the applicant eligible for Medicaid by reducing their countable income below the cap — Medicaid then covers the cost of care that the resident cannot afford.
Step 5 — At death the state is reimbursed
If any funds remain in the QIT account at the time of the resident’s death those funds go to the state Medicaid agency — up to the amount of Medicaid benefits paid on the resident’s behalf. This is part of the Medicaid estate recovery process.
A Concrete Example
Mary is 82 years old and needs nursing home care. Her monthly income is $3,400 — $2,000 from Social Security and $1,400 from a small pension. The Medicaid income cap in her state is $2,982. Mary’s income exceeds the cap by $418 per month.
Without a QIT Mary cannot qualify for Medicaid in her income cap state regardless of her assets.
With a QIT Mary deposits $418 — the excess above the cap — into the QIT bank account each month. Her countable income for Medicaid purposes is now $2,982 — just at the cap. Mary qualifies for Medicaid.
Each month the trustee distributes the $418 in the QIT account as follows — $75 personal needs allowance to Mary — $174 for her Medicare Part B premium — and $169 patient pay toward the nursing home bill. Mary’s full $3,400 in income is accounted for — $2,982 of it goes through normal Medicaid channels and $418 of it is managed through the QIT — and Medicaid pays the balance of the nursing home cost.
Who Needs a Qualified Income Trust?
You need a QIT if all of the following are true.
You live in an income cap state — approximately 37 states use income caps rather than spend-down rules. Your monthly gross income exceeds the Medicaid income cap — $2,982 per month in most income cap states in 2026. You are applying for Medicaid nursing home benefits or HCBS Waiver benefits. Without a QIT you would be categorically ineligible for Medicaid benefits due to excess income.
You do NOT need a QIT if you live in a medically needy state — approximately 13 states use spend-down rules rather than income caps and do not use QITs. In medically needy states applicants with excess income can spend down that income on medical expenses to qualify for Medicaid without a trust.
Which States Require QITs?
Income cap states — where QITs are required for applicants with excess income — include Alabama Alaska Arizona Arkansas Colorado Florida Georgia Idaho Indiana Iowa Kansas Kentucky Louisiana Mississippi Missouri Montana Nevada New Jersey New Mexico North Carolina Ohio Oklahoma Oregon South Carolina South Dakota Tennessee Texas Utah Wyoming and several others.
Medically needy states — where QITs are generally not used — include California Connecticut Hawaii Illinois Maine Maryland Massachusetts Minnesota Minnesota New York Pennsylvania Vermont Virginia Washington and a few others.
Some states fall into a hybrid category with both income cap and spend-down options available. State rules change periodically and the specific rules in your state should be confirmed with an elder law attorney.
Requirements for a Valid QIT
Not just any trust qualifies as a QIT for Medicaid purposes. The trust must meet specific requirements established by federal law and implemented by state Medicaid rules.
Must be irrevocable
The QIT must be irrevocable — the creator cannot simply take the money back out of the trust outside of the permitted distributions. This irrevocability is what makes the deposited income not countable for Medicaid purposes.
Must contain only income
The QIT can contain only income — not assets. Depositing countable assets into the QIT rather than income would not protect those assets from Medicaid’s asset limit.
Must name the state as primary remainder beneficiary
The trust must name the state Medicaid agency as the primary remainder beneficiary at the Medicaid recipient’s death — up to the amount of Medicaid benefits paid. This ensures the state can recover its costs from any remaining trust funds.
Must be established before Medicaid approval
The QIT must be in place before the Medicaid application is approved. Retroactive establishment of a QIT after a Medicaid denial due to excess income is generally not permitted.
Must be a valid legal trust under state law
In addition to the federal Medicaid requirements the QIT must be a valid trust under the laws of the state where it is created. This means it must be properly drafted signed by the appropriate parties and in some states notarized or witnessed.
How to Set Up a Qualified Income Trust
Setting up a QIT requires working with a qualified elder law attorney. The process involves the following steps.
Step 1 — Consult an elder law attorney
Contact a qualified elder law attorney in your state who has experience with Medicaid planning and QITs. The attorney can confirm whether a QIT is needed in your state and structure the trust correctly.
Step 2 — The attorney drafts the trust document
The attorney prepares a QIT trust document that meets all federal and state requirements. This is typically a short document — one to three pages — but it must be precisely drafted to comply with Medicaid rules.
Step 3 — Sign the trust document
The trust creator — typically the Medicaid applicant or their agent under a power of attorney — signs the trust document before a notary and any required witnesses.
Step 4 — Open a dedicated bank account
A separate dedicated bank account must be opened in the name of the QIT. This account is used exclusively for the QIT deposits and distributions each month. The account should not be commingled with other personal funds.
Step 5 — Begin monthly deposits
Once the Medicaid application is approved the trustee begins making monthly deposits of the required income into the QIT account and distributing those funds according to Medicaid rules each month.
Step 6 — Maintain the trust properly
The trustee must maintain careful records of all deposits and distributions and must manage the trust strictly in accordance with Medicaid rules. Poor trust administration can jeopardize Medicaid eligibility.
Common Questions About QITs
Can a family member serve as trustee?
Yes — in most states a trusted family member can serve as trustee of the QIT. The trustee has a fiduciary duty to manage the trust properly and maintain accurate records.
What happens to money left in the QIT at the end of each month?
In most states the QIT account should have a zero or near-zero balance at the end of each month after all required distributions are made. Significant accumulated balances in the QIT could be treated as countable assets by the state Medicaid agency.
Can a power of attorney establish a QIT?
In most states a person acting under a valid durable power of attorney can establish a QIT on behalf of the Medicaid applicant. The power of attorney document should specifically authorize the creation of trusts.
Does a QIT affect the community spouse?
The QIT is established for the Medicaid applicant’s excess income. The community spouse’s income is generally not affected by the QIT.
What does a QIT cost to set up?
Attorney fees for drafting a QIT are typically $500 to $1,500 depending on the state and attorney. The QIT bank account typically has no significant fees if a basic checking account is used.
Key Resources
- National Academy of Elder Law Attorneys — NAELA — naela.org — find a qualified elder law attorney who can establish a QIT in your state
- Your state Medicaid agency — see our state resource pages for contact information for your state’s Medicaid agency
- Eldercare Locator — eldercare.acl.gov — 1-800-677-1116 — connect with local elder law resources
The information in this article is for general informational purposes only and does not constitute legal or financial advice. QIT rules vary significantly by state and change frequently. Always consult a qualified elder law attorney in your state before establishing a Qualified Income Trust.
Last updated: July 2026