People often mix this up with a special needs trust, but they solve different problems. A Miller trust, also called a qualified income trust, is used to help someone qualify for Medicaid long-term care when their monthly income is over the state's income limit. A special needs trust is usually meant to hold assets for a disabled person without wrecking benefit eligibility. Income versus assets: that is the key difference.

A Miller trust is a legal account into which excess income, such as Social Security, pension checks, or other recurring payments, is deposited. In many "income-cap" states, money placed into a properly drafted Miller trust is not counted the same way for Medicaid eligibility for nursing home care or home-based long-term care. Federal authority for this setup appears in 42 U.S.C. § 1396p(d)(4)(B). The trust has to follow strict state Medicaid rules, and the state is usually repaid from remaining funds after the beneficiary dies.

In practice, this is a fix-it tool, not an asset shelter. If the trust is drafted wrong, funded late, or income is deposited outside the trust, Medicaid can be denied for that month.

That can hit an injury claim hard. A settlement or ongoing disability-related income may affect long-term care planning, nursing home bills, liens, and eligibility timing. Before signing settlement papers or moving money, make sure the payment stream and trust language fit the state's Medicaid rules exactly.