Medicaid Miller Trust and Funeral Expenses

questionSomeone recently asked me the following question: Can a Miller Trust be used to pay funeral expenses? In case you were wondering the same thing, let’s take a look at the answer.

There are a couple important points you need to know about the Texas Medicaid Miller Trust. First, a Miller Trust only receives the income of a nursing home Medicaid recipient. It never holds assets other than income. Second, the income that goes into the Miller Trust is supposed to be withdrawn from the Miller Trust by the end of the month. Funds are not meant to accumulate in a Miller Trust and here is some free advice, if you do let funds accumulate in a Miller Trust the HHSC policy treats the failure to make the required distributions as a transfer of assets resulting in a Medicaid penalty!

So let’s get back to the questions about using a Miller Trust to pay for funeral expenses. A Texas Medicaid Miller Trust must follow certain regulations. One of those regulations dictates the kinds of withdrawals that can be made from the Miller Trust. In the order of priority, those expenses are:

  1. the monthly allowance to the Medicaid recipient in the nursing home (amount defined by law);
  2. the minimum monthly maintenance allowance to the spouse of the nursing home resident (amount defined by law, if any);
  3. incurred medical expenses of the nursing home resident (the types of allowable expenses are defined by law);
  4. the co-payment to the nursing home towards the cost of care (amount defined by law).

In almost every case by the time you get to the last type of expense, there will not be any funds remaining in the Texas Medicaid Miller Trust until next month’s income is deposited into the Trust. But let’s consider one of the odd scenarios where there might be funds in the Miller Trust account even after paying the required expenses. This would be a situation where the Medicaid nursing home resident passes away early in the month or if their income was greater than their medical bills (very rare but it does happen once in a while).

In that case, you have one more required distribution you have to make after a nursing home resident with a Texas Medicaid Miller Trust passes away. That distribution is to the HHSC to reimburse them for the Medicaid assistance they paid for your parent or spouse’s care. This amount will almost certainly consume any remaining balance in the Miller Trust account so there would be nothing left to pay towards funeral expenses anyway.

This discussion is a reminder to everyone to always choose carefully where you get your advice from. By working with me my clients gain the knowledge and understanding of how to administer a Texas Medicaid Miller Trust. They know how to make the required deposits and withdrawals within the required deadlines. They know that there will be no funds left in the Miller Trust account when the person passes away and if there are any funds, they get paid to the HHSC. They know that only income goes into a Miller Trust and it is not an asset protection tool. They know how to follow Medicaid requirements to avoid problems with their loved one’s Medicaid eligibility. If you find you are not gaining this knowledge from whoever you are relying on during this critical process and you have unanswered questions, you may want to start listening to someone who can give you the answers you need to know.

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