Miller Trust in Tennessee: Requirements, Setup, and Deposits

A Miller Trust in Tennessee, formally called a Qualified Income Trust (QIT), lets you qualify for TennCare long-term care when your gross monthly income is above the program’s cap of $2,982 in 2026.¹ You create an irrevocable trust, run the over-cap portion of your income through a dedicated bank account each month, and TennCare disregards the deposited income when it decides whether you qualify. Without this tool, a single dollar over the cap disqualifies you from nursing facility coverage and the home and community-based services offered through CHOICES, no matter how much care you need.

Why Tennessee Requires the Trust

Tennessee is an income-cap state. Your gross monthly income, meaning the total from Social Security, pensions, annuities, rental income, and any other recurring payments before any deductions, has to sit at or below 300 percent of the federal SSI benefit rate. For 2026, that ceiling is $2,982, and it adjusts each January when SSI is updated for cost of living.² There is no spend-down alternative in Tennessee. If your income exceeds the cap, the QIT is the only route to eligibility.

The trust works because federal law at 42 U.S.C. § 1396p(d)(4)(B) tells states to treat income deposited into a qualifying trust as if it never counted toward eligibility.³ The trust does not lower your income in any real sense. It reroutes it, so what TennCare measures against the cap is only whatever you leave outside the trust.

One boundary worth naming up front: the QIT fixes the income test only. Tennessee also caps countable assets at $2,000, excluding the home you live in, and the trust does nothing for that side of the ledger.⁴ If your resources are also over the limit, you have a separate problem to solve. The QIT and the CHOICES income cap apply the same way whether you need nursing facility care, home and community-based services, or an at-risk placement under the program’s three groups.

The Federal Requirements Your Trust Has to Meet

Three features are non-negotiable under federal law and Tennessee’s own policy manual.⁵

The trust must be irrevocable. Once created, you cannot dissolve it or claw money back for non-approved purposes.
Only income can go in. Pension checks, Social Security, annuity payments, and similar sources, plus whatever interest accrues inside the trust. No real estate, no savings, no investments, and no deposits from a spouse, adult child, or anyone else.
Tennessee must be named as the primary beneficiary at death, entitled to recover from the remaining balance up to the total amount of Medicaid benefits paid on your behalf.

The trust also has to terminate at defined moments: when the beneficiary dies, when the trust is no longer needed for TennCare eligibility, or when long-term care services are no longer medically necessary.⁵

Drafting and Signing the Trust

The trust document names three roles. The grantor is the person applying for TennCare. The trustee manages the account and handles the monthly disbursements. A successor trustee is named to step in if the primary trustee cannot serve. The trustee has to be someone other than the applicant, but a spouse, adult child, or other trusted relative is fine.

Tennessee does not require an attorney. Working with an elder law attorney reduces the chance of drafting errors that hold up your application, and many use a standardized QIT template. The Tennessee Commission on Aging and Disability and local legal aid offices can also point you toward approved forms.

Before drafting, pull the current award letters or benefit statements for every income source, because the trust document needs the exact gross amounts. A small error gives TennCare a reason to reject the application. Once the document is complete, the grantor (or an agent under a power of attorney) and the trustee sign it in front of a notary public. Notarization is required for TennCare to accept the trust.

Opening the Trust Bank Account

Take the notarized trust document to a bank or credit union and open a dedicated checking account titled in the name of the Qualified Income Trust. Keeping the account entirely separate from any personal account is essential; commingling is one of the fastest ways to lose eligibility.

The bank will need the trust document and the grantor’s Social Security number. A QIT is treated as a grantor trust for tax purposes, so it does not need its own Employer Identification Number from the IRS. The applicant’s Social Security number serves as the tax ID.

No state law sets a minimum balance. Some banks do charge monthly maintenance fees on trust accounts, and TennCare builds in a $20 monthly QIT allowance to cover that.⁶ If your bank charges nothing, that $20 effectively goes to the resident. It pays to shop for a low-fee or no-fee trust account.

How Much Income to Deposit Each Month

Tennessee gives you flexibility, but the arithmetic is strict: any income you leave outside the trust is tested against the $2,982 cap. If what stays outside still exceeds the cap, you fail the income test.⁵

You can deposit only the amount that pushes you over the cap, or you can deposit all of your income. Both approaches are legal. Depositing everything and then paying all approved expenses out of the trust is usually the safer choice, because it creates a single clean paper trail for the eligibility reviews TennCare conducts.

The Monthly Disbursement Order

Each month the trustee deposits income into the QIT and then pays out approved expenses in a specific sequence. TennCare audits these accounts, so the order matters.⁶

Personal needs allowance. Tennessee currently sets this at $70 per month for nursing home residents, spending money for clothing, toiletries, phone charges, and similar items.
The $20 QIT allowance to cover any bank fees on the trust account.
Community Spouse Income Maintenance Allowance, when the applicant has a spouse still living at home whose own income falls below the federal minimum threshold. The amount follows federal guidelines, with a minimum floor and a maximum ceiling.
Certain health insurance premiums and non-covered medical expenses, including Medicare Part B premiums, supplemental insurance premiums, and out-of-pocket medical costs TennCare does not pay for.
Patient liability. Whatever remains goes to the nursing facility or home care provider as the applicant’s share of the cost of care. TennCare pays the rest.

The trustee writes that final check every month. Miss the sequence, and TennCare can question whether the trust is being run correctly.

Record-Keeping and Mistakes That Break Eligibility

The trustee should keep a ledger or spreadsheet tracking every deposit and disbursement, with bank statements filed each month. TennCare can request an accounting at any point during an eligibility review, and gaps in the records invite scrutiny.

A few mistakes come up often enough to flag:

Depositing anyone else’s money into the trust account.
Paying expenses out of the trust that are not on the approved list.
Skipping a monthly deposit when income arrives.

A single missed month can create a real problem. If the trustee fails to deposit income and the amount left outside the trust exceeds $2,982, TennCare can find the applicant ineligible for that month.⁵

What Happens When the Trust Ends

The QIT terminates when the beneficiary dies, when the trust is no longer needed for TennCare eligibility, or when long-term care is no longer medically necessary. At termination, the state remainder provision applies: Tennessee receives whatever is left in the account, up to the total Medicaid it paid on the beneficiary’s behalf. The trustee has to provide a full accounting along with the remaining balance.⁵

That state remainder claim is a separate mechanism from Tennessee’s broader estate recovery program, which is required by law to seek repayment from the estates of members who received long-term care benefits after age 55. Estate recovery can reach assets the member owned at death, such as a home, car, or bank accounts held outside the trust. Surviving family members are not personally responsible, but inherited assets may be subject to the claim.⁷ QIT balances tend to be small relative to total care costs, so the state remainder rarely reimburses Tennessee in full. Estate recovery is what closes that gap.

Tax Treatment

A QIT is a grantor trust for federal tax purposes. All income that flows through it is reported on the grantor’s personal tax return, not on a separate trust return, and the trust uses the applicant’s Social Security number rather than a separate EIN. Income deposited into the QIT is still taxable to the applicant in the year it is received. The trust is purely a Medicaid eligibility tool; it does not change anyone’s tax liability. If the applicant’s income was low enough that they were not required to file before, the QIT does not change that either.

1
TennCare. Major Medicaid Eligibility Categories in Tennessee
2
Social Security Administration. SSI Federal Payment Amounts
3
Office of the Law Revision Counsel. 42 USC 1396p – Liens, Adjustments and Recoveries, and Transfers of Assets
4
Medicaid. Tennessee TennCare III Demonstration Amendment 6
5
TennCare. ABD Trusts Policy Manual 110.055
6
TennCare. Institutional Medicaid Policy Manual – Post-Eligibility Treatment of Income
7
TennCare. TennCare Estate Recovery Fact Sheet