When a loved one needs long-term care but earns too much to qualify for Medicaid, families face a difficult situation. The monthly income might be modest—perhaps $2,000 from Social Security and a small pension—but it exceeds Medicaid’s income limits.
At the same time, that income falls far short of covering nursing home costs that easily exceed $12,000 per month in New York.
This income gap leaves many families stuck between two impossible choices: spend down a lifetime of savings or go without needed care. Working with an experienced Miller Trust attorney can help families find solutions that bridge this gap.
What Is a Miller Trust?
A Miller Trust, also called a Qualified Income Trust (QIT), is a legal tool that helps people with income above Medicaid’s limit become eligible for benefits.
The 1990 Colorado court case Miller v. Ibarra established that people shouldn’t be denied Medicaid simply because their income exceeded the limit by a small amount—especially when that income was still insufficient to pay for their care.
How it works:
Income that exceeds Medicaid’s threshold gets deposited into a special trust account each month. Once in the trust, that income no longer counts toward the eligibility limit.
Other names for Miller Trusts:
- Qualified Income Trusts (QIT)
- Income Diversion Trusts
- Income Cap Trusts
- Income Only Trusts
- d4B trusts
Does New York Allow Miller Trusts?
Here’s where things get different for New York residents.
New York is a “medically needy” state, which means it doesn’t use the hard income cap that requires Miller Trusts. Instead, New York allows “spend down”—applicants can use excess income to pay medical expenses until they meet the income threshold.
However, New York offers an alternative solution that works similarly: Pooled Income Trusts.
These trusts serve the same basic function—sheltering excess income so applicants can qualify for Medicaid—but operate under different rules specific to New York.
How Do Pooled Income Trusts Differ from Miller Trusts?
Pooled Income Trusts represent New York’s approach to helping residents with excess income qualify for Community Medicaid, which covers home care and long-term services.
Key differences:
- Miller Trusts: Individual accounts set up by families
- Pooled Income Trusts: Managed by nonprofit organizations with individual sub-accounts for each beneficiary
Who can use them in New York:
- People certified as disabled by the Social Security Administration
- People certified as disabled by New York State
- Adults over age 65 seeking long-term care services
How they work:
Each month, beneficiaries deposit excess income into their pooled trust account. This income is no longer counted when determining Medicaid eligibility. The funds can then pay for living expenses that Medicaid doesn’t cover.
What Are New York’s Medicaid Income Limits?
As of 2025, the general threshold is approximately $1,800 per month for a single individual.
For married couples, the limit is $2,433 per month (when both spouses are applying).
The challenge:
Between housing costs, utilities, food, and basic necessities, most people in the New York metro area find it impossible to maintain their household on less than $2,000 per month.
Yet Medicaid requires applicants to either stay below these thresholds or spend down their excess income on medical expenses.
Can Families Just Give Away Excess Income?
No. This violates Medicaid’s transfer rules and will result in penalties.
The look-back period:
Medicaid imposes look-back periods to prevent people from transferring assets or income simply to qualify for benefits.
For Community Medicaid in New York: Currently no look-back period exists. However, a 30-month (2.5 year) look-back is expected to be implemented sometime in 2025.
What happens with violations:
Any transfers made during the look-back period can result in a penalty period—a length of time during which the applicant will be ineligible for Medicaid benefits.
The solution:
Properly structured trusts provide a legal way to shelter income without triggering penalties.
How Do You Set Up a Pooled Income Trust in New York?
The process is generally more straightforward than setting up an individual trust.
Step 1: Choose a nonprofit organization
Multiple organizations in New York manage Pooled Income Trusts. Each has slightly different fee structures and services.
Well-established organizations include:
- NYSARC Trust Services
- LIFE Trusts
- Community Trust programs
- Several other state-approved nonprofits
Step 2: Complete the joinder agreement
Rather than drafting an entirely new trust document, beneficiaries join an existing pooled trust. This requires:
- Completing a joinder agreement
- Getting the document notarized
- Submitting required documentation
Step 3: Provide disability documentation
Applicants must prove they meet disability criteria:
- Documentation from Social Security showing SSDI or SSI approval
- If not previously found disabled by Social Security, obtain disability certification from New York State
Step 4: Set up monthly deposits
Once approved, arrange to have excess income deposited into the trust each month. Many organizations allow automatic electronic transfers.
What Can Pooled Income Trust Funds Pay For?
The funds aren’t locked away. They can pay for a wide range of expenses.
Housing expenses:
- Rent or mortgage payments
- Property taxes
- Home repairs and maintenance
Utilities:
- Electric, gas, water
- Phone and internet
- Cable and entertainment services
Daily living:
- Food and groceries
- Clothing and personal care items
- Transportation costs
Healthcare:
- Insurance premiums not covered by Medicaid
- Medical expenses not covered by Medicaid or Medicare
- Over-the-counter medications and supplies
How payments work:
The beneficiary cannot withdraw money directly. Instead:
- Submit bills and payment requests to the trust administrator
- Trust pays vendors directly on behalf of the beneficiary
- This ensures funds are used appropriately while maintaining Medicaid eligibility
Monthly administrative fees:
Nonprofit organizations charge modest fees to manage the trusts—typically $50 to $150 per month, deducted from the trust account.
What Happens to Leftover Money?
One important consideration: what happens to any remaining funds when the beneficiary dies.
Federal law requirements:
Any money left in the account must either:
- Be retained by the nonprofit organization managing the trust, or
- Be paid to the state Medicaid program up to the amount of benefits provided
What this means:
The beneficiary cannot designate family members or other individuals as beneficiaries of the remaining funds.
Variation by organization:
Some nonprofits retain a portion of the remaining funds to support their charitable mission. Others return more to the state Medicaid program.
This is worth discussing when choosing a pooled trust organization.
Why Professional Guidance Matters
The rules surrounding Medicaid eligibility are complex and vary based on individual circumstances.
State-specific requirements:
New York’s approach to Medicaid differs significantly from other states. Attorneys familiar with New York law, like those at Sheryll Law, can provide guidance specific to Long Island and the surrounding areas.
Avoiding costly mistakes:
Even small errors in trust setup or administration can result in:
- Denied Medicaid applications
- Penalty periods
- Loss of benefits
- Unnecessary spend-down of assets
Coordinating multiple strategies:
Many families benefit from combining Pooled Income Trusts with:
- Asset protection trusts
- Spousal refusal strategies
- Strategic gifting within legal limits
- Other Medicaid planning tools
Is a Pooled Income Trust Right for Your Family?
Every situation is different. Consider these questions:
- Does your loved one’s income exceed Medicaid limits?
- Can they meet disability certification requirements?
- Would they benefit from home care services?
- Can their household bills and living expenses be documented?
- Are they willing to work with a trust administrator?
If you answered yes to most of these questions, a Pooled Income Trust might be an appropriate solution.
The next step involves consultation with professionals who can evaluate your specific situation and determine whether a Pooled Income Trust fits into a comprehensive Medicaid planning strategy.