Indiana Miller Trust: How to Set Up a Qualified Income Trust for Medicaid

Your adult child just started receiving Disabled Adult Child benefits on your retirement record, and the monthly check pushes their income above Indiana's Medicaid waiver limit. Without intervention, they lose the waiver services that fund their daily care. A Miller Trust — also called a Qualified Income Trust — is the legal mechanism that prevents this from happening.

What a Miller Trust Does

Indiana's Home and Community-Based Services (HCBS) waivers, including the Family Supports Waiver (FSW) and Community Integration and Habilitation (CIH) waiver, impose a strict income ceiling: 300% of the maximum SSI federal benefit rate. In 2026, that threshold is approximately $2,982 per month. If the individual's gross monthly income exceeds this cap, they are financially disqualified from waiver services — regardless of how severe their disability is or how long they have been receiving care.

A Miller Trust solves this by routing the excess income through a specially structured irrevocable trust. The state agrees to disregard any income deposited into the trust when evaluating waiver eligibility, as long as the trust meets specific legal requirements. The individual's income "on paper" drops below the $2,982 threshold, and waiver services continue.

When You Need One

The most common trigger is the transition from SSI to Disabled Adult Child (DAC) benefits. SSI for an individual maxes out at $994 per month in 2026 — well below the waiver income limit. But DAC benefits are calculated from a parent's Social Security work record and are often significantly higher. A parent with a strong earnings history can generate a DAC benefit of $2,000 to $3,000 or more per month for their adult child. Once that DAC check, combined with any other income, crosses $2,982, the Miller Trust becomes essential.

Other triggers include SSDI awards based on the individual's own limited work history, or situations where multiple income streams (SSI plus small wages plus a modest pension) collectively breach the cap.

How to Set Up the Trust in Indiana

The Miller Trust must meet specific legal criteria under Indiana Medicaid rules:

The trust must be irrevocable. Once created, the terms cannot be changed or cancelled. This is a requirement, not a choice — the state will not recognize a revocable trust as a Qualified Income Trust.

The trust must name the State of Indiana as the remainder beneficiary. Upon the death of the trust beneficiary, any funds remaining in the trust must first reimburse Indiana Medicaid for services provided during the beneficiary's lifetime. Only after Medicaid has been made whole can remaining funds pass to other beneficiaries.

Only the beneficiary's income can be deposited. The Miller Trust cannot receive gifts, inheritance, or third-party contributions. It is strictly a flow-through vehicle for the beneficiary's own monthly income.

The QIT income must be kept in a dedicated account. Open a bank account for the trust (e.g., "Miller Trust for [Name], an Irrevocable Qualified Income Trust"). The account can be established using the beneficiary's Social Security number, subject to the financial institution's requirements. Do not commingle trust funds with personal accounts.

The Monthly Deposit Protocol

Each month, the excess income — the amount above the $2,982 waiver income limit — must be deposited into the Miller Trust bank account in the same month the income is received. A family may deposit the full benefit check into the trust account; the trustee then pays allowable expenses from the account under the trust and Medicaid rules.

The trust can pay for certain expenses directly from the trust account, including the beneficiary's share of shelter costs and personal needs. However, the trustee must keep meticulous records of all deposits and disbursements. Indiana Medicaid auditors will review trust activity during annual eligibility redeterminations.

Common Mistakes That Invalidate the Trust

Skipping a month. If even one month's excess income is not deposited into the trust in the month the income is received, the state can determine that the individual was over-income for that month, affecting waiver eligibility. Set up automatic deposits or calendar reminders.

Using a commingled account. The account must contain only the beneficiary's QIT income. An existing account may be used if it contains no other funds and is used solely for QIT income.

Depositing non-income funds. Birthday gifts, inheritance, or family contributions deposited into the Miller Trust violate the trust terms. Those funds belong in an INvestABLE (ABLE) account or a third-party Special Needs Trust instead.

Failing to name the state as remainder beneficiary. An attorney drafting the trust document must include the Medicaid payback provision. Without it, Indiana Medicaid will not recognize the trust, and the income will count against the waiver limit as if the trust did not exist.

Do You Need an Attorney?

Technically, the trust document itself is a relatively standardized legal instrument, and Indiana does not require attorney involvement. However, given that an improperly drafted trust can result in the loss of waiver services — services that may fund $26,482 or more in annual care — most families find the cost of a special needs planning attorney worthwhile. Indiana elder law and special needs attorneys typically charge between $500 and $1,500 to draft a Miller Trust, a fraction of the annual waiver benefit it protects.

How the Miller Trust Fits the Bigger Picture

The Miller Trust is one piece of a larger financial architecture that preserves adult disability benefits in Indiana. It works alongside INvestABLE ABLE accounts (which shield assets from the $2,000 SSI resource limit), Section 1634(c) Medicaid protection (which preserves Medicaid when SSI ends due to DAC benefits), and the waiver system itself. Getting any single piece wrong can cascade into the loss of the others.

The Indiana SSI at 18 & Adult Disability Benefits Guide walks through the complete transition sequence — from the age-18 SSI redetermination through DAC transition, Medicaid preservation, waiver navigation, and asset protection — so families can see exactly when and how each tool fits into the timeline.

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