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Understanding the Difference Between a Miller Trust and a STABLE Account

When it comes to financial planning for individuals with disabilities or those who require long-term care, there are various tools and strategies available to help them secure their financial future. Two important options to consider are the Miller Trust and the STABLE account. While both serve as valuable financial tools, they have distinct purposes, eligibility criteria, and benefits. In this blog post, we'll explore the key differences between a Miller Trust and a STABLE account to help you make informed decisions.

Miller Trust:

A Miller Trust, also known as a Qualified Income Trust (QIT), is a legal financial arrangement designed to help individuals who need Medicaid benefits but have income that exceeds Medicaid eligibility limits. This trust allows them to redirect excess income into the trust, enabling them to qualify for Medicaid coverage while still maintaining some financial resources.

Key features of a Miller Trust:

  1. Medicaid Eligibility: Miller Trusts are primarily used to meet Medicaid income eligibility requirements. They help individuals with high income levels become eligible for Medicaid services, such as long-term care.

  2. Income Limitation: There is a limit to the amount of income that can be placed into the trust. This limit varies by state and is usually set at the Medicaid income threshold.

  3. Sole Purpose: Funds in a Miller Trust must be used for specific Medicaid-approved expenses, and any remaining funds will be directed towards Medicaid or repaid to the state upon the beneficiary's passing.

  4. Complex Setup: Establishing a Miller Trust typically requires legal assistance, and it is subject to specific state regulations.

STABLE Account:

A STABLE (Achieving a Better Life Experience) account is a tax-advantaged savings and investment account specifically designed for individuals with disabilities. These accounts are intended to help individuals with disabilities save and invest money without jeopardizing their eligibility for means-tested government programs, such as Medicaid and Supplemental Security Income (SSI).

Key features of a STABLE Account:

  1. Tax Benefits: Contributions to a STABLE account are made with after-tax dollars, but any earnings and withdrawals for qualified disability-related expenses are tax-free.

  2. Disability Onset Before Age 26: To be eligible for a STABLE account, the disability must have occurred before the age of 26.

  3. Use Flexibility: Funds in a STABLE account can be used for a wide range of disability-related expenses, including housing, transportation, education, and more.

  4. Account Ownership: The account owner (the individual with the disability) has control over the account, allowing them to make investment decisions and withdrawals as needed.

  5. No Medicaid Spend-Down: STABLE accounts do not affect Medicaid eligibility or require a spend-down of excess income.

Key Differences:

  1. Purpose: A Miller Trust is primarily used to achieve Medicaid eligibility, while a STABLE account is designed to provide a savings and investment vehicle for individuals with disabilities.

  2. Eligibility: Miller Trusts are for individuals with high income seeking Medicaid, whereas STABLE accounts are for individuals with disabilities that onset before age 26.

  3. Use of Funds: Miller Trust funds are specifically for Medicaid-approved expenses, while STABLE account funds can be used for a broader range of disability-related expenses.

  4. Control: STABLE account owners have more control over their funds and investments, whereas a Miller Trust may involve a trustee managing the funds.

In conclusion, both Miller Trusts and STABLE accounts serve important roles in helping individuals with disabilities navigate their financial challenges. The choice between the two depends on individual circumstances, financial goals, and eligibility requirements. It's essential to consult with a financial advisor or attorney who specializes in disability planning to determine which option best suits your needs. By understanding the differences between these two financial tools, you can make informed decisions that will positively impact your financial future or that of your loved ones with disabilities.

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