Updated August 27, 2026. Quick answer: Arizona calls it an Income-Only Trust (IOT), and its policy carries a mechanical requirement most states do not state so plainly: the account “must be set up with all or a part of the customer’s current monthly income and have a $0 balance at the time it is set up.” You cannot seed it. And “Resources cannot be added to or used to fund the trust” — if resources go in, “the trust loses its special treatment until the resources are removed”.
What Arizona requires
| What the state sets out | What it says |
|---|---|
| Arizona’s name for it | Income-Only Trust (IOT) |
| Also known as | stream-of-income, income-cap, or Miller trust |
| When it helps | qualify for ALTCS when income eligibility is determined using the 300% Federal Benefit Rate (FBR) Gross Income Test |
| Opening balance | “have a $0 balance at the time it is set up” |
| Resources | “Resources cannot be added to or used to fund the trust” |
| If resources go in anyway | “the trust loses its special treatment until the resources are removed” |
| Policy last revised | Revised 04/26/2022 |
How it works in practice
- The $0-balance rule is the one that catches people. A trust account opened with a $500 deposit to satisfy a bank’s minimum is not an IOT that complies on its face — the policy wants the account at zero when it is created and funded only by income after that.
- The consequence of putting resources in is not a penalty but a status change: “the trust loses its special treatment until the resources are removed”. The remedy is stated in the same sentence — take them back out — which is unusually forgiving compared with states that treat a defective trust as simply invalid.
- The IOT is tied to ALTCS, Arizona’s long-term care programme, and to the gross income test: it helps “qualify for ALTCS when income eligibility is determined using the 300% Federal Benefit Rate (FBR) Gross Income Test”. It is not a general-purpose fix for being over income on other Medicaid categories.
The mechanism itself — why an income cap exists and what the trust must contain — is explained on the income-cap and Miller trust page. This page is the Arizona record.
See how the income side fits the rest of the money
Where income sits relative to a state limit changes what happens to savings, to a spouse’s position and to the order things are best done in, and an adviser can look at the whole picture rather than one rule at a time.
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What this page does not settle
- Arizona’s policy also reaches people who qualify only for acute care because of a transfer penalty or their living arrangement, which is a wider reach than the plain institutional case.
- This page reads one source: AHCCCS Eligibility Policy Manual, Chapter 800 Trusts, 803-C Income Only Trusts. It is the state’s own publication on this rule, but no state puts its whole treatment of excess income in a single document, and a detail that decides your case may sit in one this page did not read.
- A trust fixes an income problem and nothing else. The asset test, the level-of-care test and the transfer-of-assets look-back are separate hurdles, each decided on your own file, and meeting this rule does not clear any of them.
- Every quotation here was read against the source on August 27, 2026. States revise these rules, and a figure or a section number can move without the page around it changing. Open the source before you rely on a detail.
Eligibility is decided by the state agency on the whole file, not by one rule on one page. Nothing here is legal advice, and no one should move, retitle or assign income on the strength of a web page.
Sources
The source above was retrieved and read against the state text on August 27, 2026. Every quotation on this page was checked against those bytes.
Spending down to the income limit is only half of what Arizona Medicaid can do for a household that is already providing the care itself, and getting paid as a family caregiver in Arizona names the Arizona program that pays one and answers the family-member and the spouse question separately.
Related: Arizona’s Medicaid Personal Needs Allowance; the amount a nursing-facility resident keeps from their own income each month.
Related: Arizona’s Medicaid home equity limit for a single applicant with no spouse or dependent child at home.