Arkansas Income Trust Setup Guide — Qualify a Family Member for Medicaid Before the Next Billing Cycle

The bank step

The bank refusal nobody warns you about

You walk into your branch with the signed trust. The teller calls a manager. The manager has never seen one. They ask for an EIN. They tell you to come back with an attorney. You drive home with an empty trust account and a Medicaid clock ticking.

This is the single most common reason Arkansas families lose a month of benefits, and it has nothing to do with the trust itself — it is a bank-procedure problem. The kit's bank section gives you the exact language to cite at the counter, the Arkansas DHS policy reference to read aloud, and a printable resolution letter you can hand to the branch manager so they can escalate inside their own bank instead of sending you away.

Refusals the kit walks you through:

• Branch asks for a tax ID (EIN) for the trust.
• Branch is unsure what kind of account this is.
• Branch wants the applicant to be the account holder.
• Branch has never opened an income trust account.

Each refusal has a corresponding response in the kit, with the Arkansas DHS citation behind it.

Avoid these

The 9 most common Arkansas denial reasons

Every denial reason below cites Arkansas DHS policy. The full kit explains each one in context and the order in which to verify them before submitting the Medicaid application.

▸ A resource (not income) is placed in the trust

Only the applicant's income may fund the Income Trust. Under §H-111, the trust can be funded only from Social Security, pension, and other income; if assets other than income — such as real or personal property — are placed in the trust, the individual cannot be eligible for facility services under the income-trust provisions. Keep resources out of the trust entirely. — DCO-9938; Medical Services Policy Manual §H-111

▸ Income and resources are commingled in the account

PUB-396 is emphatic that income and resources cannot be co-mingled in an Income Trust account — only income can be in it. Use a single account dedicated to the trust, separate from the account used for living expenses, and never let a resource sit in it. Mixing the two voids the exemption. — PUB-396; Medical Services Policy Manual §H-111

▸ The over-cap income is not deposited in the month it is received

Income above the eligibility limit that the applicant receives directly must be transferred to the trust immediately upon receipt. §H-111 provides that in any month the excess income is not placed in the trust, the individual is not eligible for benefits or vendor payment for that month. Fund the trust every month, on time. — Medical Services Policy Manual §H-111

▸ Another person's income is put in the trust

No income belonging to anyone other than the applicant may go into the Income Trust. If income is paid jointly to the applicant and another person, the applicant's share must be separated out before deposit. Depositing a spouse's or child's own income breaks the trust. — Medical Services Policy Manual §H-111

▸ Missing State-of-Arkansas payback clause

The trust must contain a provision that all assets remaining at the individual's death are transferred to Arkansas DHS up to the total Medicaid paid after the trust was established. The DCO-9938 form already includes this remainder clause — do not alter or remove it; a missing or edited payback provision fails DHS review. — DCO-9938 (termination article); Medical Services Policy Manual §H-111

▸ The trust is revocable, or is modified without DHS agreement

The Income Trust must be irrevocable and can be terminated or amended only by mutual agreement between Arkansas DHS and the trustee. A revocable trust, or unauthorized changes to a trust DHS has already accepted, breaks compliance. — DCO-9938 (irrevocability article); Medical Services Policy Manual §H-111

▸ Trying to fix an excess-resource problem with an income trust

An Income Trust solves income over the cap — not resources over the $2,000 limit. §H-112 states that individuals with excess resources cannot establish eligibility through an income trust. If countable resources exceed the limit, they must be addressed separately before eligibility is possible. — Medical Services Policy Manual §H-112

▸ A disbursement the caseworker did not authorize

After the case is set up, the trustee may pay out only the amounts specified on the DHS-712 / Notice of Action — the personal needs allowance, authorized spousal or dependent allowances, uncovered medical costs, and the applicant's share of the cost of care. Any disbursement that is not for the benefit of the recipient, spouse, or dependents as authorized is treated as a transfer of resources and may trigger a penalty period. — Medical Services Policy Manual §H-111

▸ The trust balance is allowed to accumulate past the limit

If the trust balance at the end of a month (excluding next-month income and authorized-but-undistributed allowances) exceeds the current transfer-of-resources divisor, the individual loses facility-payment eligibility until the balance is spent down for the resident's benefit. Distribute the authorized amounts each month and ask the caseworker for the current maximum balance. — Medical Services Policy Manual §H-113

The author

Who's behind this

I'm James Whitfield — the person who hit the gap between the free state PDF and a funded Medicaid trust (the short version is up top) and built this kit to close it. I'm not an attorney. I'm a researcher who has now read every Arkansas DHS policy section that covers Qualified Income Trusts, and I publish what I learned with a citation on every claim. I won't advise you on your specific situation, draft anything, or review a document you or your attorney have drafted; for advice on your situation, you need an Arkansas-licensed attorney.

Questions

Frequently asked questions

▸ Is the Arkansas Income Trust Kit legal advice?

No. This kit is informational only and is not legal advice. We are not attorneys and we do not practice law. The kit teaches you how to use Arkansas DHS's publicly published Income Trust form (DCO-9938). DHS itself says the trust 'doesn't have to be prepared by an attorney' and provides an example for applicants to follow. For advice on your specific situation, consult an Arkansas-licensed elder-law attorney.

▸ What does the kit include?

A step-by-step operational guide: a plain-English explanation of how an Arkansas Income Trust works, direct links to the official DCO-9938 form and DHS's PUB-396 and PUB-125 publications, guidance on the fields you complete, a monthly funding worksheet built around the excess-only rule, the bank-account and EIN walkthrough, the month-by-month DHS-712 process, and an Arkansas-specific list of common denial reasons. Delivered as a single PDF.

▸ Do you provide the trust template itself?

No. We never author or host trust instrument text. The kit links you to DHS's DCO-9938 form on Arkansas's .gov site, which you download directly from DHS, and explains how to complete, fund, and maintain it. DHS publishes the form and a fact sheet for the applicant to complete.

▸ Who has to set up an Income Trust in Arkansas?

An applicant for Nursing Facility Medicaid, an ARChoices or DDS waiver, Living Choices assisted living, or PACE whose gross monthly income is above $2,982 (2026) must route the excess income through an Income Trust to become income-eligible. Arkansas is an income-cap state with no medically-needy spend-down. Each spouse is tested individually, so if both are over the limit, each needs their own trust.

▸ Does an Arkansas Income Trust need an EIN?

Arkansas is different from most states here. The DCO-9938 form directs the trustee to file an annual fiduciary tax return and to pay income taxes owed by the trust, so the trust is generally set up with its own EIN from the IRS rather than the beneficiary's Social Security number. Arkansas's rule doesn't spell out SSN versus EIN, so confirm the exact identifier with your bank and tax preparer — obtaining an EIN online is free and takes about ten minutes.

▸ How much of my income goes into the trust?

Only the income above the eligibility limit. The current DCO-9938 (2023) has you deposit the countable income that exceeds the cap — not all of your income. Certain payments (VA Aid & Attendance and continuing/unusual medical-expense reimbursements) are excluded. Note: DHS's older PUB-396 fact sheet still describes the pre-2023 'deposit all income' rule; follow the current form and this kit. Each month the trustee then pays out the personal needs allowance ($40 in Arkansas, $90 for qualifying veterans), any spousal or dependent allowance, uncovered medical costs, and your share of the cost of care, per the caseworker's DHS-712.

▸ Can I be my own trustee?

Yes — Arkansas is unusual in allowing it. DHS's PUB-396 says you may act as your own trustee, but recommends naming a replacement (successor) trustee in case you can no longer serve. A relative, friend, or a bank may also serve as trustee. A trustee may serve without bond or court supervision, and no trustee fee may be charged for serving.

▸ When does coverage begin?

Eligibility cannot begin before the month the trust is established — meaning the signed and notarized DCO-9938 is complete, the trust bank account is open, and all of that month's over-cap income has been placed in the trust with no unauthorized payments made. There is no back-dating to before the trust is funded. Using the example DHS provides, per DHS, speeds up approval.

▸ What if my bank refuses to open the trust account?

Bank refusal can happen on a first attempt. Although Arkansas does not publish a separate bank memo, the DCO-9938 form and the PUB-396 Fact Sheet are your documentation: it is a single, separate account that holds only the applicant's income, income may be direct-deposited, and — because the DCO-9938 has the trust file its own fiduciary return — the trustee generally obtains an EIN for it from the IRS. The kit walks you through handing the branch those documents, the EIN question, and escalating to the bank's trust department if needed.

▸ Do you offer a refund?

Yes — money back if Arkansas DHS rejects the Income Trust for any reason traceable to following the kit. Email support@millertrustguide.com within 30 days of purchase with the agency's stated denial reason and we issue a full refund within one business day.

▸ Will you talk to me on the phone about my situation?

No. We do not offer phone support and we do not advise on individual situations. For advice on your specific situation, consult an Arkansas-licensed elder-law attorney — you can find one through the Arkansas Bar Association's Find a Lawyer service or Legal Aid of Arkansas.

▸ Do you need an EIN to open an Arkansas Miller Trust account?

Arkansas is a departure from most states here. The DCO-9938 form directs the trustee to file an annual fiduciary tax return and to pay any income taxes owed by the trust, so Arkansas's Income Trust is generally set up as a separate taxable entity with its own EIN from the IRS — rather than run on the beneficiary's Social Security number the way grantor-trust states do. Because Arkansas's written rule does not itself dictate SSN versus EIN, the safe default is an EIN — free from the IRS in about ten minutes online — and the kit walks you through getting one and confirming with the bank that the account is titled correctly, so you are not left guessing at the counter. Fees for preparing the trust's tax return cannot be paid out of the trust.

▸ Who can serve as trustee of an Arkansas Miller Trust?

Arkansas is unusually flexible on who serves as trustee: DHS's PUB-396 expressly allows the applicant to act as their own trustee, but advises planning for a replacement trustee in case the applicant can no longer serve — so choosing a relative, friend, or (when no relative is available) a bank as trustee or successor trustee is often the safer choice. The trust may be created by the applicant or by the applicant's child, spouse, sibling, attorney-in-fact/power of attorney, guardian, or Social-Security-appointed representative payee, and must be created on or after August 11, 1993. A trustee may serve without bond or court supervision. The trustee opens a single, separate bank account that holds only the applicant's income (kept apart from the account used for living expenses), makes only the monthly payments the caseworker authorizes on the DHS-712, delivers annual accountings to the settlor, files an annual fiduciary tax return for the trust, and on the settlor's death pays Arkansas DHS its remainder. No trustee fee may be charged for serving, and neither attorney fees nor tax-return-preparation fees may be paid from the trust — only the bank's service charges and, when a commercial institution serves as trustee, its commercially reasonable administrative fee. Confirm any complex situation with an Arkansas elder-law attorney.

▸ Which banks will open a Qualified Income Trust (QIT) bank account in Arkansas?

There's no published list of banks that offer QIT accounts — most retail branches simply haven't opened one before, since it's an uncommon account type, not because anything is wrong with the trust itself. In practice: larger banks (Chase, Wells Fargo, Bank of America) generally have a centralized trust department that can process the request even when a branch teller can't; full-service branches (often a market's main branch) open commercial and trust-style accounts more routinely than limited-service branches; and community banks and credit unions are frequently the most willing, since their account-opening process tends to involve a human review rather than a screen-driven template. Arkansas is a departure from most states here. The DCO-9938 form directs the trustee to file an annual fiduciary tax return and to pay any income taxes owed by the trust, so Arkansas's Income Trust is generally set up as a separate taxable entity with its own EIN from the IRS — rather than run on the beneficiary's Social Security number the way grantor-trust states do. Because Arkansas's written rule does not itself dictate SSN versus EIN, the safe default is an EIN — free from the IRS in about ten minutes online — and the kit walks you through getting one and confirming with the bank that the account is titled correctly, so you are not left guessing at the counter. Fees for preparing the trust's tax return cannot be paid out of the trust. The kit includes the exact script to use at the counter and a printable letter for a branch manager if the first attempt is refused.

▸ When does Arkansas Medicaid coverage begin after the Qualified Income Trust is set up?

Coverage begins the calendar month the QIT is signed, the trust account is opened, and enough of the applicant's income is deposited to bring remaining countable income below the CMS January 2026 figures special income limit of $2,982/month — all in the same calendar month. There is no back-dating, so every month of delay is another month of full private-pay care ($7,148–$7,711/month in Arkansas). Source: Arkansas DHS Arkansas Medical Services Policy Manual, Section H — Long-Term Services and Supports, §H-110 through §H-116 (Income Trusts) and §H-400 / §H-410 (Post-Eligibility); codified at Arkansas Administrative Code rule 016.28.22-004; federal authority 42 U.S.C. § 1396p(d)(4)(B) / § 1917(d) of the Social Security Act.

▸ What happens to the money in an Arkansas Miller Trust when the beneficiary dies?

On the applicant's death the Income Trust terminates and the trustee pays Arkansas DHS an amount equal to the medical assistance DHS paid to, or on behalf of, the applicant since the trust was created. If the applicant received Medicaid in more than one state, the remaining funds are divided among those states in proportion to what each state paid. The trustee coordinates the exact payoff amount with the DHS caseworker and DHS's Medicaid estate-recovery process (Medical Services Policy Manual §H-600); Arkansas does not publish a separate residuary remittance form. Only the balance remaining after Arkansas DHS is reimbursed passes to the other beneficiary named on the DCO-9938 form. The trustee should resolve the State's claim before distributing any balance and keep proof of payment in the trust file.

▸ Can you set up an Arkansas Miller Trust without a lawyer?

For the core Qualified Income Trust setup, the task is following Arkansas DHS's publicly-published template and opening a specific kind of bank account — work many families do themselves. Attorneys typically charge $1,000–$2,500 for it. For complex situations (significant assets, prior gifting, second marriages, multi-state property), consult an Arkansas-licensed elder-law attorney. Miller Trust Guide is informational only and is not legal advice; we do not draft the trust or advise on individual situations.

▸ Can an attorney, paralegal, or care manager use this kit for a client?

Yes. It explains Arkansas's own published Income Trust process in plain language, which works whether you're doing this for your own family member or for a client — professionals handling a case outside their usual specialty use it as a working reference this way. It doesn't replace your own judgment on a specific client's facts and isn't personalized advice; it's the same walkthrough of Arkansas's official form either way. If you expect to use it across more than a handful of clients or want redistribution rights, email support@millertrustguide.com about licensing options.

Primary sources

State agency sources

Every claim in this kit cites a primary Arkansas DHS document. Verify directly:

• Official template: Arkansas DHS — Arkansas Medical Services Policy Manual, Section H — Long-Term Services and Supports, §H-110 through §H-116 (Income Trusts) and §H-400 / §H-410 (Post-Eligibility); codified at Arkansas Administrative Code rule 016.28.22-004; federal authority 42 U.S.C. § 1396p(d)(4)(B) / § 1917(d) of the Social Security Act . Arkansas Department of Human Services (DHS) publishes an official fill-in Income Trust instrument — form DCO-9938, 'THE ( ) IRREVOCABLE INCOME TRUST' (revised January 2023) — authored by DHS's Division of County Operations (DCO), the office that determines Medicaid eligibility. An applicant whose gross monthly income is over the cap uses it to qualify for Nursing Facility Medicaid, the ARChoices in Homecare or DDS waivers, Living Choices assisted living, or PACE. It is an income-only, irrevocable trust that names Arkansas DHS as remainder beneficiary up to the total Medicaid paid. Arkansas calls it an 'Income Trust' (its fact sheet also calls it a 'Miller Income Trust' or 'MIT') — its version of what is generically called a Miller Trust or Qualified Income Trust; the federal authority is 42 U.S.C. § 1396p(d)(4)(B). Two Arkansas features stand out. First, funding is excess-only: the current DCO-9938 has the settlor transfer only the income that exceeds the eligibility limit (a 2023 change — the state's older PUB-396 fact sheet still describes the old 'all income' rule, and the kit flags the discrepancy). Second, the DCO-9938 directs the trustee to file an annual fiduciary tax return, so the trust is generally set up with its own EIN rather than the beneficiary's Social Security number — a departure from most states. DHS's own PUB-396 says the trust 'doesn't have to be prepared by an attorney' and offers a downloadable example, and Arkansas lets the applicant serve as their own trustee. The kit explains how the published form works and links you to DHS's own materials; unlike New Jersey and Indiana, Arkansas does not publish a separate memo to banks.
• Policy manual: Arkansas DHS policy manual (section Arkansas Medical Services Policy Manual, Section H — Long-Term Services and Supports, §H-110 through §H-116 (Income Trusts) and §H-400 / §H-410 (Post-Eligibility); codified at Arkansas Administrative Code rule 016.28.22-004; federal authority 42 U.S.C. § 1396p(d)(4)(B) / § 1917(d) of the Social Security Act).
• PUB-396 — Income Trust Fact Sheet: Arkansas DHS — PUB-396 — Income Trust Fact Sheet . DHS's plain-language guide to establishing and maintaining an Income Trust — definitions, the single income-only account rule, trustee responsibilities, and the DHS-712 monthly-disbursement worksheet. Note: this fact sheet (rev. 05/18) predates the 2023 DCO-9938 and still describes the old 'all income' funding rule; follow the current DCO-9938 (excess-only) and this kit for funding.
• PUB-125 — Long-Term Services and Supports (LTSS) Information: Arkansas DHS — PUB-125 — Long-Term Services and Supports (LTSS) Information . DHS's overview of the LTSS programs (Nursing Facility, ARChoices, Living Choices, DDS Waiver, PACE) and the shared income and resource limits — it states the income limit is three times the SSI Standard Payment Amount and that income over the limit is handled through an Income Trust.