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Eric Smith, Attorney

Medicaid Planning

| Eric Smith, Attorney

A Medicaid Asset Protection Trust is an irrevocable trust used for Medicaid planning and asset protection purposes. Although not always right for everyone, this type of trust may be useful in preserving assets while maintaining Medicaid eligibility. Medicaid is the largest source of payment for long-term care in Oregon. It is a joint Federal and State program that covers a range of long-term care services.

In order to qualify for Medicaid benefits, one of the tests an individual will need to pass is an asset test. For a single applicant in 2024, the asset limit is $2,000, which means the individual must have $2,000 or less in countable assets. Countable assets include bank accounts, retirement accounts, stocks, bonds, and any other assets that can be easily converted to cash. Non-countable assets include personal belongings, such as clothing, household furnishings, an automobile, and generally one’s primary home.

In addition, state Medicaid programs have a 5-year look-back period. The Medicaid department will scrutinize any transfers that you have made during the look-back period. If you have transferred assets for less than fair market value during that time, you may incur a penalty period and will not be able to receive Medicaid benefits right away. The State of Oregon is also required to seek recovery of the amount the state’s Medicaid program spent on an individual. The State of Oregon is allowed to recover against any real or personal property and other assets to the individual had legal title or an interest in at the time of the individual’s death.

These irrevocable trusts can be used in proactive planning, where there is not in immediate need of care. The assets are placed into the trust, wait out the look-back period, and thereafter an individual may qualify for care immediately if needed. These irrevocable trusts are designed in a way that passes Medicaid scrutiny so that these assets are not counted for eligibility purposes. Using these trusts in this manner can give you peace of mind knowing that if you need care down the road, you will not lose your life savings paying for that care.