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Planning Ahead for Medicaid Eligibility

Planning ahead to ensure Medicaid eligibility if and when needed is relatively straightforward, and usually involves changes to ownership or control of assets to avoid those assets being countable under the Medicaid rules.

 

The most common advance planning technique involves the use of a Medicaid Asset Protection Trust (MAPT). A MAPT is a powerful legal tool used in estate and Medicaid planning to protect assets—especially your home and savings—while helping you qualify for Medicaid long-term care benefits.

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🛡️ What Is a Medicaid Asset Protection Trust (MAPT)?

 

A MAPT is a type of irrevocable trust that allows you to transfer ownership of certain assets out of your name, so they are no longer countable for Medicaid eligibility purposes.

 

Once assets are in the trust:

  • You no longer legally own them, so Medicaid can’t count them against you

  • But you can still benefit from them indirectly—for example, you can live in your home, or your trustee can pay expenses on your behalf.

 

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Why Use a MAPT?

 

Medicaid has strict asset limits ($2,000 for individuals in Oklahoma) and a 5-year look-back period. If you apply and have transferred assets within 5 years, Medicaid is required to impose a penalty period.

 

A MAPT:

  • Protects your home and savings from being spent on nursing home care

  • Removes assets from Medicaid's count, as long as it was created more than 5 years before applying

  • Helps you leave an inheritance for your loved ones

 

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⚠️ CAUTION ⚠️

 

Many people think the trust they created with an estate planning attorney will protect their assets from Medicaid. That’s almost never true! To protect trust assets from Medicaid long-term care costs, the trust has to meet certain requirements that are not satisfied in a normal revocable or “living” trust. 

 

Don’t count on your trust to protect your assets unless a Medicaid attorney has reviewed it and found it meets the Medicaid requirements.

 

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🧾 Key Features of a Medicaid Asset Protection Trust

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  • Irrevocable: Once created, you cannot revoke it or move assets back into your name

  • Third-party trustee: You must appoint someone else (like a child or trusted relative) to manage the trust

  • You can receive income, but not principal: You might collect rental income from a property, but you can’t pull money out directly

  • Assets are protected from Medicaid recovery—if done properly and timely

 

While these requirements sound restrictive, an experienced Medicaid attorney can create a trust with a lot of flexibility and retained control and still have it satisfy the Medicaid rules. 

 

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🏡 What Can You Put Into a MAPT?

 

Common assets include:

  • Your home

  • Bank accounts

  • CDs or brokerage accounts

  • Investment property

 

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⚠️ Retirement accounts like IRAs typically are not placed into a MAPT due to tax complications.

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⏳ Timing Is Everything

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To be fully effective, a MAPT must be established at least 5 years before applying for Medicaid. That’s why early planning is critical.

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If you wait too long, Medicaid may impose a penalty for any assets transferred too close to the application date.

 

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📞 The Bottom Line

 

A Medicaid Asset Protection Trust can help you preserve your home and legacy while still qualifying for long-term care benefits—but it must be done correctly and well in advance.

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An experienced Medicaid attorney can help structure the trust to meet both Medicaid rules and your family’s unique goals.

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