Social Security rises 3.6 percent in January, and so does the line that decides who needs an income cap trust.
Social Security announced on October 14 that benefits will rise 3.6 percent for 2027. The Social Security Administration estimates the average retired worker's check goes from $2,095 to $2,170 a month. For families dealing with long-term care in Oregon, the COLA does something else as well. It moves the income limit for Medicaid long-term care, and that can change whether a parent needs an income cap trust to qualify.
How the COLA reaches Oregon's income cap
Oregon sets its long-term care income limit at three times the federal SSI benefit for one person. That limit applies to Medicaid coverage of nursing facility care and of home and community-based care, which includes assisted living, memory care, adult foster homes, and in-home services.
The federal SSI benefit for one person rises from $994 to $1,029 a month in January. Three times $1,029 is $3,087. The cap moves from $2,982 a month in 2026 to $3,087 a month in 2027.
When a person's countable income is at or under the cap, income is not the obstacle to eligibility. When it is over, Oregon does not allow a spend-down. The only route is a qualifying trust, which Oregon calls an income cap trust and many other states call a Miller trust or qualified income trust. I explain how that trust works and who serves as trustee in Oregon's income cap trust, explained.
Why the COLA rarely changes the answer by itself
The cap and Social Security checks rise at the same rate. Someone whose income is entirely Social Security tends to stay on the same side of the line from one year to the next. A person at $2,500 a month stays under, and a person at $3,400 stays over.
The people whose answer can change are the ones with income that does not get a COLA. Many private pensions and annuities pay the same amount every year. When the cap rises by $105 and part of a person's income stays flat, the distance between that person and the cap shrinks.
Consider a hypothetical person with $1,800 a month in Social Security and a $1,200 fixed pension. That is $3,000 today, which is over the 2026 cap. In January the Social Security payment becomes $1,864 while the pension stays at $1,200, for a total of $3,064. On those numbers alone, that person falls under the 2027 cap.
The movement can run the other way too. A new survivor benefit after a spouse's death, or a pension that adjusts faster than the cap, can push someone over a cap they were under last year. The COLA is one input. The total of everything coming in each month is what the state measures.
If a parent already has an income cap trust
When a parent is already on Medicaid with an income cap trust in place, the January increase changes the monthly numbers. Higher income means a higher amount the state requires toward the cost of care each month, and the state sends a notice with the new figure. That notice controls what gets paid to the facility, through the trust, from the month it takes effect.
If a parent lives in assisted living, memory care, or an adult foster home on Medicaid, the room-and-board amount owed to the facility is tied to the SSI rate and adjusts with it each January.
Some families will run the January numbers and find a parent has dropped under the cap. Before anyone closes the trust or its account, the lawyer who drafted it should look at the full picture. The cap moves every year, and a trust that has been closed has to be drafted and established again if income goes back over the line.
If a parent is close to the line and not yet on Medicaid
A family planning an application for 2027 should look at income using the January figures, not this year's. Social Security mails each beneficiary a notice in early December with the new benefit amount, and the same figure appears in the person's online Social Security account. That notice shows which side of $3,087 a parent lands on. The state measures the full Social Security benefit before the Medicare premium is taken out, so a person can be over the cap even though the deposit that reaches the bank is under it.
The rule asks, for each month, whether income is at or under the cap or whether a qualifying trust has been established. TThe rule’s text points to the trust having to be in place during any month you want covered. A parent whose income will be over the cap when care begins needs the trust signed and its account open by then, because a trust signed later does not reach back to the months before it existed.
Someone has to have the authority to sign. When a parent can no longer sign, an agent under a power of attorney creates the trust, and the power of attorney has to give the agent that authority. I regularly see form powers of attorney, especially California forms and documents from online services, that do not authorize the agent to create a trust in Oregon. Families usually find this out at the moment they need the trust, and the fix at that point can mean a court proceeding. I cover what a sound document includes in what an Oregon durable power of attorney should do.
A spouse at home
When one spouse needs care and the other stays home, Oregon lets part of the ill spouse's income go to the spouse at home to bring that spouse up to a minimum monthly amount. The at-home spouse's own Social Security also rises with the COLA. A higher check for the at-home spouse can reduce how much of the ill spouse's income the state allows to be shifted over, which in turn changes what goes toward care. The spousal allowance figures themselves are tied to different federal measures and update on their own dates, the minimum in July and the maximum in January, so they move independently of the 3.6 percent.
What the COLA does not change
The $2,000 resource limit for a Medicaid applicant stays at $2,000. The five-year lookback on gifts and transfers is unchanged. The figure the state uses to turn a gift into a penalty period changed on its own schedule in October and is not tied to the COLA. A parent whose income now fits under the cap still has to meet the asset rules, and the planning around those rules, including Medicaid asset protection trusts, works the same way it did last year. I walk through that planning in Oregon Medicaid planning, income cap trusts, and MAPTs, and I cover which assets count and what the state can recover after death in what counts against you and what the state takes back.
Bottom Line
The 2027 COLA raises Oregon's Medicaid long-term care income cap to $3,087 a month starting in January. For a parent living on Social Security alone, it will rarely change whether an income cap trust is needed. For a parent with a fixed pension or other income near the line, it can move the answer in either direction, and the time to know is before the first month of care, because the trust has to be in place and properly authorized by then.
I prepare income cap trusts and handle Medicaid applications for Oregon families. If a parent's income is near the cap, a consultation will show where the January numbers land and what that means for the plan. Every consultation ends with a written summary email with links and next steps. Book a free consultation here.
Track Town Law. Serving Oregon, fully virtual.
This post is general information about Oregon law as of its publication date and is not legal advice for your situation. Medicaid figures change each year. Reading it does not create an attorney-client relationship.
