Oregon Medicaid Long-Term Care: What Counts Against You and What the State Takes Back
Most of what I see go wrong in Oregon Medicaid cases does not involve the income cap or the asset limit. Families know those numbers, or find them quickly. The trouble comes from four things the rules treat differently than people expect: a living trust, the family home, a gift made years earlier, and what the state can claim after death. This post covers those four, plus the one document that has to be in place before any of it can be addressed.
My post on Oregon Medicaid planning with MAPTs and Miller trusts covers the eligibility tests and the two main planning trusts. This one picks up where that leaves off. Figures are the Oregon standards effective July 1, 2026, and they change every July.
A Revocable Living Trust Protects Nothing
A revocable living trust avoids probate. For Medicaid, it does nothing. Oregon's rule counts the entire value of a revocable trust as a resource available to you, because you can take the assets back at any time. A house, brokerage account, or savings held in your living trust is treated exactly as if it were titled in your own name.
People arrive at this conclusion late because the word "trust" sounds protective. The only trusts that take assets out of the Medicaid calculation are irrevocable ones drafted for that purpose, and funding one starts the five-year clock discussed below. If your plan consists of a revocable living trust and nothing else, you have a probate plan, not a long-term care plan.
The Home
The home is excluded from countable resources while any of these people lives in it: your spouse, a child under 21, a child of any age who is blind or disabled, or a relative who depends on you for support. In those cases there is no equity limit.
If none of those people lives there and you have moved into care, the home stays excluded as long as you state an intent to return. Oregon's rule says that intent controls regardless of your medical condition. The exclusion is then limited to home equity of $752,000.
Excluded for eligibility is not the same as protected. An excluded home still counts toward what the state can recover after death, which is where the home usually ends up paying for care.
Gifts, and When the Penalty Lands
When you apply for long-term care Medicaid, the state reviews every transfer you or your spouse made during the 60 months before the application. Any gift, or any sale for less than fair market value, can produce a period of ineligibility. The federal annual gift tax exclusion is irrelevant here. A gift that is fine for tax purposes still counts.
The penalty is calculated by adding up the uncompensated value of everything transferred during the lookback and dividing by $14,585, which is Oregon's figure for the average monthly cost of private-pay nursing home care. As a hypothetical, $100,000 given to children produces just under seven months of ineligibility.
The timing is what catches families. Under Oregon's rule, the penalty does not run from the date of the gift. It starts once you have applied and would otherwise qualify, meaning after your own assets are already spent down to $2,000. By then the gifted money is usually gone too, and the facility still needs to be paid for the length of the penalty.
Transfers into a Medicaid Asset Protection Trust are treated the same way. The trust works because the five years run out before you apply. If you are within five years of needing care, the gift question is where the planning has to start, and my post on irrevocable trusts covers the kind of trust that can still be useful in that window.
What the State Takes Back
Under ORS 416.350, Oregon can recover what it paid for a Medicaid recipient who was 55 or older, or who was permanently institutionalized at any age. The claim is deferred while a surviving spouse is alive, and while there is a surviving child who is under 21, blind, or permanently and totally disabled. Once those conditions end, the state can pursue it.
The statute defines the estate broadly. It reaches all property in which the recipient had any legal title or interest at death, including assets that passed through joint tenancy, survivorship, a life estate, or a living trust. Everything that avoids probate still falls within the recovery estate. That is why a transfer-on-death deed, joint title with a child, or a revocable trust does not protect the house from the state's claim. Only property that left your ownership more than five years before the application, and in which you kept no interest, sits outside it.
My post on Oregon Medicaid estate recovery goes through how the claim is asserted and what the family can expect from the Estate Administration Unit.
The Document That Has to Exist First
Nearly every step above requires someone to act for the person who needs care: signing trust documents, retitling assets, dealing with the Department of Human Services, responding to the caseworker. If that person can no longer sign, the family needs a durable power of attorney that already grants the right authority. A general form that says the agent may "manage my affairs" is often not enough. Funding an irrevocable trust and making gifts are powers that have to be spelled out, because an agent who exceeds the document's authority has made a transfer that can be unwound.
Without a sufficient power of attorney, the fallback is a court conservatorship, which costs months the family does not have when a facility bill is already running. In about half of my elder law matters, I am working with a family member acting under a power of attorney, and the first thing I read is whether the document allows what the plan requires.
Where I Fit
I handle the planning side and the application side. Planning work, including Medicaid Asset Protection Trusts and income cap trusts, is flat fee. Application work is billed hourly and scoped with you before any work begins, because every file is different. The fee buys the questions: what the caseworker will ask for, and what happens when a transfer from four years ago surfaces during the review.
I do not handle litigation of any kind, contested guardianships or conservatorships, or elder abuse cases. For those, the Oregon State Bar's Lawyer Referral Service can connect you with a lawyer who does.
Bottom Line
A revocable living trust is counted in full. The home is excluded for eligibility but stays within reach of estate recovery. A gift inside the five-year window creates a penalty that begins only once you are otherwise eligible, after the money is gone. The state's claim after death reaches everything that bypassed probate, deferred only while a spouse or qualifying child survives. And none of it can be addressed for an incapacitated parent unless a power of attorney already grants the authority.
The earlier these questions are asked, the more options remain. I work with families throughout Oregon and Idaho, fully virtually, and elder law planning is a core part of my practice. Book a free consultation here.
This post is for general information only and is not legal advice. Medicaid rules and figures change, and the right approach depends on your specific facts.
