Long-term care can cost over $100,000 a year, and Medicaid is the largest payer of nursing home care in the U.S. A Medicaid asset protection trust is one legal tool families use to qualify for that help without losing everything they've saved.
What is a Medicaid asset protection trust and how does it work?
A Medicaid asset protection trust (MAPT) is an irrevocable trust you create and fund during your lifetime. Once assets like your home, savings, or investments are transferred in, you no longer legally own them, so Medicaid doesn't count them when reviewing your application for long-term care benefits. You typically name an adult child or other trusted person as trustee, and you can retain the right to live in your home and receive trust income. Because the trust is irrevocable, you generally cannot take the principal back — that loss of control is the trade-off for protection. According to KFF, Medicaid covers roughly 6 in 10 nursing home residents nationwide.
When should you set up a MAPT before nursing home care?
Timing is everything. Medicaid uses a 5-year look-back period (60 months in every state) that reviews asset transfers made before you apply. Assets moved into a MAPT must clear that 5-year window to be fully protected; transfers made too late can trigger a penalty period of Medicaid ineligibility. That's why elder law attorneys often advise creating a MAPT in your late 60s or early 70s, while you're still healthy. The earlier you plan, the more you protect. If a health crisis is already underway, other 'crisis planning' strategies may still help — call 1-800-MEDIGAP to talk through your timeline.
What can and can't go into a Medicaid asset protection trust?
Common assets placed in a MAPT include your primary home, vacation property, non-retirement investment accounts, CDs, and cash savings. Your home is often the centerpiece because it's usually the largest asset families want to preserve for heirs. Retirement accounts like IRAs and 401(k)s are usually left out, since transferring them triggers immediate income tax; instead, planners use other strategies for those. You should always keep enough assets outside the trust to cover daily living expenses, since MAPT principal is no longer accessible to you. A qualified elder law attorney tailors the funding to your situation.
What are the pros and cons of a MAPT?
Pros: protects your home and savings from being spent down on long-term care, preserves an inheritance for your family, may keep a step-up in cost basis for heirs, and can shield assets from Medicaid estate recovery after death. Cons: it's irrevocable, so you give up control of the principal; the 5-year look-back means it offers no protection if you need care soon; and setup requires an attorney, typically costing a few thousand dollars. A MAPT isn't right for everyone. For some families, long-term care insurance, a Medigap-paired strategy, or simply spending down makes more sense.
How does a MAPT fit with Medicare and Medigap?
Medicare and Medigap cover doctors, hospitals, and short rehab stays — but they do not pay for long-term custodial care in a nursing home or for ongoing help with daily activities. That gap is exactly why Medicaid planning matters. A Medicaid asset protection trust addresses the long-term care side, while your Medicare and Medigap coverage handle acute medical needs. Coordinating all three is how families build a complete plan. 1-800-MEDIGAP is one number for every senior need — call to review your Medigap coverage and get pointed toward trusted elder law and Medicaid planning resources.