Long-term care in New York is, without a doubt, very expensive. Some nursing homes charge over $15,000 per month; home care and assisted living aren’t far behind. Medicaid helps cover these costs, but qualifying is difficult without advance planning. Strict limits on income and assets means many families risk draining their life savings before help becomes available.

Medicaid planning in New York offers a way to protect what you’ve earned and still qualify for Medicaid benefits. With the right legal strategy, you can preserve assets for your spouse or heirs while meeting New York’s eligibility requirements.

Understanding Medicaid Planning Under New York Law

Medicaid planning involves legally restructuring finances to comply with New York’s eligibility rules for Medicaid long-term care benefits. The state sets income and asset limits, and anything above those thresholds must be spent down or sheltered using approved strategies.

One common approach is placing assets in a Medicaid Asset Protection Trust, or MAPT. If created and funded early enough (beyond the state’s five-year look-back for nursing home care) these trusts shield property from being counted toward eligibility. Other tools include spousal refusal or payout-structured retirement accounts.

Why Families Turn to Attorneys for Medicaid Planning

Applying for Medicaid without legal guidance can lead to serious missteps. New York’s rules are complex, and mistakes like transferring assets too late can delay eligibility and trigger months of out-of-pocket care.

An elder law attorney can help structure asset transfers and draft compliant irrevocable trusts. They also advise on strategies like spousal refusal and income allowances for the well spouse. Most families turn to legal counsel to protect assets legally and avoid costly delays, as well as help with the overall application process.

Eligibility and Asset Protection Rules in New York

2025 New York Medicaid rules state that a single applicant must have less than $1,800/month in income and under $32,396 in countable assets. Key exemptions include the primary residence, one vehicle, and retirement accounts in payout status.

Assets above the limit may be restructured or transferred, but improper timing might lead to penalty periods. Planning ahead allows families to use legal tools like MAPTs to shield savings without jeopardizing Medicaid eligibility.

The Look-Back Period and Legal Consequences of Transfers

Because of New York’s five-year look-back period for nursing home Medicaid, any gifted assets or transfers made within five years of applying are reviewed to determine if they were made to reduce countable assets. If so, the applicant may face a penalty period, a span of months (or years) during which Medicaid won’t pay for care.

The length of the penalty is based on the value of the uncompensated transfers divided by a regional monthly nursing home rate. Community-based Medicaid (home care or assisted living) currently has no look-back, but a 30-month look-back is expected to take effect in the future.

Legal Strategies to Protect Assets for Long-Term Care

A MAPT irrevocable trust is the best choice for most people to protect assets for Medicaid planning. It removes assets from your name, shielding them from the asset limit if funded at least five years before the date you apply for Medicaid coverage of nursing home care. MAPTs can hold cash, investment accounts, and even your primary residence, while still allowing you to live in the home and retain property tax benefits.

For retirement accounts, no trust is needed if they’re in payout status, since New York excludes these from countable assets. Other planning options include spousal refusal, pooled income trusts (for excess monthly income), and strategic gifting, which must be handled carefully to avoid penalty periods.

There’s no single approach for everyone, so each plan must be tailored to the applicant’s health, income, family structure, and timeline for care.

When to Seek Legal Counsel for Medicaid Planning

The best time to begin Medicaid planning is before care is needed, ideally five years in advance. Early planning allows for the full use of asset protection tools like MAPTs without triggering penalties.

That said, it’s never too late to consult an elder law attorney. Even in a crisis like an unexpected nursing home admission there may still be legal options to protect a portion of your assets through last-minute planning strategies.

Common Legal Mistakes to Avoid in the Planning Process

Many families make costly mistakes when trying to protect assets without proper legal guidance. Common errors include:

• Waiting too long to transfer assets, triggering a penalty period under the look-back rule
• Using revocable trusts, which offer no Medicaid protection
• Adding children to deeds, which can create tax issues and leave the home vulnerable to creditors
• Failing to account for income limits, particularly for applicants seeking community Medicaid

Another frequent mistake is assuming all assets must be given away. New York offers a multitude of legal ways to preserve wealth, but only with careful and correct estate planning.

Tully Rinckey attorneys understand that contesting a will is not only complex but also an emotionally taxing process. They will handle your matter with the attention and tact it deserves. If you have additional questions about wills or probate law in New York State, our team of attorneys is available to assist you today. Please call 8885294543 to schedule a consultation, or schedule a consultation online.

As Senior Counsel at Tully Rinckey, Marlee Stever, Esq. provides legal counsel in the areas of estate planning, trust administration, probate administration, guardianships, conservatorships, and estate tax matters. With a robust background in crafting comprehensive estate plans, Marlee focuses on developing strategies that protect clients’ assets and ensure financial stability for future generations.