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What Assets are Exempt from Medicaid Estate Recovery in New York
Medicaid estate recovery lets the state recoup, from a Medicaid recipient’s estate after death, certain benefits paid during the recipient’s lifetime. Its purpose is to recover what the state spent on long-term care, such as nursing home care or home and community-based services, for individuals aged 55 or older. The process begins when the state files a claim against the estate of the deceased recipient. The claim is limited to the total Medicaid benefits paid on the recipient’s behalf for long-term care services, and it is collected from assets that pass through probate.
New York’s Medicaid Estate Recovery Law
New York restricts recovery by statute. The “estate” subject to recovery includes only real and personal property, and other assets, that pass under a valid last will or, where there is no will, by intestate succession. That is the probate estate. It does not include assets held in living or irrevocable trusts, property owned jointly with a right of survivorship, or accounts and policies with named beneficiaries, because those assets do not pass through probate. Some states have expanded recovery to reach non-probate assets; New York has not, and confines recovery to the probate estate.
The House: Exempt for Eligibility, Not Exempt from Recovery
When someone applies for Medicaid to cover long-term care, the primary residence is usually an exempt asset for eligibility purposes. Its value is not counted toward the applicant’s assets, so a person can qualify for Medicaid while still owning the home.
That exemption ends at death. The home is not exempt from estate recovery, and once the recipient dies the state may file a claim against the estate to recover the cost of long-term care services, which usually reaches the home. Because Medicaid applicants must meet strict asset limits ($31,175 as of 2024), the home is often their only significant asset, and New York’s estate recovery program frequently focuses on it. If the recipient owned a home at death, the state may seek its value, up to the total Medicaid benefits paid for long-term care, by imposing a lien or requiring the sale of the property to satisfy the claim.
There are exceptions. If the recipient’s spouse, minor child, or disabled child is living in the home, the state may not pursue a claim against the property. And if a sibling or adult child of the recipient has an equity interest in the home, lived there, and cared for the recipient for at least one year (a sibling) or two years (an adult child) before the recipient entered a nursing home, the state may not pursue a claim against that sibling’s or child’s interest in the property.
Families should understand what recovery can do to the home and plan ahead. Transferring the home to a trust, or using a life estate deed, can protect it from estate recovery while still allowing the owner to qualify for Medicaid.
Other Assets Exempt from Medicaid Recovery in New York
The following assets are outside the probate estate and therefore beyond the reach of Medicaid estate recovery in New York. In each case the reason is the same: the asset passes to someone else by operation of law or by contract, not under the will or the intestacy statute.
| Asset | Why it is not subject to recovery |
|---|---|
| Life insurance policies | The proceeds go to the named beneficiaries, who receive them without any claim from the state. |
| Jointly owned bank accounts | A joint owner, such as a spouse or child, has a right of survivorship and automatically takes the funds when the other owner dies. |
| 401(k), IRA, payable-on-death and similar accounts | Retirement accounts and payable-on-death accounts pass to their named beneficiaries, who receive the funds without any claim from the state. |
| Property placed in certain trusts | Property in an irrevocable trust, for example, is owned by the trust and is no longer part of the recipient’s estate. |
| Jointly owned real estate | Real estate owned jointly with another person, such as a spouse or child, passes to the surviving joint owner by right of survivorship. |
| Assets entirely in the spouse’s or children’s names | Real estate or other assets owned outright by the recipient’s spouse or children were never part of the recipient’s estate. |
Protecting assets from Medicaid recovery is possible with proper planning and timing, and the earlier the planning starts, the more options remain. For more on how recovery claims are asserted and defended, see our page on Medicaid estate recovery in New York. If you need help with a Medicaid question, call the Law Offices of Albert Goodwin at 212-233-1233 or email [email protected].
About the Author
Albert Goodwin Esq. is a licensed New York attorney with over 18 years of courtroom experience. His extensive knowledge and experience make him well-qualified to write authoritative articles on a wide range of legal topics. He can be reached at 212-233-1233 or [email protected].
