How to Protect Your House From Nursing Home Costs in New York

By Albert Goodwin, Esq., attorney admitted in New York. Law Offices of Albert Goodwin, with offices in Manhattan, Brooklyn and Queens. Updated for 2025 Medicaid figures.

A nursing home in New York does not take your house. Medicaid can. A nursing home bills you, and once you run out of money it helps you apply for Medicaid. Medicaid then looks at your house in two ways: as an asset when you apply, and as a source of repayment after you die. Protecting the house means planning around both.

The short answer for most New York homeowners is this: transfer the house to a Medicaid Asset Protection Trust more than 60 months before you need nursing home care. If you do not have five years, New York law still gives you several options. This guide is organized by how much time you have, because that is what decides which strategy fits.

The short version, by timeline

• Five or more years before care: deed the house to a Medicaid Asset Protection Trust (MAPT). After 60 months the house is outside your Medicaid resources and outside your probate estate.
• One to five years before care: look at the exempt transfers New York allows without penalty (to a spouse, a caregiver child, a sibling with an equity interest, or a disabled child), spousal refusal under Social Services Law 366(3), a life estate deed, or gift-and-note planning.
• Already in a nursing home: keep the house exempt through a spouse or qualifying relative living there, or through a documented intent to return. Stay under the home equity cap. Contest any lien that does not follow the statute.
• After death: New York recovers only from the probate estate. Property that passes outside probate, including a house held in a MAPT or subject to a life estate, is not reached. A surviving spouse, a minor or disabled child, and a hardship waiver can also block recovery.

How New York Medicaid treats your house

Three sets of rules matter. Each one is different, and people confuse them constantly.

1. The house as an exempt resource

Your primary residence (the "homestead" under 18 NYCRR 360-1.4) does not count against the Medicaid resource limit while you live in it. In 2025 that limit is $32,396 for a single applicant. The house stays exempt after you enter a nursing home if your spouse, a child under 21, a blind or disabled child, or certain dependent relatives live there, or if you intend to return home. 18 NYCRR 360-4.7(a)(1). Intent to return is a subjective standard in New York. A written statement of intent in the application is usually enough to keep the house exempt during your lifetime, even if a doctor would say you are unlikely to go back.

There is a cap. Under 42 U.S.C. 1396p(f), as applied in New York, a single applicant is ineligible for nursing home Medicaid if the equity in the home exceeds $1,097,000 in 2025 (the 2024 figure was $1,071,000). The cap does not apply if a spouse, a child under 21, or a blind or disabled child lives in the home. Homeowners in Manhattan, Brooklyn and parts of Queens and Long Island hit this cap more often than they expect.

2. The house as a transferred asset: the lookback

When you apply for nursing home Medicaid, the local Department of Social Services (in New York City, the Human Resources Administration) reviews every transfer you made for less than fair market value in the 60 months before the application. 42 U.S.C. 1396p(c); Social Services Law 366(5)(e). Giving the house to a child or a trust is a transfer. The penalty is a period of ineligibility calculated by dividing the value transferred by the regional nursing home rate the Department of Health publishes each year. Downstate rates run in the range of roughly $14,000 to $15,500 per month in 2025. The penalty clock does not start until you are in a nursing home, have applied, and are otherwise eligible. A worked example appears below.

Community Medicaid, meaning home care, is different. New York enacted a 30-month lookback for community-based long-term care in the 2020 budget, amending Social Services Law 366(5)(e). As of this writing in 2025 the Department of Health has not implemented it. There is currently no lookback for home care applications, and the statute as written reaches only transfers made on or after October 1, 2020. Anyone relying on this should confirm the current status before transferring assets, because the implementation date has been pushed back several times.

3. The house as a source of repayment: liens and estate recovery

After you die, Medicaid can file a claim against your estate for benefits paid after age 55, or paid at any age while you were permanently institutionalized. Social Services Law 369(2)(b). During your life, Medicaid can record a lien against the house of a permanently institutionalized recipient after notice and a chance to contest. Social Services Law 369(2)(a); 18 NYCRR 360-7.11. These rules are covered in detail further down.

One New York rule changes everything: estate recovery in this state reaches only the probate estate, meaning property that passes under your will or by intestacy. Social Services Law 369(6). New York briefly expanded recovery to non-probate assets in 2011 and repealed that expansion in 2012. The result is that a house held in a properly drafted irrevocable trust, a house subject to a retained life estate, and a house held jointly with right of survivorship all pass outside probate and outside Medicaid's reach after death.

Five or more years out: the Medicaid Asset Protection Trust

A MAPT is an irrevocable trust. You deed the house to it. You keep the right to live there for life, and the trust can hold the house, sell it and buy a replacement, or rent it out. You cannot take the principal back, and that is the point: because you cannot reach the house, Medicaid cannot count it.

Once 60 months pass from the date of the deed, the transfer is outside the lookback. The house is not a resource, there is no penalty, and because the trust owns the house at your death it never enters your probate estate for recovery purposes.

Points that matter in New York drafting:

• Retain a right of occupancy, not ownership. The trust should give you the exclusive right to live in the house rent-free. This keeps the STAR exemption, senior citizen and veteran property tax exemptions, and the homestead character of the property.
• Keep the income, give up the principal. If the house is sold and the proceeds invested, you can receive the income without affecting the protection. Any power to receive principal defeats the trust.
• Preserve the step-up in basis. A limited power of appointment lets you change which children or relatives take the house at death, which also causes the house to be included in your taxable estate under Internal Revenue Code 2036. Inclusion is what gives your children a stepped-up basis under IRC 1014 and avoids capital gains tax on decades of appreciation. A New York estate is still well under the 2025 state estate tax exclusion of $7,160,000 in most cases, so inclusion costs nothing.
• Keep the Section 121 exclusion. Drafted as a grantor trust, the trust can sell the house during your life and still use your $250,000 (or $500,000 for a couple) capital gains exclusion.
• Choose the trustee carefully. You cannot be trustee. Most clients name one or two adult children. The trustee has fiduciary duties and can be removed or replaced under the trust terms.

A MAPT is not a revocable living trust. A revocable trust avoids probate but gives no Medicaid protection at all, because you can revoke it and take the house back. See our page on the benefits of a living trust for how that tool differs, and avoiding probate in New York for probate-only planning. This page is about Medicaid; those pages are not.

One to five years out: strategies that work inside the lookback

If you cannot wait 60 months, New York law offers transfers that carry no penalty at all, plus techniques that reduce the penalty.

Exempt transfers of the home (no penalty)

Under 42 U.S.C. 1396p(c)(2)(A), Social Services Law 366(5)(e)(4), and 18 NYCRR 360-4.4(c), you may transfer your home at any time, including the week before you apply, to:

• Your spouse. Transfers between spouses are unlimited and never penalized. The house then counts toward the community spouse's resources, which is where spousal refusal comes in.
• A child under 21, or a child of any age who is blind or disabled. A disabled child's inheritance should usually go into a supplemental needs trust so the child's own benefits are not lost.
• A sibling with an equity interest who lived in the house for at least one year immediately before you entered the nursing home. The sibling must have owned a share before the transfer; adding a sibling to the deed the month before does not qualify.
• A caregiver child who lived in the house for at least two years immediately before you entered the nursing home and provided care that allowed you to stay home instead of entering a facility sooner.

The caregiver child exemption is the one most New York families can use and most often lose through poor documentation. The Department will want proof of residence for the full two years (tax returns, driver's license, voter registration, mail at the address) and proof of care. A letter from your treating physician describing your condition and the care your child provided is the standard evidence. Payroll records from a home care agency showing hours the child covered also help. Gather this evidence before the transfer, not after the Department denies the application.

Spousal refusal (Social Services Law 366(3))

New York is one of a small number of states that still honors spousal refusal. If you enter a nursing home and your spouse stays at home, federal spousal impoverishment rules let the community spouse keep a Community Spouse Resource Allowance between $74,820 and $157,920 in 2025, plus income up to $3,948 per month. Everything above that is supposed to be spent on your care.

Under Social Services Law 366(3)(a), your spouse can instead sign a written refusal to contribute. You transfer the house and other assets to your spouse (an exempt transfer), your spouse signs the refusal, and Medicaid must approve your application based on your own resources. The local district then has the right to sue your spouse for the cost of care under an implied support obligation. In practice the district often settles for less than the Medicaid rate, and in some districts it rarely sues at all, but the exposure exists and the risk should be weighed with counsel. Spousal refusal is also useful when a couple's combined assets are modestly over the CSRA and the alternative is a spend-down that leaves the healthy spouse with too little to live on.

Spousal refusal does not protect the house from estate recovery against the refusing spouse's own estate later. A spouse who used refusal should follow up with a MAPT or other planning for the house once the ill spouse's application is approved.

Life estate deed

A life estate deed transfers the remainder interest in the house to your children now while you keep the right to live there for life. It is a transfer for Medicaid purposes, but only the value of the remainder interest counts, calculated from the life expectancy tables the Department uses. For a 75-year-old, roughly half the value of the house is a gift and half is the retained life estate. That cuts the penalty period in half compared to an outright gift, and the 60-month clock still runs from the deed date.

At your death the life estate ends automatically. The house never enters probate, so New York cannot recover against it. Your children receive a full step-up in basis because the retained life estate causes inclusion under IRC 2036.

The drawbacks are the reason most New York elder law attorneys prefer a MAPT:

• You cannot sell without every remainderman signing. A child's divorce, bankruptcy, death, or refusal can block a sale.
• If the house is sold during your life, your share of the proceeds (the life estate value) is a countable resource and must be spent before Medicaid pays. The children's share belongs to them and is subject to their capital gains tax without the Section 121 exclusion.
• Your children's creditors can attach their remainder interest.
• The gift is irrevocable with no power to change beneficiaries.

A life estate deed makes sense for a client with one reliable child, a house that will not be sold, and a strong wish to avoid trust administration. For most other families the MAPT does the same job with more flexibility. If the house is already titled in more than one name, see owning a house in two names for how joint title interacts with these transfers.

Gift-and-note ("half a loaf") planning

When nursing home admission is imminent and the house or its sale proceeds are the main asset, a gift-and-note plan can protect roughly half. You gift a portion of the assets to your children, which creates a penalty period. You lend the rest to them under a promissory note that meets 42 U.S.C. 1396p(c)(1)(I): actuarially sound, equal payments, no balloon, and not cancelable at death. The note payments, together with your income, cover the nursing home bill during the penalty period. When the penalty ends, Medicaid starts and the gifted portion is protected.

This technique requires the house to be sold or refinanced first, because the note needs cash to fund it. It also requires a precise penalty calculation, which is where the regional rate matters.

Worked example: the transfer penalty in New York

These numbers are illustrative. The regional rate changes every January and differs by county.

Suppose a widow in Queens deeds her house, worth $700,000, to her daughter outright. Eighteen months later she enters a nursing home and applies for Medicaid. Assume the New York City regional rate in that year is $14,000 per month.

• $700,000 divided by $14,000 equals a 50-month penalty.
• The penalty starts only when she is in the nursing home, has applied, and is otherwise eligible. It does not start on the date of the gift.
• During those 50 months, someone must pay the nursing home privately. If the daughter spent or lost the money, the family has a problem the statute does not solve.

Compare the same widow using a life estate deed at age 78. Only the remainder interest, roughly $350,000, is a gift. The penalty drops to about 25 months. Compare again if the daughter had lived in the house and cared for her mother for the two years before admission: the transfer is exempt, and there is no penalty at all.

The lesson is that the choice of technique, and the timing, decides the outcome. A transfer made to "get the house out of my name" without a plan for the penalty period often leaves the family worse off than no transfer.

Comparison: MAPT, life estate deed, outright gift

Already in a nursing home: keeping the house exempt and contesting liens

Keep the house exempt during your lifetime

Even without any advance planning, the house stays exempt while you are in the nursing home if your spouse or a qualifying relative lives there, or if you state an intent to return. 18 NYCRR 360-4.7(a)(1). Make sure the application says so. A house that is exempt is not a resource, and there is no requirement to sell it to qualify.

Two practical issues follow. First, the house still has to be maintained. Nursing home Medicaid leaves you a personal needs allowance of $50 per month in 2025 and takes the rest of your income toward the cost of care. Taxes, insurance and repairs usually have to come from family or from rental income. Second, if the house is rented, the net rent is income that goes to the nursing home. If the house is sold, the proceeds are a countable resource and you lose eligibility until they are spent down or transferred with a penalty.

The lifetime (TEFRA) lien

Social Services Law 369(2)(a) and 18 NYCRR 360-7.11 let the local district record a lien against the home of a recipient who has been determined to be permanently institutionalized, meaning not reasonably expected to be discharged and return home. The district must give written notice and an opportunity for a fair hearing before the lien attaches. You can defeat the lien at that stage by showing, with medical evidence, that discharge is reasonably expected. If a lien is recorded and you later go home, the district must release it.

No lien may be imposed, and a recorded lien may not be enforced, while any of the following people lawfully lives in the house:

• Your spouse.
• Your child under 21, or your blind or disabled child of any age.
• A sibling with an equity interest who lived there for at least one year before your admission.

A lien does not change ownership. It is satisfied from your equity if the house is sold during your life, and it becomes part of the estate recovery claim at death.

Defenses to a lien or recovery claim

Beyond the protected residents above, New York practice recognizes these defenses:

• Caregiver child. An adult child who lived in the home for at least two years before your admission, has lived there continuously since, and provided care that delayed your institutionalization. 18 NYCRR 360-7.11(b)(3); Social Services Law 369(2)(b)(iii)(B).
• Dependent relative. A relative living in the home to whom you provided more than half of their support. 92 ADM-53, Section IV.E.4.c.
• Income-producing property. Property used in a trade or business. 92 ADM-53, Section IV.E.4.d.
• Procedural failure. The district did not serve the notice of claim as Social Services Law 104-b requires, or did not offer a hearing before recording the lien.
• Undue hardship. Recovery would leave a beneficiary without a home of modest value that is their primary residence, or would take the only income-producing asset of the family, or other compelling circumstances. 18 NYCRR 360-7.11. The district has discretion and a hardship request must be made in writing with supporting documents.
• Cost of recovery. Districts may waive claims where title is clouded or the cost of pursuing recovery would approach the amount recovered.

After death: what New York can and cannot recover

Medicaid's claim is filed in the Surrogate's Court proceeding against your probate estate. Social Services Law 369(2)(b). It is a preferred claim, paid before beneficiaries but after funeral and administration expenses. The claim covers benefits paid after you turned 55, or paid while you were permanently institutionalized at any age.

Recovery is deferred, not waived, while a surviving spouse is alive or while a child under 21 or a blind or disabled child survives. When the spouse dies, the district can look to the spouse's estate, but only to the extent the spouse had resources above the CSRA at the time you received benefits. A spouse who had nothing above the allowance owes nothing. A spouse who used spousal refusal may face a claim under Social Services Law 366(3) against assets the spouse still holds at death.

Because New York limits recovery to the probate estate under Social Services Law 369(6), the practical defense after death is the title work you did before death. A house in a MAPT, a house with a retained life estate, or a house held jointly with right of survivorship does not pass through probate and is not reached. A house titled in your name alone, passing by will or intestacy, is.

If a parent died owning the house in their own name and a child has been living there, the Medicaid claim comes up in administration. See beneficiary living in an inherited house for the estate-side issues.

How we handle these cases

Most clients come to us at one of two points: in their late sixties or seventies with no immediate health crisis, or within weeks of a parent's nursing home admission. The work is different.

For the planning client, we review the deed, the mortgage, the property tax exemptions, and the family. We draft a MAPT with a retained right of occupancy and a limited power of appointment, record the new deed, and calendar the 60-month date. We also prepare a durable power of attorney with gifting authority under General Obligations Law 5-1514 and a health care proxy, so that if the client loses capacity inside the five years, the agent can still complete transfers. A power of attorney without gifting language cannot do Medicaid planning. See advance directives in New York.

For the crisis client, we first ask who lives in the house and for how long. An illustrative situation: a mother in Brooklyn enters rehab after a fall and is told she will not go home. Her son has lived with her for six years and drove her to appointments, managed her medications and cooked. On those facts the home can be deeded to the son as a caregiver child with no penalty, and we assemble the physician letter and residence records before filing the application. If no child qualifies, we look at whether a spouse can use refusal, whether a life estate or gift-and-note plan protects part of the value, and whether the home equity cap is a problem. If a lien notice has already arrived, we request the hearing within the deadline on the notice.

We do not promise a particular result. The outcome depends on the facts, the county, and the timing. What we can do is tell you, after reviewing the documents, which of the options above are open to you and what each one costs.

Frequently asked questions

Can a nursing home take my house if my spouse lives there in New York?

No. While your spouse lives in the house it is an exempt resource, the home equity cap does not apply, no lien can be enforced against it, and estate recovery is deferred until your spouse dies. Your spouse should still plan for the house after your application is approved, because the district can later claim against your spouse's estate to the extent your spouse had resources above the Community Spouse Resource Allowance.

What is spousal refusal in New York?

Spousal refusal is a written statement by the community spouse, authorized by Social Services Law 366(3)(a), declining to contribute to the institutionalized spouse's care. Medicaid must then determine eligibility on the applicant's resources alone. The local district keeps the right to sue the refusing spouse for support. New York is one of the few states that still permits it.

How long is the Medicaid lookback in New York in 2025?

Sixty months for nursing home Medicaid. For community Medicaid (home care) there is currently no lookback. A 30-month lookback was enacted in 2020 but has not been implemented. Check the status before relying on it.

Does a MAPT protect my house if I need care within five years?

Not fully. The transfer to the trust is penalized if you apply for nursing home Medicaid inside the 60 months. The penalty is the house value divided by the regional rate. Some families still proceed, planning to pay privately or to use a gift-and-note strategy for the remaining months. Others use a life estate deed or an exempt transfer instead. If you only need home care within five years, the trust transfer is not penalized under current rules.

What is the caregiver child exemption and how do I prove it?

A parent may transfer the home without penalty to a child who lived there for at least two years immediately before the parent entered a nursing home and who provided care that allowed the parent to stay home. Proof is a physician's statement describing the parent's condition and the care provided, plus documents showing the child's residence for the full two years. Social Services Law 366(5)(e)(4); 18 NYCRR 360-4.4(c).

Is a life estate deed better than a MAPT in New York?

A life estate deed produces a smaller transfer penalty because only the remainder is a gift, and it avoids probate and recovery. It is worse if the house might be sold during your life, if any child has creditor or marital problems, or if you may want to change who inherits. For most families a MAPT offers the same protection with fewer risks.

Does Medicaid recover against a house held jointly with my child?

If the deed creates a joint tenancy with right of survivorship, the house passes to your child outside probate at your death and is not subject to New York estate recovery. During your life, however, adding your child to the deed is a transfer of half the value and starts the 60-month clock, and your child's half is exposed to the child's creditors. Adding a child to a deed is rarely the best tool; see a house in two names for the problems it causes.

What is the New York home equity limit for Medicaid?

$1,097,000 for 2025. Equity above that makes a single applicant ineligible for nursing home Medicaid unless a spouse, a child under 21, or a blind or disabled child lives in the home. Applicants over the cap sometimes reduce equity with a home equity line, or transfer the house and plan around the penalty.

Related New York planning pages

• Advanced New York estate planning techniques, for tax-driven planning beyond Medicaid.
• Trust attorney in New York City, for trust drafting and administration generally.
• How to avoid probate in New York, for probate avoidance that does not involve Medicaid.
• Benefits of a special needs trust, for leaving a home or assets to a disabled child.
• Abuse of a power of attorney, for problems with agents handling a parent's property.

Talk to a New York Medicaid planning attorney

Protecting a house from nursing home costs is a question of timing and title. The right answer for a 68-year-old in good health is different from the right answer for a family meeting with a discharge planner this week. The Law Offices of Albert Goodwin handles Medicaid asset protection trusts, exempt transfers, spousal refusal, life estate deeds, and lien and recovery disputes for clients in New York City, Brooklyn, Queens and Long Island. Call 212-233-1233 or email [email protected] to schedule a consultation.

This page is general information about New York law as of 2025 and is not legal advice for your situation. Medicaid figures change each January and local districts apply the rules differently. Confirm current numbers and rules with an attorney before transferring property.