How to Protect Your Assets When Your Spouse Enters a Nursing Home in New York

Authored by Albert Goodwin, Esq., New York estate planning and elder law attorney. Law Offices of Albert Goodwin, Midtown Manhattan. Last reviewed and updated: January 2025. Medicaid figures are updated annually each January.

When one spouse needs long-term nursing home care in New York, the cost — frequently $15,000 to $20,000 per month in the New York City metro area — can threaten the financial security of the healthy spouse who remains at home. That spouse is called the community spouse. The good news is that New York's Medicaid rules, combined with proper planning, allow the community spouse to keep far more than most families realize. This guide focuses specifically on protecting the community spouse and walks through the actual strategies, the timing that makes or breaks them, and real New York dollar scenarios.

This page concentrates on the institutionalized-spouse / community-spouse situation. If both spouses are healthy and you are doing long-range planning, or you want to understand titling assets under one spouse, see our companion guides linked at the end.

Start Here: The Two Planning Timelines

Every Medicaid strategy in New York depends on one question — how much time do you have? The answer determines which tools are available.

• Advance planning (5+ years out): You have the most powerful options, including the Medicaid Asset Protection Trust (MAPT). New York's 60-month (five-year) lookback period for transfers applies to institutional (nursing home) Medicaid. Assets transferred more than five years before applying are completely protected.
• Crisis planning (spouse already needs care, or will soon): The MAPT is generally too late because of the lookback penalty. But because of how New York treats married couples, an enormous amount can still be saved using spousal protections, spousal refusal, Medicaid-compliant annuities, and the gift-and-loan strategy. Families often assume nothing can be done once a spouse is already in a facility — that is usually wrong.

Important New York distinction: the five-year lookback historically applied only to nursing home (institutional) Medicaid, not to Community-Based Long Term Care (home care). New York has been phasing in a 30-month lookback for community Medicaid, but its implementation has repeatedly been delayed. Because the rule and effective date keep changing, confirm the current status with an attorney before relying on it.

Why the Community Spouse Can Keep So Much in New York

New York's spousal impoverishment rules, rooted in federal law (42 U.S.C. § 1396r-5) and administered through New York's Department of Health and the local Department of Social Services / HRA in New York City, are designed so the at-home spouse is not left destitute. Two protections matter most:

The Community Spouse Resource Allowance (CSRA)

The CSRA is the amount of countable assets the community spouse keeps. New York applies the maximum federal CSRA, so the community spouse may retain the full allowance regardless of how little the applicant has — New York does not require dividing the couple's assets in half and capping the community spouse at the lower number the way some states do. The figure is set annually each January.

The Monthly Maintenance Needs Allowance (MMMNA)

If the community spouse's own income is below the MMMNA, income from the institutionalized spouse can be shifted to the community spouse to bring them up to the floor. The community spouse has no income limit of their own — they keep all of their Social Security, pension, and other income.

2025 New York Figures (Updated Each January)

These amounts change every January 1. The figures above reflect 2025. Because Medicaid is YMYL — your money and your spouse's care depend on it — always verify the current numbers in the New York DOH / HRA Medicaid Reference Guide or with your attorney before acting.

Countable vs. Non-Countable Assets — The Short Version

You only need to plan around countable assets. Countable resources include bank accounts, CDs, stocks, bonds, mutual funds, non-payout retirement accounts, cash-value life insurance, and investment real estate. Non-countable (exempt) resources include the primary residence (within the equity limit), one vehicle, household and personal effects, an irrevocable pre-paid funeral, and property essential to self-support. The goal of planning is to legally convert countable assets into exempt assets or to shift them to the protected community spouse.

The Strategies That Actually Protect the Community Spouse

1. Spousal Refusal — "Just Say No"

New York is one of a small number of states that still permit spousal refusal. Under New York Social Services Law § 366, the community spouse can formally refuse to contribute their income and resources to the institutionalized spouse's care. When done correctly, the applicant can qualify for Medicaid even though the couple's combined assets exceed the CSRA, because the community spouse's refused resources are not counted against eligibility.

The tradeoff: the local Department of Social Services or HRA may seek recovery from the refusing spouse for the cost of care provided. In practice, the amount Medicaid recovers is often far less than the private-pay cost of care, which is why spousal refusal can preserve significant assets. This is a powerful but technical tool that must be documented properly — it is one of the most important reasons crisis planning is still worthwhile in New York.

2. Medicaid Asset Protection Trust (MAPT) — The Advance-Planning Tool

A MAPT is an irrevocable trust you create well before care is needed. You transfer countable assets — typically the home and investments you do not need for current living — into the trust. You give up the right to take principal back, but the trust can be drafted so you keep the right to live in the home, receive trust income, and retain a limited power to change beneficiaries.

Key points for New York families:

• Five-year rule: Assets in the MAPT are fully protected for nursing home Medicaid once they have been in the trust for 60 months. Transfers within the lookback create a penalty period of ineligibility.
• Why irrevocable: A revocable trust gives you no Medicaid protection — assets you can take back are countable. Only an irrevocable MAPT shields assets.
• Capital gains and step-up: A properly drafted MAPT can preserve the step-up in basis at death and the home-sale capital gains exclusion, which a simple gift to a child does not. This is a major reason a MAPT usually beats outright gifting the house.
• When it's too late: If your spouse already needs care or will within five years, the MAPT alone won't avoid a penalty — you pivot to the crisis strategies below.

3. Medicaid-Compliant Annuities

Because the community spouse has no asset limit beyond the CSRA, excess countable assets can be converted into an income stream for the community spouse through a Medicaid-compliant annuity. To comply, the annuity must be irrevocable, non-assignable, actuarially sound (the payout period cannot exceed the annuitant's life expectancy), and must name the State of New York as remainder beneficiary up to the amount of Medicaid paid. This effectively transforms a countable lump sum into protected community-spouse income — a leading crisis-planning tool in New York.

4. Gift-and-Loan (Promissory Note) Strategy

For an applicant who already needs nursing home care, the gift-and-loan (or "half-a-loaf") approach can still save roughly half the otherwise-spent-down assets. A portion of assets is gifted (triggering a penalty period), and a Medicaid-compliant promissory note loan is made for a similar amount. The loan repayments are used to private-pay during the penalty period, and the gifted portion is preserved. The note must be actuarially sound, require equal payments, and prohibit cancellation at death. The math is precise and must be calibrated to New York's regional penalty divisor, so this should never be attempted without counsel.

5. Caregiver Agreements and Allowable Spend-Down

Not all spending counts as a transfer. Paying off the mortgage, making accessibility home modifications, replacing a vehicle, buying an irrevocable pre-paid funeral, and entering a written, fair-market caregiver agreement with a family member are legitimate ways to use down countable assets without creating a penalty. A caregiver agreement must be in writing, signed before services begin, and pay reasonable rates — otherwise Medicaid may treat the payments as gifts.

6. Protecting the Home

The primary residence is exempt within the equity limit while the community spouse lives there. Transferring the home to the community spouse is exempt and does not trigger a penalty. For advance planning, transferring the home into a MAPT or executing a life estate deed can protect it for the next generation while preserving the right to live there. Remember: New York's Medicaid estate recovery generally reaches only assets passing through the deceased recipient's probate estate, so keeping the home out of probate is part of the strategy.

Real New York Dollar Scenarios

The following are illustrative examples to show how the math works. They are not predictions of your result; every case turns on its own facts and current figures.

Scenario A: Couple With $400,000 in Liquid Assets

Henry enters a nursing home; his wife Rose stays home. They have $400,000 in countable savings and investments, plus a paid-off home. Using 2025 figures, Rose's CSRA lets her keep $157,920. Henry's individual limit is about $32,396. That leaves roughly $209,684 over the limits. Rather than spend it all on care, a Medicaid-compliant annuity for Rose (no income limit applies to her) plus a gift-and-loan structure can preserve a substantial portion of that excess while Henry becomes eligible. The home stays exempt because Rose lives there.

Scenario B: Home Worth $700,000 Plus Savings

Maria's husband needs care. They own a home worth $700,000 (within the equity limit) and have $180,000 in the bank. The home is exempt while Maria lives in it. The savings exceed the CSRA only slightly; with spousal refusal and modest allowable spend-down (paying property taxes, home repairs, a pre-paid funeral), the husband can qualify while Maria keeps the home and the bulk of the savings.

Scenario C: Advance Planner, Age 68, Healthy

Frank and Eva, both healthy and 68, want to protect a $600,000 portfolio and their home. Because they have time, they fund a MAPT now. If neither needs nursing home care for five years, the entire MAPT is protected, the home keeps its step-up in basis and capital-gains exclusion, and they continue receiving the trust's income. This is the cleanest, lowest-cost path — available only because they planned early.

Frequently Asked Questions

Can Medicaid take my house in New York?

Not while you or your community spouse live in it within the equity limit. Medicaid may pursue estate recovery after death, but in New York recovery generally applies only to assets in the deceased recipient's probate estate. Proper planning — a MAPT, life estate, or transfer to the community spouse — can keep the home out of recovery.

What is the Medicaid lookback period in New York?

For nursing home (institutional) Medicaid, the lookback is 60 months (five years). A 30-month lookback for community-based (home care) Medicaid has been enacted but its implementation has been repeatedly delayed, so confirm its current status before relying on it.

Can I transfer assets to my spouse to qualify?

Yes. Transfers between spouses are exempt and do not trigger a penalty. The challenge is that the couple's assets are counted together, so simply moving money to the community spouse does not by itself create eligibility — that is where spousal refusal, annuities, and the CSRA come in.

Is it too late to plan if my spouse is already in a nursing home?

Usually not. New York's spousal refusal, Medicaid-compliant annuities, and gift-and-loan strategies are specifically designed for crisis situations and can preserve a large share of assets even after admission.

Does the community spouse have an income limit?

No. The community spouse keeps all of their own income with no cap, and may receive additional income from the institutionalized spouse if their income falls below the monthly maintenance allowance.

Related New York Planning Guides

• Asset Protection in New York: Moving Assets Under One Spouse
• Advanced New York Estate Planning Techniques
• Benefits of a Special Needs / Supplemental Needs Trust
• Benefits of a Living Trust
• How to Avoid Probate in New York

Speak With a New York Medicaid Planning Attorney

Every strategy above is timing- and fact-sensitive, and a single misstructured transfer can create months of ineligibility. We help New York families coordinate spousal protections, MAPTs, annuities, and crisis planning so the community spouse is protected and the application is approved. The Law Offices of Albert Goodwin are located in Midtown Manhattan, New York, NY. Call 212-233-1233 or email [email protected] to schedule a consultation.

This article is general information about New York Medicaid and elder law, not legal advice, and does not create an attorney-client relationship. Medicaid figures and rules change annually; consult a qualified attorney about your specific situation.