Most people who are getting older start thinking about long-term care. You have probably built up some assets and want to know whether they will be spent on a nursing home or home care before anything reaches your children. That is the question a Medicaid lawyer answers, and this page explains what the work actually involves.
Medicaid is a joint federal and state program that covers long-term care for people with low income and few assets. People above the income and asset limits are not eligible. Long-term care, however, is expensive and can run to tens of thousands of dollars a month depending on where you live. Owning a house, a retirement fund and a monthly pension does not mean you can afford it for an unknown number of years, and most people would rather their wealth pass to their children and grandchildren than to a nursing home.
A Medicaid lawyer plans for that. Depending on how early you start, the lawyer will propose different strategies to qualify you for Medicaid while preserving assets, and will also draft and supervise the execution of the will, power of attorney, health care proxy and any trusts the plan requires. Applying without planning can backfire: if the case reviewer finds that you transferred property to others for nothing in return simply to become eligible, you will be penalized. Getting advice before you apply avoids that.
Asset and income levels to qualify for New York Medicaid
In 2026, a single New York resident may have monthly income of no more than $1,836 and countable assets of no more than $33,038. The limits are higher for a married couple with both spouses applying. Where only one spouse is applying, the applicant is held to the single limits and the spouse at home may keep up to $162,660 of resources under the spousal impoverishment rules. The figures change every January.
Certain assets are exempt from the eligibility computation: the family home (with an equity limit of $858,000), one car, an irrevocable funeral trust, a life insurance policy with a face value of $1,500 or less, and household goods and personal effects. Remember that even though the family home is exempt when eligibility is determined, it is not exempt from Medicaid’s estate recovery program when you die, save for certain exceptions.
The Medicaid lookback period and the penalty
Everything a Medicaid lawyer recommends depends on where you stand in relation to the lookback period. The lookback rule penalizes transfers of assets made without full and adequate consideration during the lookback period before the application. States differ on the length of the period and the type of care it applies to. In most states it is 60 months. In New York, nursing home Medicaid has a 60-month lookback. A separate 30-month lookback for community (home care) Medicaid was enacted in 2020 but, as of 2026, has not been implemented.
Transfers found within the lookback period produce a period of ineligibility. The penalty period is computed by dividing the amount transferred without adequate consideration by the average private-pay cost of a nursing home in your region.
Take a widow with $100,000 in the bank who wants to enter a New York City nursing home. Under New York nursing home Medicaid rules her assets may not exceed $33,038, so six months before applying she transfers $67,000 to her adult son, leaving $33,000 in her account. For 2026, the New York City nursing home Medicaid monthly regional rate is $15,282. The reviewer sees the $67,000 transfer within the 60-month lookback and divides $67,000 by $15,282, which comes to 4.38. From the date of the application she is ineligible for Medicaid for a further 4.38 months. After that period she can re-apply and, provided the income and non-financial requirements are met, she will be eligible because she is within the $33,038 asset limit.
If your income and assets are above the limits, the available strategies depend on how far ahead of the lookback period you start. Planning done before the lookback period is far more powerful than planning done inside it.
Preserving assets before the lookback period
The strategy also depends on your marital status, whether one or both spouses will apply, and how long before the application the plan is put in place. Before the lookback period, the main tool is an irrevocable trust, which reduces your countable assets on paper. In an irrevocable trust you hand complete control of the property to a trustee, who manages it for your named beneficiaries. Examples include the Medicaid asset protection trust, the qualified personal residence trust, the qualified terminable interest property trust, the special needs trust and the irrevocable life insurance trust.
Many people are put off irrevocable trusts by the loss of control. A carefully drafted trust can include trust protector and decanting provisions so that the grantor, through a representative, keeps some level of oversight.
The Medicaid asset protection trust (MAPT) is the most common choice. You transfer your assets, typically bank accounts and the house, to an irrevocable trust in which you are entitled only to the income. That income counts toward the Medicaid income limit. The trustee must be someone other than you or your spouse, often an adult child, and you cannot reach the principal.
If the trust is established more than five years before you apply, everything in it is protected: it is not a countable asset, it does not generate a penalty period, and it is beyond the reach of the Medicaid estate recovery program, so it cannot be used to reimburse Medicaid for your nursing home costs after you die. If you apply less than five years after the transfer, however, the entire amount moved into the MAPT may be counted in computing the penalty period. For that reason, if you need long-term care within five years of funding the trust, it is usually better for family members to pay for the interim care rather than apply for Medicaid and trigger the penalty.
Preserving assets during the lookback period
Once you are inside the lookback period, the options narrow, because any gift may be penalized. What is prohibited is transferring assets without full and adequate consideration; spending money and receiving fair value in return is not penalized. The strategies below all work within that rule.
| Strategy | How it works | Effect on the penalty period |
|---|---|---|
| Spending down countable assets | Buy an irrevocable funeral trust, pay off the mortgage and credit card debt, or pay a family member who has been caring for you for those caregiving services. | None, because value is received in exchange. |
| Medicaid-compliant annuity | Convert countable assets into a monthly income stream. The annuity must be based on the applicant’s life expectancy, immediate, irrevocable, non-transferable and fixed. | None, but the payments count toward the monthly income limit. |
| Modern half a loaf | Gift half of the excess assets to a family member and use the other half to buy a Medicaid-compliant annuity. | Only the gifted half is penalized; the annuity payments cover care during the shorter penalty period. |
| Gift and loan | Like half a loaf, but instead of an annuity you lend the second half to a family member, repayable in equal monthly installments over your life expectancy. | Only the gift is penalized; the loan repayments pay the nursing home while you wait out the penalty. |
| Pooled income trust | For disabled applicants with excess income. Income placed in a trust administered by a non-profit is not countable, and is used to pay your bills. Money left in the trust cannot be withdrawn after death, so it should be spent as it comes in. | None; it addresses excess income, not assets. |
| Spousal impoverishment rules | Where only one spouse applies, part of the applicant’s income can be shifted to the healthy spouse as a spousal income allowance, up to the Minimum Monthly Maintenance Needs Allowance (MMMNA) set federally each July. | None; it is an allowance, not a transfer. |
Two worked examples show how the numbers fall out. If you buy an annuity for $50,000 with a life expectancy of 10 years, you will receive about $416.67 a month ($50,000 divided by 120 months) plus a small amount of interest, and that monthly figure counts toward your income limit.
With the modern half a loaf, go back to the widow with $100,000 who needs to get below the $33,038 asset limit. She applies the strategy to $67,000, leaving her with $33,000. The $67,000 is split in two: $33,500 is gifted to a family member and is subject to the penalty period, and the remaining $33,500 buys a Medicaid-compliant annuity. Because only $33,500 was gifted, her penalty period is only 2.19 months, assuming a New York City nursing home at the 2026 regional rate of $15,282, and the annuity payments help cover those months.
What the Medicaid lawyer does with all this
The lawyer prepares a Medicaid plan based on your assets and income and the time available. The earlier the conversation, the more of the pre-lookback tools are open to you and the less likely you are to face a penalty period. Come to the first meeting with a list of what you own: the house, the car, bank and investment accounts, life insurance, retirement accounts and anything else of value. With that information the lawyer can evaluate your position and recommend a strategy that can be put in place immediately.
There are Medicaid specialists who will assess your assets for eligibility, but a lawyer can do the whole job, including drafting and funding the trust that protects the assets and the documents that go with it. If you need a Medicaid lawyer in New York, we can help. Call us at 212-233-1233 or email [email protected].
