How Can I Protect My House and Assets From Nursing Home Costs in New York?

Understanding Nursing Home and Medicaid Asset Planning

Protecting assets from the cost of long-term care does not mean hiding assets or transferring property after someone enters a nursing home without considering Medicaid rules.

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The objective is to arrange a person’s assets and estate plan lawfully so that long-term care needs, Medicaid eligibility, the financial security of a spouse, and the family’s estate-planning objectives work together as effectively as possible. Medicaid is particularly important because Medicare and Medicaid serve different purposes. Medicare may cover qualifying skilled nursing or rehabilitation services for a limited period under applicable rules, but it is not a general program for indefinitely paying the cost of custodial nursing home care.

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Medicaid can provide coverage for qualifying long-term nursing facility care, but financial and transfer-of-asset rules apply.

For nursing home Medicaid, New York currently reviews certain financial transactions during a 60-month look-back period to determine whether assets were transferred for less than fair market value. An improper transfer can result in a period during which Medicaid will not pay for nursing facility services. This makes timing extremely important.

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A strategy that works well when implemented years before care is needed may have very different consequences when implemented immediately before a Medicaid application.

 

Protecting the Family Home

For many families, the house is both their largest asset and the property they are most concerned about protecting.

A common misconception is that a person must automatically sell the home before Medicaid can pay for nursing home care.

The rules are more complicated.

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A residence can receive special treatment under Medicaid eligibility rules depending on the circumstances, including whether a spouse or certain other qualifying individuals continue to reside there. New York’s current Medicaid materials addressing married couples specifically state that the home is not included when calculating the couple’s countable resources for purposes of the spousal resource assessment described by the Department of Health.  But having a home treated favorably when determining Medicaid eligibility is not necessarily the same thing as permanently protecting the home. Eligibility, liens, transfers, and Medicaid estate recovery involve separate rules. That distinction is important.

A family should not conclude that a home is permanently protected merely because it was not counted as an available resource when Medicaid eligibility was initially determined.

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Medicaid Asset Protection Trusts

One planning strategy frequently considered in New York is a Medicaid Asset Protection Trust, often referred to as a MAPT.

A MAPT is generally an irrevocable trust designed so that selected assets are transferred out of the individual ownership of the person seeking to protect them while the trust preserves certain rights and benefits established in the trust agreement.

A residence is frequently among the assets considered for transfer to a MAPT.

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Other assets may also be appropriate depending on the trust design, the client’s financial circumstances, and the need to retain sufficient accessible assets outside the trust. The critical issue is that the person creating the trust cannot simply treat protected trust principal as though it remained an unrestricted personal bank account. New York Medicaid rules specifically examine what portions of an irrevocable trust can be paid to or for the benefit of the person who established it. A properly designed Medicaid trust therefore requires the client to accept meaningful limitations in exchange for the potential asset-protection benefits. This is also why simply creating an “irrevocable trust” is not enough. The trust provisions, assets transferred, retained rights, trustee powers, beneficiaries, timing, and administration all affect the result.

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Learn more about a MAPT here.

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The Five-Year Medicaid Look-Back

The five-year look-back is one of the most important concepts in nursing home Medicaid planning.

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When someone applies for Medicaid coverage of nursing facility services, New York currently reviews financial transactions during the preceding 60 months to determine whether assets were transferred or given away for less than fair market value. 

If an uncompensated transfer occurred and no exception applies, a transfer penalty may result. The penalty is not simply a tax or fine. It can create a period during which the applicant otherwise requires nursing home care but Medicaid will not pay for that care. That is why planning early can be so valuable.

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The Look-Back Does Not Mean Assets Are Frozen for Five Years

Another common misunderstanding is that transferring assets automatically makes someone ineligible for Medicaid for five years. That is not how the rule works. The 60 months describe the period Medicaid examines. If Medicaid identifies a transfer for less than fair market value within that period, the amount transferred and the applicable Medicaid rules are used to determine whether a penalty period results. The consequence therefore depends on the transfer rather than automatically producing five years of ineligibility.

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The Five-Year Rule Should Not Be Applied to Every Form of Medicaid

The 60-month rule discussed here concerns Medicaid coverage of nursing facility services. Families should be careful about assuming that every Medicaid program, home-care benefit, or long-term-care situation uses precisely the same eligibility and transfer rules. New York Medicaid rules vary depending on the coverage being requested and the applicant’s circumstances. This is particularly important because online discussions frequently use the phrase “Medicaid five-year rule” as though one rule governs every Medicaid application.

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Transfers to Children and Other Family Members

A common reaction to nursing home concerns is: “Why don’t I just give everything to my children?” That can create serious problems. Giving away money, investments, or real estate for less than fair market value can create a Medicaid transfer penalty if the transfer falls within the applicable look-back period and no exception applies. It can also create consequences unrelated to Medicaid. Once property is given outright to a child, it generally belongs to the child.

That can expose the property to circumstances involving the child’s creditors, financial problems, death, family relationships, or other personal circumstances. The transfer may also have gift, estate, income-tax, and basis consequences that should be considered before property is given away.

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Important Exceptions for Certain Home Transfers

Not every transfer of a home produces a Medicaid penalty. New York’s Department of Health currently identifies exceptions for certain transfers of the home, including transfers to:

• A spouse

• A child under age 21

• A sibling who has an equity interest in the home and lived there for at least one year immediately before the applicant entered the nursing home

• An adult child who lived in the home for at least two years immediately before the applicant entered the nursing home and provided care that permitted the parent to remain at home rather than entering a medical facility. 

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These exceptions can be extremely important. They are also fact-specific. Families should not assume a transfer qualifies merely because a child provided some assistance or lived nearby. The statutory and Medicaid requirements need to be satisfied and appropriately documented.

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Protections for a Spouse

Married couples have important protections under Medicaid’s spousal impoverishment rules. The basic purpose of these rules is to avoid requiring the spouse who remains in the community to become impoverished simply because the other spouse requires institutional long-term care. The spouse receiving institutional care and the spouse remaining in the community are treated differently for certain Medicaid eligibility purposes. The spouse remaining outside the institution is commonly called the community spouse.

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Resources the Community Spouse May Keep

The community spouse may retain a protected amount of the couple’s countable resources. These figures can change from year to year. For 2026, New York’s Department of Health reports a state minimum Community Spouse Resource Allowance of $74,820 and a federal maximum of $162,660, subject to the applicable calculation and possible adjustments through a fair hearing or court proceeding.  The Department also explains that the home, household items, personal property, a car, and certain burial funds are not counted when determining the couple’s countable resources for this particular spousal-resource calculation. 

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Income Protections

The community spouse may also be entitled to retain income under Medicaid’s spousal impoverishment rules.

For 2026, New York reports a maximum community spouse monthly income allowance of up to $4,066.50 under the circumstances described by the Department of Health.  These amounts are adjusted periodically. For a permanent Eldon Resource Library page, I would therefore avoid building the entire article around a dollar amount that will become outdated. The figures can be included as a current example, but the page should clearly identify the year and be reviewed annually.

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Planning When Nursing Home Care Is Already Needed

One of the most damaging assumptions families make is that planning is pointless once someone has entered a nursing home. Planning earlier generally provides more options.

But an immediate need for care does not automatically mean that the family must simply spend every asset until nothing remains. The appropriate options depend heavily on the individual’s circumstances. Important factors can include:

• Whether the person is married

• What assets the person and spouse own

• Whether there is a home

• How assets are titled

• Whether transfers were made during the preceding five years

• Whether any transfer exceptions apply

• The applicant’s income

• The spouse’s income and resources

• Existing trusts

• Powers of attorney

• Prior gifts to children or other family members

• The anticipated duration and level of care

An immediate-care case therefore requires a different analysis from advance Medicaid planning. The first step is usually understanding what has already happened financially rather than making additional transfers before the existing transactions have been reviewed.

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Medicaid Estate Recovery

Qualifying for Medicaid does not necessarily end the analysis. Federal and New York law require Medicaid estate recovery in certain circumstances. New York’s Department of Health explains that Medicaid may seek recovery from an individual’s estate after death for qualifying medical assistance, subject to applicable limitations and exceptions.

For individuals age 55 or older whose Medicaid eligibility fell within certain categories, recovery can include Medicaid payments for nursing facility services, home and community-based services, and related hospital and prescription drug services.  This creates another important distinction: Medicaid eligibility and Medicaid estate recovery are not the same issue.

An asset might not prevent someone from qualifying for Medicaid but still raise questions about liens or recovery later.

Effective planning should therefore consider both eligibility during life and what may happen to remaining property after death.

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Common Planning Mistakes

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Waiting Until a Crisis

The closer someone is to needing nursing home care, the fewer planning options may be available without encountering the Medicaid transfer rules. Planning earlier generally provides greater flexibility.

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Giving the House to the Children Without Reviewing the Consequences

An outright deed transfer can affect Medicaid, taxes, control of the property, creditor exposure, and the owner’s long-term security. The fact that a transfer seems simple does not make it the safest strategy.

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Assuming an Irrevocable Trust Automatically Protects Everything

Different irrevocable trusts are designed for different purposes. A QPRT, Special Needs Trust, charitable trust, ordinary irrevocable family trust, and Medicaid Asset Protection Trust are not interchangeable.

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Keeping Too Little Outside a Trust

Asset protection should not leave the person creating the plan without adequate accessible funds. The amount retained outside a trust should reflect income, expenses, lifestyle, anticipated emergencies, housing needs, and other financial circumstances.

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Ignoring the Estate Plan

Medicaid planning should be coordinated with wills, trusts, powers of attorney, beneficiary designations, real estate, and the overall inheritance plan. Protecting an asset is only part of the objective. The plan should also determine who ultimately receives it and how it will be managed.

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Nursing Home Asset Protection FAQs

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Can a Nursing Home Take My House in New York?

A nursing home does not simply acquire ownership of a person’s house because the person needs care.

The more important questions involve how the cost of care will be paid, whether the person qualifies for Medicaid, how the home is treated under Medicaid eligibility rules, whether a lien can apply, and whether Medicaid estate recovery may eventually affect the property. The answer also changes depending on whether a spouse or another protected individual lives in the home. For that reason, “Can the nursing home take my house?” is better understood as a group of Medicaid eligibility, transfer, lien, and estate-recovery questions rather than a simple yes-or-no issue.

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Should I Put My House in a Trust to Protect It From Nursing Home Costs?

A properly structured Medicaid Asset Protection Trust may be an appropriate strategy for protecting a residence in some New York long-term-care plans. But not every trust protects a house for Medicaid purposes. The type of trust, retained rights, trustee provisions, timing of the transfer, and Medicaid rules all matter. A homeowner should also consider whether the house might be sold, whether the owner expects to move, tax consequences, family circumstances, and how much control the owner wants to retain.

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Can I Give My House to My Children Before Going Into a Nursing Home?

A transfer of a home to children can potentially create a Medicaid transfer penalty when it occurs within the applicable look-back period. However, New York recognizes specific exceptions for certain home transfers, including qualifying transfers to a spouse, certain children, and qualifying siblings.  An outright transfer also gives the recipient ownership of the property and can have consequences beyond Medicaid. The transfer should therefore be evaluated before a deed is signed.

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What Is the Five-Year Medicaid Look-Back in New York?

When someone seeks Medicaid coverage of nursing facility services, New York currently reviews certain asset transfers during the 60 months preceding the relevant application and institutionalization period. Transfers for less than fair market value can result in a period of ineligibility for Medicaid payment of nursing facility services unless an exception or other applicable rule prevents the penalty.  The five-year look-back is not itself an automatic five-year penalty.

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Is It Too Late to Protect Assets if Someone Is Already in a Nursing Home?

Not necessarily.

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Advance planning generally offers the greatest flexibility, but someone already requiring nursing home care may still have planning options. The available strategies depend on assets, marital status, prior transfers, income, the home, existing estate-planning documents, and other circumstances. Before additional property is transferred or spent, the existing financial situation should be reviewed so that a well-intended transaction does not create an unnecessary Medicaid penalty.

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Related Resources

Medicaid Asset Protection Trusts in New York

Learn how Medicaid Asset Protection Trusts work, what assets may be transferred to them, and why timing and access to trust principal matter.

Elder Law & Medicaid Planning in New York

Learn how long-term care planning, Medicaid eligibility, powers of attorney, trusts, and estate planning can work together.

Irrevocable Trusts in New York

Learn why irrevocable trusts have different purposes and why the word “irrevocable” alone does not determine Medicaid treatment.

Powers of Attorney & Advance Directives in New York

Learn why incapacity documents can become particularly important when financial and long-term-care planning must be implemented for someone who can no longer act independently.

Estate Planning in New York

Learn how Medicaid planning can be coordinated with wills, trusts, beneficiary planning, incapacity planning, and the overall estate plan.

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Sources & Legal References

New York State Department of Health — How to Apply for NY Medicaid; Look-Back Period, Home Transfers and Estate Recovery

https://www.health.ny.gov/health_care/medicaid/how_do_i_apply.htm

New York State Department of Health — Medicaid Trusts

https://www.health.ny.gov/health_care/medicaid/trusts.htm

New York State Department of Health — GIS 15 MA/07, Transfer-of-Assets Look-Back Period

https://www.health.ny.gov/health_care/medicaid/publications/gis/15ma007.htm

New York State Department of Health — GIS 14 MA/016, Long-Term Care Eligibility Rules and Estate Recovery

https://www.health.ny.gov/health_care/medicaid/publications/gis/14ma016.htm

New York State Department of Health — March 2026 Medicaid Update; Spousal Impoverishment Allowances

https://www.health.ny.gov/health_care/medicaid/program/update/2026/no04_2026-03.htm

New York State Department of Health — Medicaid Benefits FAQs; Community Spouse Protections

https://www.health.ny.gov/health_care/medicaid/members/faqs_benefits.htm

New York Social Services Law § 369 — Liens and Medicaid Estate Recovery

https://www.nysenate.gov/legislation/laws/SOS/369