What is Medicaid?
Medicaid is a joint federal and state program that can cover the cost of Nursing Home care as well as Community Based care (“home care”) for individuals who meet both the financial and health eligibility requirements.
The cost of care in New York can be financially burdensome on a family. The cost of care in a Nursing Home can cost upward of $190,000/year. The cost of Home Care, where an individual is in need of 24/7 care, the cost of care can be upwards of $210,000/year.
The type of Medicaid long-term care program for which you apply will have differing functional and financial eligibility requirements, as well as varying benefits. To determine financial eligibility, Medicaid looks at both the individual, and if married, the individual and the spouses, assets and income.
Medicaid is a “needs based” program which follows strict income and asset guidelines, which numbers can change annually. While there are limitations on the amount of income and assets an individual can have to qualify for Medicaid, with proper planning, almost anyone can be eligible.
By doing proper Medicaid Planning, you can ensure that your assets will be protected and remain within your family, rather than be depleted for the cost of care. The optimal time to do planning is well in advance of the emergent need for care.
Recommended reading: NYS Income and Resource Limits for Medicaid (2025)
Asset Limits:
Medicaid provides that there is a limit on the amount of assets an applicant, and when applicable, the spouse may have to qualify.
What are Assets?
Medicaid looks at the following as countable assets (also called resources): Cash, stocks, bonds, investments, vacation homes, and savings and checking accounts.
What are Exempt Assets?
For Medicaid eligibility, the following are considered exempt assets (non-countable): IRAs and 401Ks in payout status, personal belongings, household items, a vehicle, burial funds up to $1500, prepaid funeral arrangements, and one’s primary home, as long as the Medicaid applicant lives in the home, or intends to return to live in the home, and the equity value is under $1,033,000 (for 2023). Additionally, if the applicant is married, and the applicant’s spouse lives in the home, the house is exempt regardless of the equity value. It is important to note that while the individual’s personal residence is an exempt asset, if the asset is part of the applicant’s probate estate, Medicaid could place a lien and “claw-back”.
Limitations on Assets for Home Care and Nursing Home Care
What is Income?
For Medicaid eligibility purposes, all income that a person receives from any source is counted towards the income limit. This may include wages from employment, pension payments, Social Security Income, Social Security Disability, gifts and payments from annuities and IRAs.
Income rules for Nursing Home:
All of the applicant’s monthly income in excess of $50 must be paid to the Nursing Home to offset Medicaid payments towards care.
Community Spousal Resource Allowance (CSRA):
Where an applicant is married, in order to protect the non-applicant spouse of a Medicaid Nursing Home applicant from having too little resources, the spouse may retain a higher portion of the couples assets. For instance, in 2023, the non-applicant spouse can retain up to $148,620.
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Trusts
Trusts are a vehicle used by Elder Law attorneys to protect assets. There are many benefits of using a Trust, including long term care asset protection, providing for a child with disabilities, controlling how a beneficiary will receive his or her inheritance, and for all trusts, removing the assets from the individual’s probate estate.
Medicaid Asset Protection Trusts vs. Revocable Trusts
Not all trusts preserve assets in light of the costs of long term care, but may serve other beneficial purposes. For example, a revocable trust will not help qualify the applicant for Medicaid, but will remove trust assets from the applicant’s probate estate. So for example, an applicant may qualify for Medicaid while owning their personal residence (that is under the Medicaid allowable equity limit), but would choose to fund it in a revocable trust to avoid probate and protect the residence from potential Medicaid estate recovery.
What is Medicaid Asset Protection Trust?
A Medicaid Asset Protection Trust is an irrevocable Trust where the assets of the Medicaid applicant are placed into the trust. The Medicaid Asset Protection Trust allows all assets placed into the trust to be removed from the applicants name for Medicaid eligibility, both for Home Care and for Nursing Home care (subject to the differing look-back periods). The assets placed into the Medicaid Asset Protection Trust are not subject to a Medicaid Lien after the death of the Medicaid recipient.