By: Brian L. Miller, Esq., CELA

Planning for long-term care requires more than simply meeting Medicaid’s income and asset limits. New York’s Medicaid rules are complex, and without proper planning, individuals and families can make costly mistakes that delay eligibility and unnecessarily deplete assets.

Whether you are planning in advance or facing an immediate need for care, understanding the most common Medicaid planning mistakes can help you protect your assets and secure the benefits you need.

1. Waiting Too Long to Start Medicaid Planning

One of the most common mistakes is waiting until a health crisis occurs to begin planning.

In New York, nursing home Medicaid is subject to a five-year (60-month) lookback period, meaning all asset transfers made within five years of applying are reviewed. Improper transfers can result in a penalty period during which Medicaid will not pay for care.

For community Medicaid, New York does not have a lookback period; however, a law was passed in 2020 to establish a thirty-month lookback period and is awaiting approval from the federal government implemented. Thus, the lookback period for community Medicaid is evolving and requires careful, up-to-date legal guidance.

Key takeaway:

The earlier you begin Medicaid planning; the more strategies are available to protect assets and avoid penalties.

2. Making Gifts Without Understanding New York’s Lookback Rules

Many individuals believe they can simply transfer assets to children or loved ones to qualify for Medicaid. In New York, this can create serious eligibility issues if not done correctly.

Unplanned gifting may:

• Trigger a Medicaid penalty period.
• Delay access to long-term care benefits.
• Result in loss of control over transferred assets.
• Result in future capital gains taxes for your loved ones.
• Expose assets to risks such as divorce or creditors.

Key takeaway:

In New York Medicaid planning, asset transfers must be carefully timed and structured —often using tools such as irrevocable Medicaid Asset Protection Trusts.

3. Misunderstanding What Assets Are Protected Under New York Medicaid

A frequent misconception is that all assets must be spent down before qualifying for Medicaid. In reality, New York allows certain assets to be exempt or protected.

In New York, exempt assets include:

• A primary residence (subject to equity limits, currently $1,130,000).
• Qualified retirement accounts in payout status.
• Personal property and household belongings.
• Prepaid burial contract and/or burial plot.
• Motor vehicle.
• Irrevocable trusts structured properly in advance.

Additionally, New York allows for specific spend-down strategies that can convert countable assets into exempt resources.

Key takeaway:

With proper Medicaid planning in New York, individuals can often preserve significant assets rather than spending everything on long-term care.

4. Failing to Plan for New York’s Income Rules

Medicaid eligibility in New York involves not only asset limits but also income rules, which differ depending on the type of care.

For nursing home Medicaid:

• Most of the applicant’s income must be contributed toward the cost of care; however, certain deductions and allowances apply.

For community Medicaid:

• Income limits are strictly applied ($1,856 for an individual and $2,509 for a married couple both receiving community Medicaid), but planning strategies such as the use of pooled income trusts can allow individuals to qualify for community Medicaid while preserving their excess income for living expenses.

Key takeaway:

Proper income planning—particularly through tools like pooled trusts—is essential to qualifying for Medicaid home care in New York.

5. Overlooking Spousal Protections Under New York Medicaid

When one spouse requires long-term care, New York Medicaid provides important protections for the spouse remaining at home (the “community spouse”).

As of current New York guidelines, the community spouse may retain:

• A Community Spouse Resource Allowance (CSRA) (up to approximately $162,660, subject to annual updates).
• A Minimum Monthly Maintenance Needs Allowance (MMMNA) (ensuring a baseline level of monthly income up to $4,066.50).

Without proper planning, however, families may fail to maximize these protections.

Key takeaway:

Strategic Medicaid planning can help ensure the community spouse remains financially secure while the other spouse receives necessary care.

Protecting Your Assets and Securing Care in New York

Medicaid planning in New York is highly technical and constantly evolving. The difference between proper planning and costly mistakes can mean preserving a lifetime of savings —or losing it to long-term care expenses.

If you or a loved one are planning for long-term care, it is critical to work with an experienced New York elder law attorney.

A comprehensive Medicaid plan can help you:

• Protect your home and savings.
• Avoid Medicaid penalties.
• Qualify for nursing home or home care benefits.
• Preserve financial security for your family.

At Littman Krooks LLP, we help individuals and families navigate New York Medicaid rules with clarity and confidence, developing customized strategies to protect assets while securing eligibility. Contact us here to schedule a consultation and discuss your Medicaid planning needs.