By Brian L. Miller, Esq., CELA

New York State has released several important Medicaid policy updates that will take effect in 2026. These changes affect how transfer penalties are calculated, whether applicants must pursue other benefits, and the financial eligibility standards used in Medicaid budgeting. Here’s a practical overview of what has changed—and why it matters.

1. New Regional Rates for Medicaid Transfer Penalties

When an individual applies for Medicaid coverage of nursing home care, any uncompensated transfer of assets can result in a penalty period during which Medicaid will not pay for services. The length of that penalty is determined by dividing the amount transferred by the average private-pay nursing home rate in the region where care is provided.

For 2026, New York has updated those regional rates. Local districts must now use the following figures when calculating penalty periods:

• New York City – $15,282
• Long Island – $15,193
• Northern Metropolitan – $15,024
• Northeastern – $14,783
• Central – $14,146
• Western – $13,765
• Rochester – $15,675

These rates must be applied based on the Medicaid pick-up date (usually the date of the application unless the applicant is seeking retroactive benefits) and the location of the applicant’s domicile. Even small changes in the regional divisor can significantly affect how long a Medicaid penalty lasts. Families engaging in planning or crisis applications should be sure calculations reflect these 2026 figures.

2. Major Policy Shift: No More Requirement to Apply for Other Benefits

One of the most significant changes this year is the elimination of the long-standing rule that required Medicaid applicants to pursue other potential benefits as a condition of eligibility. In the past, Medicaid could require people to apply for other benefits before they could be approved. That rule has mostly been eliminated.

What Is Eliminated?

Medicaid applicants and recipients no longer have to apply for:

• Social Security Retirement, Survivors, or Disability (RSDI) benefits
• Unemployment Insurance
• Veterans’ benefits
• Maximum payments from retirement accounts
• Waivers of U.S. Savings Bond retention periods
• Elective share rights against a deceased spouse’s estate (for non-transfer cases)

What Still Is Required?

• Applying for Medicare remains mandatory as a condition of Medicaid eligibility.
• Applicants must still pursue third-party health insurance when available.

Impact on Retirement Accounts

Previously, individuals had to elect the maximum payout from qualified retirement accounts such as IRA, 401(k) and 403(b) plants to qualify for Medicaid. That requirement is rescinded. Now:

• If a retirement account is in payout status, the payments count as income and the principal is not a resource.
• The Medicaid applicant’s retirement account need only receive the required minimum distributions to be in payout status.
• If the retirement account is not in payout status, the balance is treated as a countable resource.

This reform removes many punitive and impractical hurdles—particularly for seniors who preferred to preserve retirement accounts or who were reluctant to pursue certain benefits.

3. Updated Medicaid Financial Standards for 2026

Key Numbers

• Medicare Part B premium: $202.90 per month (up from $185.00 in 2025)
• SSI Federal Benefit Rate: $994 for an individual / $1,491 for a couple
• SSI Resource Limits: $2,000 individual / $3,000 couple
• Medicaid Resource Limit: $32,532 for an individual
• Community Spouse Protections:
  • Maximum Resource Allowance: $162,660
  • Minimum Resource Allowance: $74,820
  • Monthly Maintenance Needs Allowance: $4,066.50
• Home Equity Limit for Long-Term Care: $1,130,000

Budgeting Caution

Because the 2026 Federal Poverty Levels have not yet been published in the Federal Register, districts are instructed to continue using 2025 medically needy income levels for now. If a new budget would create or increase a spenddown, districts must temporarily continue using 2025 income figures until updated guidance is issued by the New York State Department of Health.

What These Changes Mean for Families and Practitioners

• Planning opportunities are expanding.
• Penalty calculations have shifted.
• Budgeting remains in flux until federal poverty levels are updated and reported in the Federal Register.

Medicaid rules are complex and constantly evolving. Professional guidance can help ensure that applications, transfer analyses, and community-spouse budgets are handled correctly under these new standards. Getting advice early can help protect savings and avoid delays in coverage.

You can contact Littman Krooks LLP for a no obligation consultation to discuss how these updates and changes affect you or your loved ones.

This document is for informational purposes only and does not constitute legal advice.