Costly Medicaid Planning Myths New York Families Still Believe

Planning for Medicaid isn’t something you want to take lightly. A lot of folks think they’ve got it all figured out; they heard something from a friend, read an article online, or assume they have too much money to qualify. But the truth is, believing in these common Medicaid myths can end up costing you real benefits. Worse, it could put your savings, your home, and even your care at risk. That’s why having the right guidance matters from the start.

At Schlessel Law PLLC, working with our seasoned Long Island Medicaid planning attorneys means you’re not left guessing. You’ll get clear, practical advice that helps you avoid the most common pitfalls people fall into, like gifting away assets too late, missing key paperwork, or assuming a will protects everything. The process doesn’t have to be overwhelming, but it does take careful steps, and that’s where experience counts. If you’re planning for yourself or helping a loved one, take the time to talk with someone who does this work every day. It’s one conversation that could save you a lot of stress and money down the line. Contact us today at (516) 574-9630 for a free consultation.

Don’t Let These Medicaid Myths Cost Your Family Everything

Let’s be honest, Medicaid planning in New York can feel stressful. You’ve probably heard stories from friends or family that made you worry about losing everything you’ve worked for. But here’s the thing: a lot of that fear is based on misinformation. So let’s clear up some of the biggest myths that could be putting your financial future and your family’s at risk.

Thinking You Have Too Much Money to Qualify for Medicaid

You might believe that your income or assets are too high for Medicaid eligibility. However, New York’s 2025 Medicaid guidelines allow individuals to have up to $1,800 in monthly income and $32,396 in assets. For married couples, the limits are $2,433 in monthly income and $43,781 in assets. Additionally, if one spouse is applying for nursing home Medicaid, the non-applicant spouse can retain up to $157,920 in assets.

Certain assets, like your primary residence (up to $1,097,000 in equity), are exempt. Moreover, strategies such as pooled income trusts can help manage excess income while maintaining eligibility. 

Why Waiting Until a Crisis Hits is a Costly Mistake

Delaying Medicaid planning until a health crisis arises can be financially detrimental. New York enforces a five-year lookback period for nursing home Medicaid. This means any asset transfers made within five years before applying can trigger penalties, delaying eligibility.

Starting in 2025, a 30-month lookback period is also planned to be implemented to community-based Medicaid services, such as home care. Planning ahead allows you to make informed decisions, protect your assets, and ensure timely access to care.

The Real Story on Protecting Your Life Savings

You’ve worked hard for what you have. Your house, your retirement accounts, your savings, they shouldn’t be wiped out because you need long-term care.

You don’t have to give everything away to protect it. And you definitely don’t need to wait until you’re flat broke. There are legal tools available right here in New York that let you keep control of your money and still get Medicaid. 

This isn’t about gaming the system. It’s about planning wisely, using the laws that are already in place to protect your family’s future.

If you’ve heard that applying for Medicaid means losing your home or draining your savings, you’ve been given bad advice. Taking the time to understand and plan for Medicaid can make a significant difference in preserving your family’s financial well-being.  Don’t let those myths make you hesitate. The sooner you take action, the more options you’ll have, and your future self and your family will thank you for it.

Long Island Medicaid Planning Attorney – Seth Schlessel

Seth Schlessel

Seth Schlessel is the Managing Member and Founder of Schlessel Law PLLC, a Long Island-based firm focused on estate planning, elder law, and Medicaid planning. Since earning his law degree from Touro Law School in 2013 and admission to the New York Bar in 2014, Seth has guided individuals and families through the legal processes of wills, trusts, probate, and long-term care planning.

At Schlessel Law PLLC, Seth oversees daily operations and handles complex cases, providing clients with personalized strategies to protect their assets and legacies. His dedication to clear communication and tailored legal solutions has established the firm as a trusted resource for estate planning needs in Nassau and Suffolk counties.

Is Gifting Your Assets to Your Kids Really the Best Move?

Thinking about giving your home or savings to your children to qualify for Medicaid? It might seem like a smart way to protect your legacy, but in New York, this approach can backfire. Let’s break down what you need to know to avoid costly mistakes.

How Does the Medicaid Look-Back Period in New York Work?

In New York, Medicaid has a five-year “look-back” period for nursing home care applications. This means that any gifts or transfers of assets made within five years before applying for Medicaid are scrutinized. If you’ve given away assets during this time, Medicaid may impose a penalty period during which you’re ineligible for benefits.

For example, if you gifted $60,000 to your children, and the average monthly cost of nursing home care is $6,000, you can face a 10-month penalty period where Medicaid won’t cover your care.

How Giving Away Your Home Can Backfire

Transferring your home to your children might seem like a way to protect it, but it can have unintended consequences. If you transfer your home and then apply for Medicaid within five years, the transfer could trigger a penalty period, delaying your eligibility for benefits.

Moreover, if your children decide to sell the home, they might face significant capital gains taxes, especially if the home’s value has appreciated since you purchased it.

The Hidden Tax Consequences for Your Children

Gifting assets to your children can also have tax implications. While New York doesn’t have a gift tax, the federal government does. In 2025, you can gift up to $19,000 per recipient without filing a gift tax return. However, any amount above that requires filing, and while you might not owe taxes immediately, it reduces your lifetime exemption.

And, as mentioned, if your children sell the gifted assets, they might owe capital gains taxes based on your original purchase price, which could be significantly lower than the current market value.

Safer Ways to Transfer Assets for Your Heirs

Instead of outright gifting, consider these alternatives:

• Medicaid Asset Protection Trust (MAPT): Placing assets into a MAPT can protect them from Medicaid’s asset calculations, provided it’s done at least five years before applying for nursing home Medicaid.
• Life Estate Deed: This allows you to retain the right to live in your home for the rest of your life, with the property transferring to your heirs upon your death, potentially avoiding probate and reducing capital gains taxes.
• Spousal Transfers: Transferring assets to a spouse is generally exempt from Medicaid’s look-back rules, providing a way to protect assets without penalties.
• Caregiver Agreements: If a family member is providing care, formalizing this arrangement with a written agreement can allow for compensation without violating Medicaid rules.

Before making any decisions, it’s crucial to consult with a professional familiar with New York’s Medicaid laws to ensure your plans align with current regulations and protect your family’s financial future.

Why Your Will Won’t Protect Your Assets from Medicaid Costs

If you think a will is enough to keep your home or savings safe from Medicaid, you’re not alone, but you may be in for a surprise. A will decides who gets what after you pass away, but it doesn’t shield anything from Medicaid. In New York, Medicaid can still come back for repayment. That’s why it’s so important to know what really happens after you’re gone and what you can do while you’re still here.

The Difference Between Probate and Medicaid Estate Recovery

In New York, Medicaid can seek reimbursement for the costs of your care from your estate after you pass away. This process is known as estate recovery. It applies to assets that go through probate, that is, assets solely in your name without designated beneficiaries.

So, if your will leaves your house to your children, but it’s still in your name alone, Medicaid can place a claim against it during probate. This means your heirs might have to sell the home to pay back Medicaid, even if your will says otherwise.

How Medicaid Can Claim Assets After You’re Gone

In New York, Medicaid can file a claim against your estate for the cost of the services you received. It doesn’t matter what your will says. Medicaid gets in line with your other creditors, and in some cases, they go straight to the front.

New York’s estate recovery rules are broader than you might expect. The state can pursue assets that:

• Are part of your probate estate (like property solely in your name)
• Were jointly owned but pass to someone else upon your death
• Are in certain types of trusts that don’t meet specific criteria

This means that even assets you thought would bypass probate could be subject to Medicaid’s claim. Your family could be surprised to find that accounts or property they expected to inherit are now tied up in repayment processes.

Here’s what this might look like: you pass away with your house in your name, and your will says it should go to your children. But you used Medicaid to pay for home care or nursing home care. The state then sends a bill to your estate for those services. If there’s no cash to pay it, your home may have to be sold to settle the debt.

This happens more often than you might think. And once the estate is opened in court, it’s public. That makes it even easier for Medicaid to file a claim.

Using Trusts to Safeguard Your Legacy

To protect your assets from Medicaid estate recovery, consider setting up a Medicaid Asset Protection Trust (MAPT). Here’s how it works:

• Irrevocable Trust: Once you place assets into a MAPT, you can’t take them back. This might sound restrictive, but it means those assets aren’t considered yours for Medicaid purposes.
• Timing Matters: Transfers into a MAPT must be made at least five years before you apply for Medicaid to avoid penalties.
• Control and Use: While you can’t access the principal, you can still receive income generated by the trust, and your designated trustee manages the assets according to your wishes.

By planning ahead and using a MAPT, you can help ensure that your assets go to your intended beneficiaries, not to repay Medicaid. It’s a proactive step that can provide peace of mind for you and your family.

Believing You Can Hide Assets from Medicaid Scrutiny

It might be tempting to think you can tuck away some money or put property in someone else’s name, and Medicaid won’t find out. Maybe someone you know even told you they “got away with it.” But let’s be clear: in New York, Medicaid takes asset reporting very seriously, and trying to hide anything can backfire fast.

How Medicaid Finds Your Financial Information

You might assume that small transfers or undisclosed accounts will go unnoticed. However, New York’s Medicaid program has systems in place to detect such activities. When you apply for Medicaid, you’re required to provide comprehensive financial information, including:

• Bank statements
• Property deeds
• Investment accounts
• Trust documents

The state reviews financial records from the past five years to identify any transfers or gifts that could affect your eligibility. This “look-back” period is designed to prevent individuals from giving away assets to qualify for Medicaid benefits. 

The Serious Penalties for Attempting to Defraud Medicaid

Trying to outsmart the system isn’t just risky, and it can have serious consequences. If Medicaid finds out you left out assets or made transfers you didn’t report, here’s what could happen:

• Your application could be denied, leaving you to pay out-of-pocket until you reapply correctly.
• You could face a penalty period, meaning you won’t get Medicaid coverage for a certain number of months.
• In some cases, there could be legal consequences, including criminal charges for fraud.

Even if the mistake wasn’t intentional, leaving something out or misreporting can still cause delays, stress, and potentially a lot of financial damage. Medicaid doesn’t give the benefit of the doubt when it comes to missing information.

Why Honesty is the Best (and Only) Policy in Your Application

It might be tempting to think that small omissions or transfers won’t be detected, but the risks far outweigh any perceived benefits. New York’s Medicaid program is designed to assist those in genuine need, and the application process includes thorough checks to verify eligibility.

Getting help with the application process doesn’t mean hiding anything, it means doing things the right way, with your long-term security in mind. Being transparent about your financial situation allows you to explore legitimate avenues for qualifying for Medicaid. There are legal strategies to protect certain assets and still meet eligibility requirements, but these must be approached correctly and within the bounds of the law.

If you’re unsure about how your assets affect your Medicaid eligibility, it’s crucial to seek guidance. Professionals familiar with New York’s Medicaid laws can provide advice tailored to your situation, helping you make informed decisions without risking your benefits or legal standing.

Remember, the goal is to secure the care you need without compromising your financial future or facing legal repercussions. Honesty and proper planning are your best tools in achieving that.

Your Bank Account Isn’t the Only Asset Medicaid Looks At

When you’re applying for Medicaid in New York, it’s easy to focus solely on your bank account balance. But Medicaid considers a broader picture of your financial situation. Let’s explore some assets that might impact your eligibility.

How Your Retirement Accounts Factor into Eligibility

In New York, retirement accounts like IRAs and 401(k)s are treated differently depending on their status. If your retirement account is in “payout status,” meaning you’re receiving regular, required minimum distributions, the principal is generally not counted as an asset. However, the income you receive from these distributions will be considered when evaluating your Medicaid eligibility. 

If your retirement account is not in payout status, the entire value of the account may be considered a countable asset, potentially affecting your eligibility. 

The Truth About Your Life Insurance Policies

Life insurance policies can also influence your Medicaid eligibility, depending on the type and value of the policy:

• Term Life Insurance: These policies do not accumulate cash value and are generally not counted as assets for Medicaid purposes.
• Whole Life Insurance: If the total face value of all your whole life policies exceeds $1,500, the cash surrender value (the amount you’d receive if you canceled the policy) is considered a countable asset. 

It’s important to review your life insurance policies to understand how they might impact your Medicaid application.

Why Your Spouse’s Assets Aren’t Automatically Safe

In New York, when one spouse applies for Medicaid, the assets of both spouses are considered in determining eligibility. This includes assets solely in the name of the non-applicant spouse. 

However, New York allows for a strategy known as “spousal refusal,” where the non-applicant spouse can legally refuse to contribute their assets toward the applicant spouse’s care. While this can help the applicant qualify for Medicaid, it’s important to note that Medicaid may still seek reimbursement from the non-applicant spouse’s assets after the applicant’s death. 

Understanding how your spouse’s assets are treated is crucial in Medicaid planning.

Being aware of how various assets affect Medicaid eligibility in New York can help you make informed decisions and plan effectively for your future care needs.

“I Don’t Need a Lawyer, I Can Handle Medicaid Planning Myself”

It’s easy to think, “I’ve filled out plenty of forms in my life. I can figure out Medicaid on my own.” And sure, if you’re used to handling paperwork, it might feel like something you can tackle solo. But Medicaid planning in New York isn’t just about filling out forms. It’s about timing, rules, and how your choices today can affect your care and your family’s future for years to come.

The Risks of DIY Medicaid Applications

You might not see the risks right away. But a small mistake can have big consequences. Medicaid in New York looks closely at how your finances have been handled in the past five years. A missed detail, wrong date, or incomplete answer can hold things up or even lead to a denial.

Some common issues people run into when applying on their own include:

• Not knowing which assets count against the limit
• Transferring money or property at the wrong time
• Thinking a simple will or power of attorney covers everything
• Missing required documentation, leading to delays or rejections

When these things happen, it’s not just a hassle; it can cost you months of coverage, force you to spend down your savings, or delay care you need now.

How a Medicaid Planning Attorney Saves You Money in the Long Run

Hiring someone to help with Medicaid planning might feel like an extra expense, especially if you’re trying to protect your finances. But the truth is, the right legal guidance often saves more than it costs.

A Medicaid planning attorney can:

• Help you legally protect assets using New York-approved strategies such as Medicaid spend-down
• Avoid unnecessary penalties and coverage delays
• Set up trusts such as an MAPT or other tools to preserve your home or savings
• Make sure your application is complete and ready the first time

That means you’re less likely to get stuck paying out-of-pocket for care while you wait for approval. It also means fewer surprises for your family down the road. A little planning now can keep you from facing big bills later.

Stay Updated with New York Medicaid Law

New York’s Medicaid laws have unique features that differ from other states. For instance, the state has specific rules regarding asset transfers and spousal protections. An experienced attorney can help you understand these nuances and develop a plan tailored to your situation.

Moreover, Medicaid laws and regulations can change. Staying updated on these changes is crucial to maintaining your eligibility and protecting your assets. An attorney stays informed about these developments and can adjust your plan accordingly.

In short, while it might be tempting to handle Medicaid planning on your own, the potential pitfalls can be significant. Consulting with a knowledgeable attorney can provide peace of mind and financial security for you and your loved ones.

Taking the Right Steps to Secure Your Future and Your Care

Planning for long-term care might not be something you want to think about right now, but taking action today can make a big difference for you and your family down the road. In New York, there are ways to protect your assets and still qualify for Medicaid when the time comes. Let’s look at some practical steps you can take.

The Power of a Medicaid Asset Protection Trust

One of the most effective tools available in New York is a Medicaid Asset Protection Trust, also called a MAPT. This kind of trust lets you move certain assets out of your name so they aren’t counted when Medicaid looks at your finances.

Here’s the key: once assets are in the trust, they’re no longer considered yours. But that doesn’t mean you lose everything.

• You can still live in your home if it’s in the trust.
• You can still receive income from trust investments, if set up that way.
• The assets stay protected from Medicaid’s look-back for nursing home care, as long as they’ve been in the trust for at least five years.

This trust helps you keep control over how your property is handled after you’re gone, while making sure Medicaid doesn’t eat up your life savings in the meantime.

However, timing is crucial. In New York, there’s a five-year look-back period for nursing home Medicaid applications. This means you should establish a MAPT at least five years before you anticipate needing long-term care to avoid potential penalties.

How to Plan Ahead for Long-Term Care Needs

Long-term care can be expensive, and relying solely on savings or insurance might not be sufficient. Planning ahead allows you to explore options like MAPTs and other strategies to protect your assets and ensure you receive the care you need.

Consider the following steps:

• Assess your financial situation: Understand your assets, income, and potential long-term care costs.
• Explore legal tools: Look into trusts, such as MAPTs, that can help protect your assets while maintaining Medicaid eligibility.
• Consult with professionals: Seek guidance from legal and financial advisors familiar with New York Medicaid laws to develop a plan tailored to your needs.

When you plan early, you’re not boxed into emergency decisions. You get the chance to protect your home, prepare for expenses, and qualify for help when you need it.

Starting the Conversation with Your Family Today

Talking about long-term care and financial planning with your family might be uncomfortable, but it’s an essential conversation. Open communication ensures everyone understands your wishes and can help you make informed decisions.

Let them know:

• What kind of care you’d want
• Who you trust to make decisions if you can’t
• Where you keep important documents
• How you’ve taken steps to protect your finances

These conversations don’t have to be long or heavy. Just honest. A simple talk today can prevent confusion and tension down the line. It also gives your family a chance to support your choices, instead of having to guess what you would’ve wanted.

Taking action now gives you peace of mind later. Your care, your choices, your legacy; it’s worth planning for.

Get the Right Help Before It’s Too Late

Medicaid planning isn’t something you want to get wrong. A simple mistake or a belief in the wrong advice can end up costing you benefits, money, or even the care you need. That’s why it helps to have someone in your corner who deals with this every day. 

Working with a Long Island Medicaid planning attorney from Schlessel Law PLLC gives you a clear path forward. You’ll have someone to walk you through what really matters, explain the rules in plain language, and help you avoid the traps that catch so many families off guard. If you’re thinking about your future or helping someone you love with theirs, don’t wait until you’re in a tough spot. Schedule a consultation today at (516) 574-9630, ask your questions, and get peace of mind that your planning is on the right track.

from Schlessel Law https://www.schlessellaw.com/costly-medicaid-planning-myths-new-york-families-still-believe/