What Happens to Your Assets If You Go Into a Nursing Home?

Paying for a nursing home in New York can drain a lifetime of savings before you know it. A private room often costs more than $176,000 a year. That figure can shake your family’s sense of security.

Medicaid can cover much of the bill, yet the program looks closely at your assets first. The rules can seem strict, and shifting your money in the wrong way may lead to long wait times for help. Careful planning now can help you preserve more of your assets while ensuring you can access the care you may need in the future.

At Schlessel Law PLLC, our Long Island Medicaid planning attorneys are well-versed in Medicaid planning. We offer tailored guidance on how to protect your assets while maintaining eligibility for Medicaid. Our attorneys can help you make informed decisions on legal strategies to protect your financial interests, guiding you through asset structuring and Medicaid planning. 

If you are concerned about how nursing home care can impact your assets or whether a nursing home can take your home if it’s in a trust, reach out to Schlessel Law PLLC at (516) 574-9630 today. Let us assist in creating a strategy that aligns with your long-term care needs and family goals, ensuring that you can take full advantage of Medicaid benefits while preserving your assets.

Asset Consideration for Nursing Home Care in New York

Thinking about a move to a nursing home can feel heavy, and the money side of it often adds extra worry. In New York, Medicaid can help pay for a portion of the cost, including the room, meals, daily care, and medical services you receive. To qualify, you must stay within strict income and asset limits set by the state. Knowing how your savings, home, and other property count toward those limits will help you make clear choices.

Asset Evaluation Process When Entering a Nursing Home

When you arrive at a nursing home, the staff collects financial details to see if you can cover the bills on your own or if Medicaid should step in. They look at all “countable” assets, like bank accounts and investments, then compare them with “non-countable” items the rules allow you to keep, such as certain personal belongings and, in many cases, your home. New York’s rules spell out what falls on each list. Learning these rules early gives you time to arrange your assets in a way that works for you.

A big question for many families is how to keep what they have worked for. While you receive care, the nursing home cannot simply take your assets. After you pass away, though, the state may try to recover some costs through the Medicaid Estate Recovery Program (MERP). Planning ahead can help lower that risk and keep more of your estate for your loved ones.

Financial Eligibility for Medicaid Nursing Home Coverage

When applying for Medicaid coverage for nursing home care, there are specific financial criteria that need to be met. Medicaid examines both the applicant’s income and their resources to determine eligibility.

Income Considerations

Income refers to regular monetary receipts such as Social Security benefits, pension payments, or distributions from an IRA. For those residing in a nursing home under Medicaid coverage, the individual is allowed to keep $50 per month as a personal needs allowance. All additional income must be contributed towards the cost of their care in the nursing home. It is important to note that, in contrast to other Medicaid programs like Community Medicaid, nursing home residents cannot use a pooled income trust to manage excess income to qualify for Medicaid.

Why Pooled-Income Trusts Stop Working Once You Enter a Facility

When you live at home, a pooled-income trust feels like a lifeline. You send the dollars that push you over Medicaid’s income limit to the trust. The trust then pays your rent, utilities, food, or other bills, and Medicaid treats that income as gone, so you stay covered without losing the roof over your head.

That balance ends the day you move into a nursing home or other long-term care facility. New York switches you to institutional budgeting. Instead of a spend down, the state sets a Net Available Monthly Income line called NAMI. Almost all of your income, except about fifty dollars for personal needs, must flow straight to the facility. Depositing money into a pooled trust no longer lowers NAMI, so the trust stops doing its job. Funds already in the account may settle old bills, yet fresh deposits will be counted.

We know this change feels harsh, yet you still have options. You might use short rehab then return home with Community Medicaid. You could rearrange assets before admission or explore other trust tools that fit a longer stay. Good timing matters, and every rule carries fine print. A Long Island Medicaid planning attorney can review your records, speak with the trust, and map out next steps that guard your savings and support your care. With planned action, you can keep control of comfort items and still meet Medicaid rules.

Resource Assessments

Resources encompass the applicant’s assets, including savings accounts, stocks, bonds, real estate properties, and IRAs that are not currently in distribution. In New York State, the resource limit for nursing home residents applying for Medicaid in 2025 is set at $32,396. Assets exceeding this amount must be spent down on care and related expenses before the applicant can qualify for Medicaid coverage.

Considering the demanding nature of managing finances to meet Medicaid eligibility requirements, it is often beneficial for applicants to consult with an elder law attorney. These legal professionals can provide valuable guidance on how to effectively reduce assets through legally acceptable strategies to preserve as much of the applicant’s wealth as possible, while still achieving Medicaid eligibility.

Long Island Medicaid Planning Attorney

Seth Schlessel

Seth Schlessel is the Managing Member and Founder of Schlessel Law PLLC, a firm recognized for its compassionate and strategic approach to elder law and Medicaid planning across Long Island. As team leader, Seth is involved in every aspect of the firm’s day-to-day operations, while personally managing its client matters. His leadership is grounded in a client-first philosophy, ensuring each case is handled with diligence and empathy.

A graduate of Touro Law School in 2013, Seth distinguished himself early through his active participation in student leadership, including serving as Vice President of the Sports and Entertainment Society. Admitted to the New York Bar in 2014, Seth has since developed a strong reputation for guiding individuals and families through Medicaid planning, asset protection, and long-term care strategies with clarity and precision.

Can a Nursing Home Take a Person’s Assets?

Nursing homes themselves do not have the legal authority to directly seize assets from residents merely because they are receiving care. However, if you fail to pay for care and if bills remain unpaid, the nursing home may initiate a legal process to sue and potentially secure a judgment for payment. This legal judgment can lead to consequences such as liens, wage garnishment, or the seizure of assets, but these actions require formal legal proceedings.

The cost of nursing home care can be substantial. Without insurance, many families find themselves needing to liquidate significant assets, such as real estate and long-term investments, to cover these high costs.

Average Cost of Nursing Home Care in New York

The cost of nursing home care in New York varies significantly depending on the location and the type of facility. As of the latest data available, rates in New York City and Long Island reflect some of the highest in the state due to the high cost of living and operational costs in these areas.

New York City

In New York City, the cost of nursing home care can be exceptionally high. On average, residents may pay an average of $469 a day for a private room in a nursing home or up to $171,276 annually. The variation in cost typically depends on the borough, with Manhattan often being the most expensive. Factors influencing these costs include the level of care provided, the reputation and facilities of the nursing home, and additional services that may be offered.

Long Island

Similarly, on Long Island, the rates for nursing home care are also substantial, reflecting the overall high cost of living in the area. Average daily costs for a private room in a nursing home on Long Island are around $482 or $176,016 annually. These costs are influenced by the proximity to major urban centers like New York City, the quality of care, and the specific amenities provided by the facility.

Both New York City and Long Island exhibit high costs for nursing home care, with rates significantly above the national average. These costs reflect the economic realities of operating in these regions and underscore the importance of thorough financial planning for long-term care. 

Selling major assets to fund nursing home care is not necessarily detrimental. For individuals requiring lifelong care, significant assets like a family home may no longer be necessary, making their sale a practical solution to finance care needs. However, there are scenarios where preserving assets is crucial. If only one spouse requires nursing home care, or if there is a desire to leave an inheritance to family members, protecting assets from nursing home costs becomes important. Each situation warrants careful consideration and planning to align financial actions with personal circumstances and goals.

How Medicaid Pays for Nursing Home Care

When a person becomes a nursing home resident under Medicaid, their income and assets may influence their eligibility and the amount they contribute towards care, but the ownership of these assets does not transfer to the nursing home. Instead, residents often pay a portion of their income, like Social Security or pensions, towards their care according to Medicaid’s cost-sharing rules.

The primary concern regarding assets usually involves eligibility for Medicaid. To qualify, individuals must meet certain asset limits. This often necessitates spending down or restructuring assets legally to meet these thresholds. Importantly, while the nursing home does not take ownership of assets, the structuring and spending process can lead to a significant reduction in the person’s assets due to care-related expenses.

Individuals considering nursing home care should explore various financing options, including Medicaid planning, to manage these high expenses effectively. Consulting with a knowledgeable attorney who understands the specifics of Medicaid eligibility and asset protection strategies can be a critical step in preparing for the financial aspects of long-term care.

Impact of Nursing Home Admission on Personal Assets

The decision to enter a nursing home is significant not only for the individual’s health care but also for their financial well-being. When an individual applies for nursing home care, particularly under Medicaid eligibility in New York, their financial assessment includes a wide array of assets. These typically encompass both liquid assets, like cash, bank accounts, and stocks, and non-liquid assets, such as real estate, excluding the primary residence up to a certain equity limit, and personal property. Accurate planning for nursing home costs requires a clear distinction between countable and exempt assets.

Common Asset Protection Strategies Before Nursing Home Admission

To mitigate the financial impact of nursing home care, many individuals engage in early planning to shield their assets. Common strategies include the transfer of assets, the establishment of irrevocable trusts, or the purchase of annuities that comply with state and federal regulations. These methods can help preserve an individual’s wealth for their heirs while still ensuring eligibility for Medicaid coverage of nursing home expenses. Such strategies must be implemented within the guidelines of the Medicaid look-back period in New York, which scrutinizes asset transfers made within five years before applying for Medicaid.

Consequences of Not Planning Ahead for Asset Protection

Failing to prepare for asset protection can lead to severe financial consequences. Without proper planning, individuals might find themselves depleting their life savings to cover nursing home costs, potentially affecting their eligibility for Medicaid and the financial legacy they can leave behind. Moreover, inadvertent violations of the Medicaid look-back rules can result in penalties, including periods of ineligibility for Medicaid, during which time the individual would be responsible for all nursing home costs.

What is the Medicaid Look-Back Period in New York?

The Medicaid Look-Back Period is a timeframe during which the New York Medicaid agency examines an applicant’s financial history to determine if any assets were transferred for less than fair market value. The look-back period is five years in New York, and it is meant to prevent individuals from giving assets away to meet Medicaid’s asset limit. 

During the look-back period, Medicaid reviews all asset transfers, including any transfers made by a spouse. Transfers made during this time that violate the look-back period could result in a penalty period of Medicaid ineligibility. The penalty period length depends on the value of the assets transferred. It is important to note that gifting assets, even under the U.S. Federal Gift Tax Rule, can still be considered a violation of Medicaid’s look-back period.

The Look-Back Period only applies to Institutional Medicaid, also known as Nursing Home Medicaid, in New York. The look-back period does not apply to Regular Medicaid or Home and Community-Based Services (HCBS). 

How Can I Protect My Assets from Medicaid Estate Recovery in New York?

Medicaid Estate Recovery is a program that enables the state to recover the costs of Medicaid services provided to an individual from their estate after death. After a long-term care Medicaid beneficiary’s death, the New York Medicaid agency often attempts reimbursement of care costs through the deceased’s remaining estate. Medicaid may attempt to recover assets that were exempt during the individual’s lifetime, including their primary residence. 

What are Exempt Assets Under New York Medicaid?

When applying for Medicaid in New York, not all of a person’s assets are counted towards the eligibility thresholds. Some assets are considered exempt, meaning they are not taken into account when determining whether an individual qualifies for Medicaid benefits. Applicants who know which assets are exempt can better prepare for the application process and preserve their resources.

Common Exempt Assets in New York Medicaid

• Primary Residence: The primary home of the applicant is usually exempt if the equity value is under $1,097,000 (in 2025) and the Medicaid applicant, their spouse, or a dependent relative lives in the home. This exemption is crucial because it allows applicants to retain their home without it affecting their Medicaid eligibility.
• Automobile: One vehicle, regardless of value, is typically exempt if it is used for the transportation of the Medicaid applicant or another member of the household for medical treatments or other essential life activities.
• Personal Property: Household goods and personal effects (such as clothing, furniture, and jewelry) are generally exempt from consideration as assets.
• Burial Spaces and Related Items: Burial plots, caskets, vaults, headstones, and other items intended for the burial of the applicant and immediate family members are also exempt.
• Burial Funds Up To $1,500: Prepaid burial funds or irrevocable trust funds set aside for burial expenses up to a certain amount are exempt assets. These funds must be clearly designated for burial expenses and not commingled with other resources.
• Life Insurance: Life insurance policies with a face value of $1,500 or less are typically exempt. If the total face value of multiple policies exceeds $1,500, the cash value of these policies may count as a resource.
• Retirement Accounts: Retirement accounts like IRAs and 401(k)s may be exempt if they are in payout status, meaning the owner is receiving regular payments based on life expectancy or period certain.
• Special Needs Trusts: Assets held in a special needs trust are exempt. These trusts are designed to benefit individuals with disabilities and are not counted as available resources for Medicaid eligibility.

Although a primary residence is an exempt asset during the recipient’s lifetime, it may be subject to estate recovery after their death. This is why consulting with a New York Medicaid Planning Attorney is recommended to develop a plan to protect your assets.

What is the Medicaid Estate Recovery Program?

After a Medicaid recipient passes away, the Medicaid Estate Recovery Program may impact their remaining assets. MERP allows the state to recoup the costs spent on the individual’s long-term care and other Medicaid benefits.

The Medicaid Estate Recovery Program (MERP) seeks reimbursement for all the costs paid toward the care of a Medicaid recipient from the time they turn 55. This recovery process targets the estate of the deceased, which can include assets like homes, bank accounts, and other personal property that may not have been properly shielded through legal planning tools. The state’s claim applies to assets that pass through probate, which is the legal process through which the deceased’s assets are distributed under state law. Medicaid may file a claim against the estate for recovery, potentially affecting what heirs may inherit.

Protecting Your Heirs from Medicaid Estate Recovery

To protect heirs from the potential financial impact of Medicaid estate recovery, several strategies can be employed. It is crucial for individuals to work with legal professionals who understand the aspects of Medicaid rules and estate planning to structure assets in a way that minimizes exposure to estate recovery while complying with all legal requirements.

Through careful planning and legal structuring of assets, individuals can safeguard their estate and ensure that their legacy is passed on to their heirs without undue loss either claims brought by legal actions from nursing homes or Medicaid recovery efforts. This not only secures the financial wellbeing of future generations but also provides peace of mind to individuals receiving Medicaid benefits.

Strategies to Legally Shield Assets from Nursing Home Costs

Effective financial planning for nursing home care is crucial, especially when considering the high costs associated with long-term care and the strict requirements of New York Medicaid eligibility. 

Starting long-term care planning early can significantly influence the range of options available for protecting assets while securing Medicaid eligibility. Early planning allows individuals to appropriately structure their assets, take advantage of legal tools like trusts and annuities, and address potential issues well ahead of the Medicaid look-back period. This proactive approach not only helps in preserving one’s wealth for future generations but also in maintaining the individual’s choice of nursing home facilities and care options without financial burden.

The Essentials of Creating a Trust for Asset Protection

Medicaid Asset Protection Trusts (MAPTs) play a vital role in planning for long-term nursing home care by effectively managing assets to meet Medicaid eligibility requirements while preserving wealth for future generations. These trusts work by transferring the ownership of assets out of an individual’s name, thereby categorizing them as non-countable for Medicaid purposes.

When assets are placed into an irrevocable trust, they are no longer under the direct control of the individual, a crucial step in adhering to Medicaid’s stringent asset limits. Properly structured, these trusts must conform to both state and federal regulations to ensure they do not trigger penalties such as the look-back period or jeopardize Medicaid eligibility.

The Use of Annuities in Nursing Home Asset Planning

Annuities can convert a lump sum into a regular income stream, which can be exempt from Medicaid calculations if structured properly. For an annuity to be exempt, it must be irrevocable, non-transferable, actuarially sound, and provide for equal payments with no deferral or balloon payments. This allows the individual to receive a steady income while preserving Medicaid eligibility and can provide income for living expenses or support for a spouse not in care.

How Gifting Can Affect Your Asset Protection Strategy

Gifting assets, whether directly to family members or into a trust, must be approached with care due to the Medicaid five-year look-back period. Improper gifting can lead to penalties, such as periods of ineligibility for Medicaid. Gifts should be planned with consideration of the look-back period to avoid penalties. Consulting with a legal professional is essential to navigate the detailed regulations of Medicaid and to implement a gifting strategy that maintains eligibility.

Implementing these Medicaid planning instruments requires the guidance of knowledgeable legal professionals to ensure they are effective and legally sound. Employing these strategies thoughtfully and in accordance with New York Medicaid laws can help individuals safeguard their assets against the substantial costs of nursing home care while ensuring compliance with eligibility requirements.

Strategy	Description
Creating a Medicaid Asset Protection Trust (MAPT)	Assets are transferred into an irrevocable trust to remove them from an individual’s ownership, making them non-countable for Medicaid eligibility while preserving wealth for heirs.
Using Annuities in Asset Planning	Annuities convert a lump sum into a steady income stream that can be exempt from Medicaid calculations if structured properly. The annuity must meet specific requirements, including being irrevocable and non-transferable.
Gifting	Gifting assets to family members or into a trust must be done carefully, keeping the Medicaid five-year look-back period in mind to avoid penalties or periods of ineligibility.

How a Long Island Medicaid Planning Attorney from Schlessel Law PLLC Can Assist in Protecting Assets

Medicaid planning attorneys are essential for advising individuals on how to protect their assets in preparation for long-term care needs. Our attorneys possess a deep understanding of both federal and state Medicaid regulations, allowing us to offer strategic advice that is customized to the specific needs of each client. At Schlessel Law PLLC, our attorneys collaborate with clients to draft and review legal documents, appropriately structure assets, and implement strategies that are compliant with the law while optimizing asset protection.

The financial implications of entering a nursing home in New York are important to consider, especially when it comes to preserving your assets and ensuring Medicaid eligibility. At Schlessel Law PLLC, our Long Island Medicaid planning attorneys can provide clear and effective legal guidance to help manage your assets wisely in the face of long-term care costs.

Taking proactive steps with a skilled attorney can make a significant difference in protecting your financial future and securing your legacy for future generations. Whether you are planning for yourself or a loved one, our team is here to assist with tailored strategies that respect your needs and goals.

For dedicated assistance and to learn more about safeguarding your assets while navigating the requirements for Medicaid eligibility, contact Schlessel Law PLLC today at (516) 574-9630. Let us help you prepare with confidence, knowing your assets and family’s future are well looked after.

from Schlessel Law https://www.schlessellaw.com/what-happens-to-assets-if-you-go-into-a-nursing-home/