In 2019, the average cost of a NYC nursing home is $12,419.00 a month. Without proper planning, in less than a year, $100,000.00 could be wiped way paying for nursing home costs.

Paying for nursing home costs can quickly erode a lifetime of savings. Long-term care costs can wipe out everything you have accumulated during your life, leaving you nothing to pass along to your children or loved ones. Most people don’t need to lose everything. Legal steps can potentially save some or all your assets.

Legal Strategies Used to Protect Assets

Medicaid Crisis Planning involves helping someone in a nursing home save some of their assets before they are all gone. These strategies involve complying with federal Medicaid law and New York state statutes and regulations. As part of our Elder Law practice, Medicaid Crisis Planning involves re-positioning assets as permitted under Medicaid eligibility rules.

Due to the complex nature of this area of law, it is difficult to assess which legal strategies would make sense for a particular situation without a full analysis of the circumstances. Relevant factors include

  • the value of assets in the estate

  • the type of assets in the estate

  • the age and health of the estate owner

  • family circumstances (divorces, disabled children, adult children who live in the home, etc.)

Time is of the Essence

In Medicaid Crisis Planning, timing is critical. The sooner you take action, the more money can be saved. Even if you have been “spending down” for a while, if you still have significant assets to protect, you can still take action.

Medicaid Laws to be aware of:

The DRA amended Section 1917(c) of the Social Security Act to lengthen the look-back date for all transfers of assets made on or after February 8, 2006 to 60 months for applicants requesting Medicaid coverage of nursing home facilities, or applicants who are disabled, aged 65+, or blind.  (People who are not in these categories have different look-back rules.)  The Act also changed the begin date for the penalty period to the month after which assets have been transferred for less that fair market value, or the date the institutionalized individual is otherwise eligible for and receiving nursing facility services, whichever is later.

Multiple transfers made during the look-back period are accumulated into one total amount to determine the penalty period.  In the event that the imposition of the transfer penalty would create an undue hardship, an exception may be made to the application of the penalty. 

Exceptions to the transfer penalty:

  • Transfer of a home: The transfer of the home by an applicant or spouse will not prompt a transfer penalty if the home was transferred to:

  1. Spouse

  2. Child under 21 or certified blind/disabled child of any age

  3. Sibling with an equity interest in the home who has resided in the home for at least one year immediately prior to applicant’s most recent institutionalization; or

  4. Caretaker adult child who resided in the home for at least 2 years immediately prior to the most recent institutionalization and who provided care to the applicant which permitted her or him to reside at home rather than in a medical facility. 

Transfers of property other than the home
Transfer penalties are not imposed when an asset other than the home is transferred by an applicant or spouse to:

  1. Spouse (or to another for the sole benefit of the spouse but it may not be to a trust)

  2. Applicant’s child who is certified blind or disabled

  3. A trust established solely for the benefit of an individual under 65 years of age who is disabled

  4. The applicant or spouse of the applicant if their intention is to dispose of the asset for its fair market value

  5. Transfer of the asset was for a purpose other than to qualify for Medicaid nursing home coverage.  

 State Document Information

Sole benefit trusts are allowed and are an exception to the asset transfer penalty. To qualify, the trust must be:

  1. Established for the benefit of a disabled person under 65 years of age

  2. Established by a parent, grandparent, guardian, or court

  3. Funded with the assets of the disabled beneficiary AND

  4. Contain a Medicaid pay-back provision.  

Penalty Period
Continuous eligibility required? No
Penalty begins:

  • On the otherwise eligible date or pre-DRA transfer date

  • On the first of the month of the otherwise eligible date or pre-DRA transfer date

  • On the first of the month following the otherwise eligible date or pre-DRA transfer date

  • Penalty Period Divisor (Monthly) --

  • Divestment Penalty Divisor

  • $10,068.00 - Central

  • $13,407.00 - Long Island

  • $12,419.00 - NYC

  • $11,280.00 - N. East

  • $12,636.00 - N. Metro

  • $12,342.00 - Rochester

  • $10,556.00 - Western

State Income Limits

  • Income Cap State? No

  • Personal Needs Allowance:  $50

  • MMMNA (Minimum Monthly Maintenance Needs Allowance) lower range: $3,160.50

  • MMMNA upper range: $3,160.50

  • +Excess shelter costs? Yes

State Asset Limits

  • Individual Resource Allowance: $15,450.00

  • Resource Allowance for a Couple (Husband and Wife both reside in a facility) $22,800.00

  • CSRA Lower Range: $74,820.00

  • CSRA Upper Range: $126,420.00

  • Home equity limit: $878,000.00

  • Life insurance face value limit: $1,500.00

  • Burial savings account limit: $1,500.00

Retirement funds

A retirement fund owned by an SSI-related individual is a countable resource if the SSI-related individual is not entitled to periodic payments, but is allowed to withdraw any of the funds. The value of the resource is the amount of money that s/he can currently withdraw. If there is a penalty for early withdrawal, the value of the resource is the amount available after the penalty deduction. Any ordinary income taxes due are not deductible in determining the value of the resources.


Annuities purchased on or after February 8, 2006 must have the State listed as the named remainder beneficiary, whether the annuity belongs to the applicant or the community spouse.  In the case where there is a community spouse or minor or disabled child, the State must be named the remainder beneficiary in the second position and named in the first position if such spouse or representative of such child disposes of any such remainder for less than fair market value.  If the applicant or applicant’s spouse fails or refuses to name the State as the remainder beneficiary, the purchase will be considered a transfer of assets for less than fair market value.  Finally, the annuity will be treated as a transfer or assets for less than fair market value unless the annuity is:

  1. An annuity described in subsection (b) or (q) of Section 408 of the Internal Revenue Code of 1986; or

  2. Purchased with the proceeds from an account described in subsection (a), (c), (p) of Section 408 of such Code; a simplified employee pension; or a Roth IRA; or

  3. The annuity is

    • Irrevocable and non-assignable;

    • Is actuarially sound

    • Provides for payment in equal amounts during the term of the annuity with no deferral and no balloon payments made.

(06 OMM/ADM-5) 

  • If the individual is receiving automatic regular periodic distributions (which must include all interest and some principal in order to meet the [Medicaid agency name] guidelines), the retirement fund is not an available asset (but the distributions from the retirement fund are income and included in the patient responsibility amount).

 Available Asset Description

  • Checking accounts

  • Savings accounts

  • Brokerage accounts

  • Certificates of deposit

  • Stocks and bonds

  • U.S. savings bonds

  • Real property, other than primary residence (with certain exceptions)

  • Limited partnerships

  • Cash value of life insurance if the total face value of all such policies is greater than $1,500.00

  • Vehicles other than the one excluded vehicle

  • Boats, unless it is your primary residence

  • Recreational vehicles, unless it is your primary residence or your only vehicle

  • Loans payable to applicant

  • Deferred annuities and some immediate annuities, depending on how they are structured and the date purchased

  • Retirement funds, generally are not an available resource if they are in payout status. The income is countable as income to the applicant.

 Excluded Asset Description

A homestead is exempt which is essential and appropriate to the needs of the household.  A homestead is exempt if the equity is less than or equal to $878,000 (which may be increased annually) and the applicant intends to return home.  For persons who are 65 years of age or older, certified blind or certified disabled, a homestead loses its exempt status if the owner moves out of the home without the intent to return, and no spouse, child under 21 years of age, certified blind or certified disabled child, or other dependent relative is living in the home.  (18NYCRR 360-4.7)

Any special requirements re: intent to return?  Intent to return income

  • Primary residence, regardless of equity, if spouse, child under age 21, or blind or disabled child of any age lives there

  • One vehicle

  • Life insurance with no cash value

  • Life insurance with cash value if the total face value of all such policies is less than or equal to $1,500.00

  • Irrevocable burial contracts

  • $1,500.00 designated for burial expenses (revocable burial contracts, burial savings accounts, or life insurance policies)

  • One burial plot per family member

  • Pre need irrevocable burial arrangement


  • It is too late to do planning: False. It is never too late to preserve and protect assets. Too often, seniors and their families rely upon the advice of the Nursing Home staff that they need to spend-down all their money on the nursing home before the senior may qualify for Medicaid benefits. Given that the Nursing Home stands to gain most from you unnecessarily spending your hard-earned assets on the Nursing Home, it should come as no surprise that they do not advise you to see a Qualified Elder Law Attorney.

  • The Nursing Home will do your Medicaid Application for Free: False . The Nursing Home often says that it will do the Medicaid application for free. The fact is that the Nursing Home will require that you spend down all of your savings before they do the application for "Free". If you had to spend down tens of thousands of dollars on Nursing Home costs, can you really say the application was "Free"? The nursing homes goal is to make sure they are paid, not to ensure your assets are preserved.

  • I will never qualify for Medicaid – I have too much money: Not Necessarily. You cannot make an informed decision about when you might qualify for benefits until you speak to a Qualified Elder Law Attorney. The fact is that every senior deserves to know the facts before making an informed decision about their long term care costs.

  • Planning requires 'hiding' assets or engaging in illegal acts: False Nothing could be further from the truth. The fact is that a Qualified Elder Law Attorney will disclose all planning strategies that are allowable under the law such as taking advantage of “exempt transfers” etc. Planning is lawful and you have every right to take advantage of your rights under the law. Just as folks have the right to employ a CPA to save tax dollars, seniors have the right to employ Attorneys to save assets in the Medicaid process.