When Lyndon Johnson signed Medicaid into law in 1965, it was based on a welfare model for people with low incomes and limited resources. For some people, the word Medicaid is synonymous with words like “poor” and “poverty,” when in reality, Medicaid evolved into a generous program that serves the middle class. Now, Medicaid covers more people, including those who need long-term health care but also have significant assets. No longer is it true that you must be impoverished or suffering financial hardship to qualify for Medicaid. Federal and state policymakers have changed the rules, making Medicaid more accessible to the middle class.
The New York Medicaid attorneys at Landskind & Ricaforte Law Group, P.C. understand that when you work hard all your life and carefully save for your retirement, you don’t want to see your life savings depleted within a few years because an elderly parent or family member needs nursing home care 24/7. We know it’s possible to lose your nest egg due to long-term health care needs. Here, we discuss how families with typical middle-class assets like homes, retirement accounts, and savings can legally protect their wealth while still qualifying for Medicaid long-term care benefits.
Understanding Medicaid and Long-Term Care
When people fall ill or become incapacitated, family members may think that Medicare will help cover the costs of long-term nursing care. However, that’s basically not true. Medicare is a federal health insurance program for people over 65 and those who suffer from some illnesses and certain disabilities. Medicare helps with the cost of health care, but it doesn’t cover all medical expenses or the cost of most long-term care.
Medicaid is a government medical assistance program initially established for low-income Americans to pay for long-term care if a patient became ill, disabled, or incapacitated. New York Medicaid offers Institutional Medicaid for those who need long-term care in a nursing home, and Community Medicaid for those who live in their own home, someone else’s home, or in an assisted living facility.
What’s important to remember is that Medicaid is not Medicare, and qualifying for Medicaid requires some planning. Because you must have limited income and assets to be eligible for benefits, any excess or surplus above the Medicaid limit must be “spent down” or reduced before Medicaid will provide financial support.
Often, middle-class New Yorkers can’t afford to pay for long-term care for a loved one; or they can only pay for a short time and exhaust their savings in the process. So, it’s important that middle-class families plan for Medicaid eligibility—especially those with a family history of hereditary disease and/or dementia—work with our Medicaid attorneys to plan for the future.
Medicaid for Middle-Class New Yorkers
Over the years, federal and state policymakers have changed the rules, turning Medicaid into a more accessible program for the middle class in the following ways:
- Certain assets don’t count against Medicaid’s financial limit. For example, a single person can own a home, a vehicle of unlimited value, certain retirements and life insurance policies, and/or a business and still qualify for Medicaid.
- In the 1980s, significant changes relaxed the requirements for married people, so a spouse who doesn’t need long-term nursing care doesn’t lose his life savings and assets to pay for a spouse who does need care.
- During the pandemic, Congress passed President Biden’s American Rescue Plan that increased funding for home and community-based care. It allowed more seniors and people with disabilities or chronic illnesses to receive care and assistance at home instead of at a facility.
However, the rules related to the Medicaid program are complicated and specific. That’s why it’s important to talk to our Medicaid attorneys to understand these changes and discuss planning for the future to help ensure you keep as much of your hard-earned money as possible.
New York Medicaid Asset Limits
To be eligible for Medicaid coverage in New York, a person must have a limited amount of assets. For 2025, a single person can have no more than $32,396 in countable resources; married couples can have no more than $43,781. If assets exceed these amounts, they must be "spent down" before Medicaid eligibility begins, and this could wipe out a person’s savings and investments.
However, there are certain assets that Medicaid exempts from its calculations, including burial spaces, a vehicle, and the following:
- Your home. As of January 1, 2025, the home equity limit in New York was $1,097,000. If your home equity exceeds this amount, the home may count as a countable asset, affecting your Medicaid eligibility. As long as the equity in your home is under $1,097,000, it won’t be part of Medicaid’s calculation. This exemption requires the Medicaid applicant or their spouse to live there or intend to return home.
- Retirement accounts. But this only applies to the non-applying spouse. The Medicaid applicant's IRA, 401(k), or other tax-deferred plan counts as an available resource.
- Personal property and household belongings. These can include clothing, appliances, furniture, and jewelry (up to a limit). One wedding ring and one engagement ring are always exempt, regardless of value.
Ways to Improve Your Medicaid Eligibility
As a middle-class New Yorker, there are a variety of tools you can use to protect your financial stability and assets while planning for Medicaid, including the following:
- Don’t spend down your assets when you apply. Because you may need to spend down your assets to be eligible for Medicaid, you might consider gifting money to family members or transferring assets. However, Medicaid has a five-year look-back period for most asset transfers. So, when you apply for Medicaid benefits, the government will look at all the financial transactions you’ve made in the past five years. If you’ve made transfers for less than fair market value or given large-cash gifts or assets to change the appearance of your financial situation during this time, it can trigger a penalty period that makes you ineligible for financial support.
- Create a Medicaid Asset Protection Trust (MAPT). A Medicaid Asset Protection Trust (MAPT) can help protect your assets. A MAPT is an estate planning tool that helps you meet Medicaid’s strict eligibility requirements without depleting your nest egg to pay for long-term care. You can establish a MAPT and transfer assets into it, so Medicaid won’t count those assets when it determines your financial eligibility for benefits.
- Establish an annuity. An annuity is a contract between you and an insurance company. The most basic type of annuity is an income annuity, where you give the insurance company a lump sum of money, and they send you a certain amount of money every month for as long as you live. An annuity to be Medicaid-compliant, it must be irrevocable.
Contact Landskind & Ricaforte Law Group, P.C.
We know there’s a lot to think about for middle-class New Yorkers planning for Medicaid. Meeting eligibility requirements can take time and forethought, and that’s why we’re here to help. With the right kind of planning, middle-class families can structure their finances and protect their assets to qualify for Medicaid now or when they’ll need long-term health care. We can discuss with you the benefits of a MAPT, spousal transfers, and other types of strategies for preserving your assets. Contact us to talk about your long-term care needs. Read our testimonials to learn how we’ve helped other middle-class New Yorkers qualify for Medicaid.