What New York Medicaid Can Take From Your Estate After You Die

KEY TAKEAWAYS

• Not every asset is automatically available to Medicaid. How property is titled, whether it passes outside probate, and whether it has been placed in a properly structured trust can affect estate recovery.
• New York Medicaid estate recovery is not unlimited. The state may seek repayment for certain Medicaid costs after a recipient dies, but recovery is generally limited to the amount owed or the value of available estate assets.
• Probate assets may be at risk. A home, bank account, investments, or other property owned individually at death may become part of the estate and potentially subject to a Medicaid claim.
• Recovery may be delayed in some family situations. A surviving spouse or certain qualifying children can postpone Medicaid recovery, although a delay does not always erase the claim.

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Many of our clients talk to us about Medicaid asset protection. After we discuss Medicaid Asset Protection Trusts (MAPTs), the conversation often leads to a common question: If Medicaid helps pay for long-term care, can New York Medicaid come back after death and take the house or savings meant for the children?

It is a reasonable concern because qualifying for Medicaid and protecting assets from New York Medicaid estate recovery are related, but they are not the same issue.

At Landskind & Ricaforte Law Group, P.C., we help families understand both sides of the equation before long-term care becomes urgent. Thoughtful planning can clarify which assets could face a Medicaid claim, which may pass outside the estate, and how a properly structured plan may preserve more of a family's legacy. Here, our estate planning attorneys discuss the assets New York can take to repay Medicaid.

What Is New York Medicaid Estate Recovery?

Estate recovery allows New York to seek reimbursement for certain Medicaid expenses after a recipient dies. The Office of the Medicaid Inspector General (OMIG) states that recovery applies to certain recipients who were 55 or older or permanently institutionalized. Depending on the recipient's Medicaid eligibility category, recoverable payments can include nursing facility care, home and community-based services, hospital and physician services, prescriptions, and Medicaid managed-care payments.

The biggest misconception about New York Medicaid estate recovery is that the state can simply take anything the Medicaid recipient owned or used during life. That is not how current New York estate recovery works. The critical question is whether an asset becomes part of the deceased Medicaid recipient’s probate estate.

Under current New York policy, Medicaid estate recovery focuses on assets belonging to the deceased recipient's estate. In 2011, New York’s Department of Health instructed districts not to include assets passing outside the probate estate for recovery purposes. Additionally, current OMIG guidance explains that Medicaid recovers only up to the amount of its claim or the available estate assets, whichever is less. Funeral expenses, estate administration costs, and certain federal liens receive priority before the state's Medicaid claim.

This distinction matters. Estate recovery is not an unlimited right to seize a family's property.

What Assets Can New York Take to Repay Medicaid?

Assets that may become part of a recoverable probate estate can include the following:

• A home owned individually. If the Medicaid recipient still owns the Brooklyn house individually at death and it becomes an estate asset, Medicaid may assert a claim against the available estate value.
• Bank and investment accounts without an effective non-probate transfer. Accounts that become part of the probate estate may provide funds for satisfying valid creditor claims.
• Personal property and other probate assets. Property passing through the estate can potentially contribute to repayment, subject to applicable rules and creditor priorities.

New York's OMIG specifically states that its claim is against the deceased Medicaid recipient's estate assets. That makes ownership and beneficiary structure critical considerations long before a Medicaid application is filed.

What Can Medicaid Not Simply Take After Death?

A Medicaid bill does not give the state unrestricted access to everything connected to the deceased person or the family. Current New York guidance distinguishes estate assets from property that is not part of the recipient's estate. There are also circumstances that delay or limit recovery:

• A surviving spouse. Recovery is deferred when the deceased Medicaid recipient leaves a surviving spouse.
• Certain surviving children. Recovery is deferred when there is a surviving child under 21 or a child of any age who is certified blind or disabled.
• Qualifying hardship situations. An heir, survivor, or beneficiary may request a full or partial undue-hardship waiver. New York identifies examples involving certain modest-value primary residences and limited income-producing family assets.

A deferral should not be mistaken for permanent forgiveness. In some circumstances, the state may pursue its claim later after the reason for the deferral ends.