How to Plan for Long-Term Care in New York

Most families don't plan for long-term care until they're in the middle of a crisis. A parent has a stroke. A spouse is diagnosed with dementia. Suddenly, a family that thought they had years to figure this out is facing a $15,000-per-month nursing home bill with no plan in place. I've sat with dozens of families in this exact situation. The ones who planned ahead preserved their assets and their options. The ones who didn't often spent down everything they'd built over a lifetime in 18 to 24 months. The planning isn't complicated — but it has to happen before the need arises.

The Real Cost of Long-Term Care in New York

New York consistently ranks among the most expensive states in the country for long-term care. These are 2026 approximate costs for the New York City metropolitan area:

At $15,000 per month for a nursing home, a two-year stay costs $360,000. A five-year stay — which is not unusual for dementia patients — costs $900,000 or more. Even a robust retirement portfolio can be depleted quickly at these rates. Medicare covers very little of this. And without planning, Medicaid only kicks in after you've spent down virtually all your assets.

The average length of stay in a nursing home in the United States is approximately 2.5 years. But 20% of people stay 5 years or more. And women statistically require longer care than men. Planning for 3–5 years of care costs is a reasonable baseline; planning for 7+ years is more conservative and appropriate for many families.

What Medicare Does and Doesn't Cover

This is where most families make their first critical mistake: they assume Medicare will cover nursing home costs. It won't — at least not for long. Medicare covers up to 100 days of skilled nursing facility care following a qualifying 3-day hospital inpatient stay, and only if the care involves skilled nursing or rehabilitation services. After day 20, there's a significant daily copay. After day 100, Medicare coverage ends entirely.

Medicare does not cover custodial care — the ongoing help with activities of daily living (bathing, dressing, eating, walking) that makes up the majority of nursing home stays. Once a patient is no longer improving and needs only custodial care, Medicare stops paying. This transition happens faster than most families expect.

Medicare also covers some home health aide services — but only if they're providing skilled care under a physician's order, and only for limited periods. The expectation is that it's temporary. For long-term home care, Medicare offers very limited coverage.

Medicaid: The Primary Payer for Long-Term Care

Medicaid is the primary funding source for long-term nursing home care in New York for people who qualify. In 2026, approximately 65% of all nursing home residents in New York are on Medicaid. Understanding who qualifies and how to qualify strategically is the central challenge of long-term care planning.

New York Medicaid Eligibility for Nursing Home Care

To qualify for New York Medicaid to cover nursing home costs, the applicant must meet both income and asset criteria:

Income: In 2026, a Medicaid nursing home recipient can keep approximately $50 per month in personal needs allowance. Nearly all income must be applied to the cost of nursing home care (this is called the "patient pay amount" or "spend-down").

Assets: The applicant may keep approximately $31,175 in countable assets (2026 figure, adjusted annually). The primary residence is generally exempt as long as the applicant intends to return home, a spouse lives there, or a dependent child lives there. One car, personal property, and prepaid funeral arrangements are also exempt.

The Five-Year Look-Back Period

Here's the rule that catches most families by surprise: New York Medicaid looks back five years (60 months) at all asset transfers made for less than fair market value. If you gave away money, transferred your home to a child, or otherwise disposed of assets during the look-back period, Medicaid will impose a penalty period during which you don't qualify for benefits.

The penalty period is calculated by dividing the value of the transferred assets by the regional daily nursing home rate (approximately $500–$600 per day in New York City in 2026). A $360,000 transfer could create a 600-day penalty period — nearly two years during which you must pay privately. And the penalty doesn't start until you're otherwise eligible (meaning broke and in a nursing home), so you need a way to pay those costs during the penalty period.

Our comprehensive guide on the New York Medicaid look-back period explains how the calculation works, what transfers are exempt, and how to plan around it.

Medicaid Asset Protection Trust (MAPT)

The Medicaid Asset Protection Trust — sometimes called an "irrevocable income-only trust" — is one of the most powerful long-term care planning tools available in New York. Here's how it works:

• You transfer assets (typically your home and/or other significant assets) into an irrevocable trust more than five years before applying for Medicaid
• You are not the trustee — a trusted family member or other person serves as trustee
• You retain the right to receive income from the trust (for example, rental income from the home, or investment income)
• You cannot take back the principal — the trust is irrevocable
• After five years, the assets in the trust are protected from Medicaid spend-down requirements

For a family home worth $1 million, a MAPT created more than five years before a Medicaid application means the home is protected. Without it, if Medicaid is needed, the home may be subject to estate recovery claims after the Medicaid recipient's death.

MAPTs require giving up control. You can no longer sell, mortgage, or gift the home without the trustee's participation. You can't revoke the trust or get the assets back. These are real constraints that must be weighed against the Medicaid protection benefit. But for families where long-term care is a realistic concern — which is essentially everyone over 60 — the tradeoff is often worth making.

For a deeper look at asset protection strategies before nursing home care, see our article on protecting assets from nursing home costs in New York.

Protecting the Community Spouse

If one spouse enters a nursing home and the other spouse remains in the community (the "community spouse"), New York has specific protections designed to prevent the community spouse from becoming impoverished. These rules are among the most important in Medicaid planning for married couples.

Community Spouse Resource Allowance (CSRA)

In 2026, the community spouse can keep up to approximately $154,140 in countable assets — the maximum Community Spouse Resource Allowance in New York. Assets above that amount must be spent down to qualify the institutionalized spouse for Medicaid. The primary home, if the community spouse lives there, is exempt.

Minimum Monthly Maintenance Needs Allowance (MMMNA)

The community spouse is also protected by income rules. If the community spouse's own income doesn't meet the minimum monthly maintenance needs allowance (approximately $3,854 per month in 2026 in New York), they may be entitled to a portion of the institutionalized spouse's income to reach that floor. This prevents a situation where the community spouse is left with too little income to survive while all income goes to the nursing home.

Spousal Refusal

New York law also allows a community spouse to refuse to make their assets available for the institutionalized spouse's care — a strategy called "spousal refusal." This can allow the institutionalized spouse to qualify for Medicaid even if the couple has assets above the CSRA. However, Medicaid can pursue the community spouse for reimbursement under certain circumstances. Spousal refusal is a complex strategy that requires careful legal guidance.

Long-Term Care Insurance: Is It Worth Buying?

Long-term care insurance (LTCI) pays a daily or monthly benefit when you need qualifying long-term care services. If you purchase a policy at age 55 with a $300/day benefit for three years, and you end up needing nursing home care for three years in your 80s, the policy pays approximately $328,000 — protecting that amount from your personal assets.

LTCI has real advantages: it preserves assets, gives you access to higher-quality care facilities than Medicaid might provide, and lets you choose care options. But it also has significant drawbacks:

• Premiums are expensive — $2,500 to $4,500 per year or more for a quality policy for a 55-year-old
• Premiums can increase significantly over time — many policyholders have faced 40–80% premium increases
• Many insurers have exited the LTCI market, raising concerns about insurer solvency and future availability
• You may pay premiums for 30 years and never need care, or need care before the elimination period ends

Hybrid life insurance/LTCI products are now popular alternatives — they combine a death benefit with a long-term care benefit, so the premium isn't "wasted" if you die without needing care. These products have grown substantially in the market and are worth evaluating alongside traditional LTCI.

Integrating Long-Term Care Planning with Your Estate Plan

Long-term care planning doesn't happen in isolation. It needs to be integrated with your overall estate plan. Key coordination points:

• Durable power of attorney: Your agent needs broad authority to make Medicaid applications, manage financial transactions, and implement planning strategies on your behalf if you become incapacitated
• Healthcare proxy: Authorizes your agent to make medical decisions, including decisions about the level of care you receive
• MAPT and your home: If your home is in a MAPT, your estate plan must be updated to reflect that you no longer own it directly — your will shouldn't try to leave property you don't own
• Retirement accounts: IRAs and 401(k)s are countable assets for Medicaid purposes. Spend-down planning for retirement accounts requires coordination with your tax advisor to minimize the income tax impact

The time to start this planning is well before 65 — ideally 10 or more years before you might need care, to allow the five-year look-back period to pass and give strategies time to work. For families dealing with a more immediate need, crisis planning options exist — but the sooner you contact us, the more tools we have available.

For more information on New York Medicaid planning strategies, the Morgan Legal NY Medicaid planning resource page provides supplemental guidance and current program information.