How to Protect Assets from Nursing Home Costs in New York

A single year in a New York nursing home can easily cost $175,000 or more. Without advance planning, a lifetime of savings can be entirely consumed within two to three years. The good news is that New York law provides legitimate, well-established strategies to protect assets — but the window to act is not unlimited, and time is the most critical variable in this area of planning.

The True Cost of Long-Term Care in New York City

Before discussing protection strategies, it is worth confronting the numbers directly. Long-term care costs in New York are among the highest in the nation. In 2026, nursing home care in New York City typically ranges from $14,000 to $18,000 per month — or $168,000 to $216,000 per year. Home health aide services, while less expensive, still average $8,000 to $12,000 per month for full-time care. Assisted living in the metropolitan area generally runs $6,000 to $10,000 per month.

For context: the median household retirement savings for Americans aged 65 to 74 is approximately $200,000. A two-year nursing home stay in New York City would consume nearly all of that. And according to the U.S. Department of Health and Human Services, the average person turning 65 today will need more than three years of long-term care at some point in their life.

Understanding New York Medicaid for Nursing Home Care

Medicaid is the primary government program that pays for nursing home care for individuals who cannot afford it themselves. In New York, Medicaid covers nursing home care in full once an applicant meets the eligibility criteria — but those criteria are strict. In 2026, a single applicant for nursing home Medicaid in New York may own no more than $2,000 in countable resources. For married couples, the community spouse (the one not entering the nursing home) may retain up to approximately $157,920 under the Community Spouse Resource Allowance.

The most consequential rule in Medicaid planning is the five-year lookback period. When a New York resident applies for nursing home Medicaid, the state reviews all asset transfers made during the 60 months immediately preceding the application date. Any transfer made for less than fair market value during that window is considered a disqualifying transfer. The penalty is a period of Medicaid ineligibility calculated by dividing the total value of disqualifying transfers by New York's average monthly nursing home cost (approximately $14,000 in 2026).

This means a gift of $140,000 to a child three years before a Medicaid application could trigger a ten-month penalty period — ten months during which the applicant is responsible for their own nursing home costs even though they have virtually no assets left. Avoiding this trap requires either acting more than five years before needing care or using specialized legal structures designed to minimize penalties.

The Medicaid Asset Protection Trust: New York's Most Powerful Planning Tool

The most effective strategy for protecting assets from nursing home costs in New York is the Medicaid Asset Protection Trust (MAPT) — sometimes called an Irrevocable Income-Only Trust. This is a specific type of irrevocable trust designed to hold assets (most commonly the family home and investment accounts) outside the Medicaid applicant's name while preserving the ability to generate income during the grantor's lifetime.

Here is how it works: You transfer assets — typically your home and/or a brokerage account — into the MAPT. You name a trustee (often an adult child or trusted third party, never yourself) and you name your children or other heirs as the beneficiaries. You retain the right to receive all income generated by the trust assets during your lifetime, and you typically retain a limited right to change the trust's beneficiaries. You do not, however, retain the right to receive the principal of the trust — that irrevocability is precisely what makes Medicaid treat the assets as no longer yours after the five-year lookback period has passed.

Once five years have elapsed since the MAPT was funded, the assets held within it are not counted for Medicaid eligibility purposes. Your home can remain in the trust and you can continue to live in it; it simply will not be subject to Medicaid estate recovery upon your death.

Protecting the Family Home in New York

For most New York families, the home is the largest asset — and also one of the most misunderstood in the context of Medicaid planning. Several important rules apply specifically to the home:

The Home as an Exempt Asset

While a Medicaid applicant is alive, their primary residence is considered an exempt asset for Medicaid eligibility purposes — it is not counted toward the $2,000 resource limit — provided the applicant intends to return home or a spouse, minor child, or disabled child lives there. However, the home is not protected from Medicaid estate recovery after death. New York State can file a claim against the estate to recoup the cost of nursing home care paid by Medicaid, which in practice means a lien against the house that must be paid before heirs receive anything.

Transferring the Home to a MAPT

Transferring the home into a Medicaid Asset Protection Trust solves both problems: it removes the home from the Medicaid estate recovery reach after the five-year period and ensures it passes to heirs without encumbrance. The grantor retains a life estate in many structures, meaning the right to live in and use the home for life.

Life Estate Deeds

A simpler — though less flexible — alternative is a traditional life estate deed, in which the homeowner retains a life estate (the right to live in and use the property for life) and transfers the remainder interest to children. This also starts the five-year lookback clock and provides some protection, but life estate deeds do not offer the same level of control and flexibility as a MAPT. In particular, they cannot be easily unwound if circumstances change.

Spousal Protections Under New York Medicaid

New York law provides significant protections for the spouse who remains in the community (the "community spouse") when the other spouse enters a nursing home. These protections include:

• Community Spouse Resource Allowance (CSRA): In 2026, the community spouse may retain up to approximately $157,920 in countable resources, in addition to the institutionalized spouse's $2,000 limit.
• Minimum Monthly Maintenance Needs Allowance (MMMNA): The community spouse is entitled to a monthly income floor of approximately $3,435 per month in 2026. If their own income falls below this level, they may receive a portion of the nursing home spouse's income.
• The Family Home: The community spouse may retain the primary residence, one vehicle, and personal belongings without those assets counting toward Medicaid eligibility.

For married couples, additional planning strategies — such as spousal refusal under New York Social Services Law § 366(3) — may be available in certain circumstances. This is a nuanced area of law that requires advice tailored to the specific facts of each case.

Crisis Planning: What If You Need Nursing Home Care Now?

Not every family has five years to plan. When a nursing home admission is imminent or has already occurred, the planning options are more limited but not nonexistent. Strategies that may apply in crisis situations include:

• Annuities: Converting countable assets into a Medicaid-compliant annuity can accelerate eligibility by converting a lump sum into a stream of income. The annuity must be irrevocable, non-assignable, actuarially sound, and name New York State Medicaid as a primary beneficiary — rules that require careful compliance.
• Caregiver child exception: If an adult child lived in and cared for the parent in the family home for at least two years prior to nursing home placement, and delayed the parent's institutionalization, the home may be transferable to that child without a Medicaid penalty.
• Promissory notes and loans: In limited circumstances, converting gifts into bona fide loans with market interest rates can restructure transfers that would otherwise cause a penalty period.
• Half-a-loaf strategies: A planning technique in which a portion of assets is gifted (creating a known penalty period) and the other half is retained to pay for nursing home care during the penalty period, maximizing the assets that ultimately pass to heirs.

Crisis planning is significantly more complicated and less effective than proactive planning. The outcome depends heavily on the specific facts, amounts involved, and the timing of the Medicaid application. Our Medicaid Planning practice page provides a full overview of the strategies available in both proactive and crisis scenarios.

Asset Protection Beyond Medicaid: Protecting Business and Investment Assets

Families with assets beyond the home — investment portfolios, rental properties, business interests — need layered strategies that go beyond the MAPT. Tools such as limited liability companies, family limited partnerships, and irrevocable trusts can provide additional protection against nursing home costs as part of a comprehensive asset protection plan. Our Asset Protection practice page addresses these strategies in detail.

For additional resources on elder law and Medicaid planning in New York, we recommend reviewing Morgan Legal NY's Elder Law resource page, which provides supplemental guidance on this complex area of law.

Starting the Conversation: What to Bring to Your Planning Meeting

When you meet with a New York Medicaid planning attorney, the quality of the guidance you receive depends on the completeness of the information you provide. Come prepared with:

• A full list of all assets and their approximate values (bank accounts, investment accounts, real estate, retirement accounts, life insurance cash values)
• Deeds to any real property you own
• Your most recent tax returns
• Information about any gifts or transfers made in the past five years
• Copies of any existing estate planning documents (wills, trusts, powers of attorney, health care proxies)
• Health insurance and Medicare/Medicaid information
• Information about your spouse's income and assets if you are married

At Morgan Legal Group, P.C., Russel Morgan and his team take a whole-family approach to Medicaid planning. We do not simply apply for Medicaid — we design a comprehensive strategy that protects as much of your estate as legally possible while ensuring you qualify for the care you need. Our office at 15 Maiden Lane, Suite 905, in Lower Manhattan serves clients throughout New York City and the surrounding area.