Medicaid Estate Recovery in New York: What Families Need to Know Before It Is Too Late
In This Article
What Is Medicaid Estate Recovery? How Does the Medicaid Estate Recovery Program (MERP) Work in New York? Which Medicaid Services Trigger Estate Recovery? What Assets Can New York Recover? When the State Cannot Recover From Your Estate How to Protect Your Home and Assets From MERPReviewed by Kent Gross, Esq. — 40+ years handling elder law, estate planning, and guardianship matters in New York.
What Is Medicaid Estate Recovery?
If your parent received Medicaid-funded nursing home care or home care services in New York, the state may try to recoup what it paid after they pass away. This process is called Medicaid estate recovery, and it catches many families off guard.
The Medicaid Estate Recovery Program, known as MERP, is mandated by federal law. Every state, including New York, must attempt to recover certain Medicaid expenditures from the estates of deceased beneficiaries who were 55 or older when they received benefits. The program is administered in New York by the Office of the Medicaid Inspector General (OMIG).
The goal is straightforward from the state’s perspective: if a person received hundreds of thousands of dollars in long-term care benefits, and their estate still holds assets at death, the state wants those assets to help offset the cost. For families, this can mean losing a home or savings they expected to inherit.
How Does the Medicaid Estate Recovery Program (MERP) Work in New York?
After a Medicaid recipient passes away, the OMIG sends a notice to the estate’s executor or administrator. This notice informs them of the amount Medicaid paid on the deceased person’s behalf and asserts the state’s claim against the estate.
The executor is legally obligated to respond. If the estate includes assets that are subject to recovery, the state files a claim just like any other creditor. MERP claims are paid from the estate before remaining assets are distributed to heirs.
Here is a simplified version of how the process unfolds in New York. First, the Medicaid recipient passes away. Next, probate or estate administration begins, and the OMIG is notified. The OMIG calculates the total Medicaid benefits paid. Then, a recovery claim is filed against the estate. The executor reviews the claim, and if valid, pays it from estate assets before distributing to beneficiaries. If the claim is contested or hardship applies, the executor can challenge it.
Which Medicaid Services Trigger Estate Recovery?
Not all Medicaid benefits are subject to recovery. In New York, MERP applies to the following categories of services provided to individuals who were 55 or older at the time they received them:
Nursing home care, which is the most common trigger. Home and community-based waiver services. Hospital and prescription drug services related to long-term care. Managed long-term care plan costs.
Community Medicaid, which covers doctor visits and prescriptions for people living at home, is generally not subject to estate recovery unless the person was 55 or older and received specific institutional or waiver services.
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What Assets Can New York Recover?
This is where New York differs from some other states, and the difference matters for planning. New York limits estate recovery to probate assets only. This means the state can go after assets that pass through the deceased person’s estate, such as real property held solely in the decedent’s name, bank accounts titled only in the decedent’s name, personal property that becomes part of the estate, and any other assets subject to probate.
New York does not use an expanded definition of “estate” for recovery purposes. This is significant because it means the state cannot pursue assets held in a properly structured irrevocable trust, assets that transfer automatically by beneficiary designation such as life insurance or retirement accounts, jointly held property that passes by right of survivorship, or assets in a revocable living trust. However, it is critical that trust and ownership structures are set up correctly and well in advance of any Medicaid application. Poor planning or last-minute transfers can trigger penalties under Medicaid’s look-back rules.
When the State Cannot Recover From Your Estate
Federal and state law provides several protections that prevent or delay MERP recovery. The state cannot recover while a surviving spouse is alive, regardless of whether the spouse was on the Medicaid case. Recovery is also barred if the deceased has a surviving child under age 21, or a surviving child of any age who is blind or disabled.
In addition, recovery may be waived or delayed if an adult child lived in the home and provided care that kept the Medicaid recipient out of a nursing home for at least two years before institutionalization. A sibling with an equity interest in the property who lived there for at least one year before the person was institutionalized may also qualify for protection.
New York also participates in the Long-Term Care Partnership Program. If the Medicaid recipient purchased a qualified long-term care insurance policy and received at least 36 months of nursing home benefits or equivalent services under that policy, MERP recovery does not apply.
Hardship waivers are another option. If recovering from the estate would cause undue hardship, such as forcing the sale of a family business or the only income-producing asset for surviving family members, the estate can apply for a waiver.
How to Protect Your Home and Assets From MERP
The most effective protection against Medicaid estate recovery is advance planning, ideally years before anyone needs long-term care. Here are strategies that New York families commonly use.
A Medicaid Asset Protection Trust (MAPT) is one of the most common tools. Transferring your home and other assets into a properly structured irrevocable trust removes them from your probate estate. Because New York only recovers from probate assets, a MAPT can protect these assets from MERP. However, the transfer must be made outside the Medicaid look-back period, which is currently being phased in for community Medicaid and is five years for nursing home Medicaid.
Transferring property to a spouse during your lifetime can also protect it from estate recovery, since MERP cannot pursue the estate while a surviving spouse is alive. Life estate deeds allow you to transfer your home to your children while retaining the right to live there. When you pass away, the property transfers outside of probate. However, life estate deeds have Medicaid planning implications that must be carefully evaluated.
Proper beneficiary designations on retirement accounts, bank accounts with payable-on-death designations, and life insurance policies all help assets pass outside of probate and beyond MERP’s reach.
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Common Mistakes Families Make
Waiting too long is by far the most common mistake. Medicaid planning should begin years before care is needed, not when a parent is already in a nursing home. Transfers made within the look-back period can result in penalty periods that delay Medicaid eligibility.
Doing it yourself without legal guidance is another frequent error. Transferring a home to children outright, for example, can create capital gains tax consequences, expose the property to the children’s creditors, and still trigger Medicaid penalties if done within the look-back window.
Assuming all assets are protected just because a spouse survives is also risky. While MERP recovery is delayed during a surviving spouse’s lifetime, it can resume after the surviving spouse passes away if probate assets remain.
Ignoring the MERP notice when it arrives can result in losing the opportunity to claim exemptions or request a hardship waiver. The estate’s executor should review every MERP claim carefully and respond within the required timeframe.
Frequently Asked Questions
Can Medicaid take my parents’ house in New York?
Medicaid cannot seize a home during a person’s lifetime. However, after the Medicaid recipient passes away, the state can file a claim against the estate to recover benefits paid. If the home is a probate asset and no exemptions apply, the estate may need to sell the home to satisfy the MERP claim.
Does Medicaid estate recovery apply to community Medicaid in New York?
MERP generally applies to long-term care services, nursing home care, and home and community-based waiver services for individuals 55 and older. Standard community Medicaid covering doctor visits and prescriptions is typically not subject to estate recovery.
How long does the state have to file a MERP claim?
There is no specific statute of limitations for MERP claims in New York. The OMIG typically files a claim after being notified that probate or administration has been opened for the estate.
Can I challenge a Medicaid estate recovery claim?
Yes. The executor or administrator can dispute the amount claimed, assert exemptions such as a surviving spouse or disabled child, or apply for a hardship waiver. Legal counsel experienced in Medicaid planning can help evaluate whether a challenge is appropriate.
What is the Medicaid look-back period in New York?
For nursing home Medicaid, the look-back period is five years. For community Medicaid, New York is phasing in a 30-month look-back period starting in 2026. Asset transfers made within these windows can result in penalty periods that delay eligibility.
Protecting Your Family Starts With a Conversation
If your family is thinking about long-term care planning, or if you have already begun the Medicaid application process, understanding estate recovery is a critical part of the picture. An experienced New York elder law attorney can help you evaluate your options and develop a plan that protects what you have worked to build.
LGK Lawyers represents families across New York City and the Capital Region, including Saratoga Springs, Albany, and the surrounding counties. To discuss your family’s situation, schedule a consultation with our team.
*The information in this blog post is provided for general informational purposes only and does not constitute legal advice. Reading this content or contacting LGK Lawyers through this website does not create an attorney-client relationship. This post discusses New York law, which may differ from the law in other jurisdictions. For advice specific to your situation, please schedule a consultation.*
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