Can Medicaid Take Your House in New York?

The fear is universal: your parent needs Medicaid for nursing home care, and you're terrified the state will seize the family home. In New York, the reality is more nuanced than the fear — and the protections are stronger than most families realize, as long as you understand the rules before filing.

The Home Exemption During Your Parent's Lifetime

While your parent is alive and on Medicaid, the primary residence is exempt from the asset count — up to $1,130,000 in equity — as long as one of these conditions is met:

• Your parent lives in the home
• Your parent's spouse lives in the home
• Your parent files a formal "Intent to Return" statement, even if they're in a nursing facility

This means a home worth $900,000 with a $200,000 mortgage ($700,000 equity) is fully exempt. Medicaid cannot force a sale or place a lien on the property while the applicant or their spouse resides there.

The 2028 change: New York has legislated a drop in the home equity cap to a flat $1,000,000 effective January 1, 2028. Families with homes valued near or above this threshold should factor this into planning decisions now.

Estate Recovery: What Happens After Death

Here's where New York offers a critical advantage. The state enforces a probate-only estate recovery policy. This means Medicaid can only recover costs from assets that pass through probate after the beneficiary's death.

Assets that bypass probate are completely shielded:

• Property held as joint tenants with right of survivorship
• Property held in a living trust
• Bank accounts with payable-on-death (POD) beneficiaries
• Life insurance proceeds with named beneficiaries
• Retirement accounts with designated beneficiaries
• Real estate with a life estate deed

If the home is the only asset in the parent's probate estate, Medicaid will file a claim. But if the home was transferred to a trust or held jointly before death, the recovery claim has nothing to attach to.

Important limitation: Estate recovery cannot be pursued while a surviving spouse is alive, while a minor or disabled child lives in the home, or while a sibling with an equity interest resides there.

The Medicaid Asset Protection Trust (MAPT)

For long-term planning, the irrevocable Medicaid Asset Protection Trust is the primary tool New York families use to protect a home.

How it works: your parent transfers the home into an irrevocable trust. An adult child or trusted family member serves as trustee. Your parent retains the legal right to live in the home for life (via a "Right of Occupancy" clause) but cannot revoke the trust or access the home's sale proceeds.

The critical constraint: funding the MAPT triggers a 60-month lookback for Institutional Medicaid. The trust must be established and funded at least five years before the parent needs nursing home care.

The benefits:

• The home is removed from the countable estate
• The Right of Occupancy clause preserves your parent's capital gains tax exclusion ($250,000 single / $500,000 married) and local property tax exemptions (STAR, senior exemptions)
• After 60 months, the home is completely outside Medicaid's reach — even for estate recovery
• The trust bypasses probate entirely

For Community Medicaid (home care): Because the community care lookback remains unimplemented, transferring a home into a MAPT does not trigger a penalty for home care applications. But if your parent later needs nursing home care within five years of the transfer, the full penalty applies.

Other Home Protection Strategies

Life estate deed: Your parent deeds the home to a child but retains the right to live there for life. Simpler than a MAPT but less flexible — if your parent needs to sell the home, both the parent and the child must agree. Also, a life estate deed created within the 60-month lookback triggers a transfer penalty for nursing home Medicaid.

Adding a child to the deed: This is almost always a mistake. It creates potential gift tax issues, exposes the home to the child's creditors, and Medicaid treats the transfer of a partial interest as an uncompensated transfer.

Caretaker Child Exemption: If an adult child lived in the home and provided care that delayed institutionalization for at least two years, the home can be transferred to that child penalty-free — even at the time of the Medicaid application. Requires detailed documentation of care provided and co-residence.

The New York Medicaid Long-Term Care Guide includes a home protection decision tree that maps each strategy against your family's timeline and circumstances.

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