Will Medicaid Take My Parent’s House After They Die in New York?

If your parent received Medicaid, it's completely understandable to be concerned about what happens to their home. In New York, Medicaid can seek repayment from certain assets after someone passes away, but there are important limits and protections — especially when it comes to the family home.

What is Medicaid Estate Recovery?

Under both federal and state law, New York's Medicaid program is required to seek reimbursement for certain costs it paid on behalf of a recipient after the recipient's death. This process is known as estate recovery. In New York, the governing rules appear primarily in Social Services Law § 369 and its related regulations. Generally, Medicaid may recover only for services correctly paid after the recipient turned 55, or for anyone, regardless of age, who was permanently institutionalized, such as in a nursing home. See N.Y. Soc. Serv. Law § 369(2)(b).

What Property Is at Risk?

New York limits estate recovery to the deceased person's probate estate—property that passes under a will or by intestacy through Surrogate's Court. By statute, "estate" for recovery purposes "means all real and personal property and other assets included within the individual's estate and passing under the terms of a valid will or by intestacy." N.Y. Soc. Serv. Law § 369(6).

That means assets that avoid probate—such as property owned jointly with rights of survivorship, accounts with named beneficiaries, payable-on-death/transfer-on-death designations, and most living trust assets—are generally not part of the recoverable "estate" in New York.

When Does Recovery Apply?

• Recipients age 55 or older: Medicaid may seek repayment for certain services paid after age 55.
• Permanently institutionalized recipients (any age): Recovery may be pursued from the estate or upon sale of a home that had a qualifying pre death lien (TEFRA lien), subject to important limits and resident protections described below.

For some coverage groups, recovery is limited to the costs of long term care services (nursing facility services, home and community based services) and related hospital and prescription drug services. See N.Y. Soc. Serv. Law § 369(2)(b)(i)(B).

Exemptions and Protections

• Surviving family: Medicaid cannot pursue estate recovery while an applicant's spouse is still living. Recovery is also prohibited if there is a surviving child who is under 21, or a surviving child who is blind or disabled.
• Home protections from pre death liens: Medicaid generally cannot place a pre death medical assistance lien on the home if a spouse lives there, a child under 21 lives there, a blind/disabled child lives there, or a sibling with an equity interest lived there for at least one year before institutionalization.
• Caregiver child/sibling deferrals: Even when a pre death lien is permitted, recovery on the home is barred while a qualifying sibling (equity interest; 1-year residence before institutionalization) or a qualifying adult "caretaker" child (2-year residence and provided care delaying institutionalization) continues to reside there.
• Undue hardship waivers: New York must waive recovery if it would cause "undue hardship," with examples including a modest value homestead that is a beneficiary's primary residence or a sole income producing asset like a small family business or farm.

Planning Strategies

Thoughtful planning can lawfully reduce exposure while preserving eligibility for needed care:

• Consider lifetime planning tools such as properly structured irrevocable trusts and transfers that comply with Medicaid look back rules.
• Review beneficiary designations and titling to understand which assets pass outside probate (and thus outside New York's estate recovery definition).
• Evaluate long term care insurance, if any, including New York State Partnership policies, which can protect assets from recovery in certain cases noted by DOH.

These strategies are highly fact specific and time sensitive. Your first step should be to consult an elder law attorney to discuss your family's specific circumstance. It is important to work closely with the elder law attorney before making any changes.

Disclaimer: This article is for informational purposes only and is not legal advice. Reading it does not create an attorney–client relationship. Laws and policies change; consult a qualified New York elder law/estate planning attorney about your specific situation.