Medicaid is a state funded long term care program that will pay for home health aides (referred to as Community Medicaid), full cost of the nursing home (referred to as Institutional Medicaid), certain doctors and medications. To qualify, you must meet strict asset and income eligibility standards.
ASSET LIMITATIONS
As of January 2026, a single applicant can have up to $32,396 and married applicants who are both applying can have up to a total of $43,781 in countable assets (also called Resources). Countable assets include cash, stocks and bonds, cash surrender value of life insurance policies, and real property such as vacation homes.
Exempt Assets
There are certain resources that are exempt from the asset calculation.
Although an individual can qualify for Medicaid while owning exempt assets, such assets may still be subject to Medicaid estate recovery. If an asset is owned solely by the Medicaid recipient, upon his or her passing, Medicaid will file a claim against the estate for any amounts that were paid out from Medicaid on behalf of the beneficiary during their lifetime. Medicaid will place a lien against a primary residence, entitling it to a portion of the proceeds upon sale of the property.
The following assets are exempt from the Medicaid asset calculation:
Homestead Exemption
The applicant’s primary residence, with an equity value of up to $1,097,000 is exempt if the individual applying for Medicaid lives in the home or, if applying for Institutional Medicaid, either intends to return to the home or has a spouse or a minor child, a disabled child, or a caretaker child living in the home.
A vacation home or a rental property does not qualify for the homestead exemption.
Qualified Retirement Accounts
Tax deferred accounts such as an IRA, 401(k) and 403(b) are exempt if the applicant receives the minimum amount that must be withdrawn each year under the IRS regulations (the required minimum distribution).
Vehicle
One automobile, no matter its value, is excluded from the resource calculation.
Term Life Insurance Policy
It’s important to determine what type of life insurance you own. Term life insurance is not counted because there is no cash surrender value associated with the policy.
However, whole life insurance is a countable resource since the owner can borrow against the policy and terminate the policy at any time and receive the cash surrender value.
INCOME LIMITATIONS
A single applicant applying for Community Medicaid can make up to $1,800 per month and married applicants can make up to a combined $2,433 per month in income. Income includes wages, social security, and distributions from pension, annuity and retirement accounts.
You can still qualify for Medicaid if your income exceeds the limits. There are two permissible ways to spend down excess income each month:
- Pooled Income Trust
The applicant can deposit their income overage into a Pooled Income Trust, which is a Medicaid approved trust established to shelter excess income for Community Medicaid applicants. The trust is managed by a third-party non-profit organization. The money in the trust can only be used to pay for the applicant’s expenses such as housing, utilities, food and clothing. Anything remaining in the account after the applicant passes is not returned to the family, but rather belongs to the trust organization.
- Spousal Monthly Maintenance Needs Allowance
The applicant’s spouse is entitled to $4,066.50 a month in income to ensure that he or she has the financial means to pay for basic living expenses. If the well spouse’s own income is under $4,066.50, the applicant is permitted to transfer the difference from his or her income.
An applicant receiving Institutional Medicaid is only permitted to keep $50 of income each month. The remainder of the income must be paid directly to Medicaid to cover the cost of the care provided.
Quick Reference Table
| Provision (2026) | Single Applicant | Married (Both Applying) |
| Asset Limit | $32,396 | $43,781 |
| Income Limit | $1,800 | $2,433 |
| Home Equity Limit | $1,097,000 | $1,097,000 |
| SMMNA (Spousal) | N/A | $4,066.50 |
PLANNING FOR MEDICAID ELIGIBILITY
In order to qualify for Medicaid under the strict asset limitations, many applicants must transfer their assets to family members or to a Medicaid asset protection trust. If you believe you may need Medicaid, it is critical to start planning early so that there are no transfers within the look back period.
The Look Back Period
The Department of Social Services (“DSS”) reviews the applicant’s past financial transactions to determine if any gifts or unexplained transfers were made. Any such gifts made during the “Lookback Period” will generally trigger a penalty period, during which the applicant will not be eligible for Medicaid coverage and must privately pay for all medical expenses.
There is no penalty if you transfer your home to a spouse or a caretaker child who has resided in the home for at least two years. You are also permitted to transfer most other assets to a spouse immediately before applying for Medicaid.
The scope of the look back period depends on what type of Medicaid coverage you are seeking. The look back period for Institutional Medicaid is five years from the date of the application. The look back period for Community Medicaid is currently one month from the date of the application. Sometime in 2026, the state plans to increase the Community look back period to 30 months.
The penalty period is calculated by dividing the amount of the gift or unexplained transfer by the average cost of the nursing home in the county where you reside.
The 2025 average monthly nursing home rates are as follows:
| COUNTY | RATE |
| Nassau | $14,914 |
| Suffolk | $14,914 |
| Manhattan | $14,582 |
| Brooklyn | $14,582 |
| Queens | $14,582 |
| Bronx | $14,582 |
| Westchester | $14,569 |
| Dutchess | $14,569 |
Example
To illustrate how these rules apply, assume Sally, a resident of Brooklyn, applies for Institutional Medicaid in March 2026.
- The Transfer: In March 2024, Sally gave her daughter $100,000 to assist with a home down payment. Because this transfer occurred within the five-year (60-month) look-back period for nursing home care, it is considered a “non-exempt transfer” that triggers a penalty.
- The Calculation: The penalty is calculated by dividing the gift amount ($100,000) by the 2026 regional rate for Brooklyn ($14,582).
$100,000 ÷ $14,582 = 6.85 months.
- The Result: Sally will be ineligible for Medicaid coverage for approximately 7 months. This penalty period does not begin when the gift was made; rather, it begins on the date Sally is “otherwise eligible” (meaning she is in the nursing home and has spent her assets down to the $32,396 limit). During these 7 months, Sally must pay the nursing home privately. Medicaid will begin coverage in the 8th month.
- Community Medicaid Difference: If Sally were applying for Community Medicaid (home care) in March 2026, there would currently be no penalty, as the $100,000 gift occurred more than one month prior to her application. However, if the 30-month look-back is implemented later in 2026, this same gift could then trigger a penalty for home care services.
WE CAN HELP
At the Village Law Firm, we have years of experience assisting clients plan and apply for Medicaid and understand the numerous technicalities involved. We can provide a comprehensive explanation of the Medicaid eligibility requirements and give insight and guidance on how to navigate the application process.
