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How Can I Use Estate Planning To Prepare For Medicaid?The Medicaid program can help you pay for nursing home care or home healthcare as you grow older. Most people pay for care out of savings, then apply for Medicaid once their assets are “spent down.” Of the 294 surveyed Medicaid applicants approved in 2012, 14% had over $100,000 in total resources. Therefore, estate planning and Medicaid go hand in hand. The complete estate plan will include plans to qualify for Medicaid while protecting your home and assets for your family to enjoy after you’re gone. The remainder of this page will answer some of the most popular questions about estate planning for Medicaid.

What Is Medicaid?

Medicaid is a needs-based program that helps Americans pay for a home health aide or a nursing home. The state manages Medicaid following federal regulations. The states have some flexibility in setting which benefits they offer as well as the eligibility criteria for those benefits. New York requires that you meet three criteria to qualify for long-term illness benefits coverage: the income criteria, the asset criteria, and the clinical medical eligibility need. Many people feel they are ineligible for Medicaid. However, this is a prevalent misunderstanding. The fact is that with appropriate preparation, many people can qualify.

What Do I Need to Know When Preparing for Medicaid in New York?

Medicaid is meant to support low-income individuals. The state updates the income and resource criteria yearly. Income includes all income sources, including employment wages, pension payments, and Social Security Income. Resources include all “countable” assets you own. In 2022, individuals 65 and older can qualify if they make $934 or less per month and have resources less than $16,800. Couples can make up to $1,367 per month and have $24,600 in resources.

If you have income and resources above these levels, estate planning can help you qualify without spending down everything. In addition, not all assets are countable toward your resource limits. Your estate planning matters attorney can help you determine which of your assets are countable. Finally, estate planning can help with the Medicaid “look back” when applying for nursing home coverage.

 How Does Estate Planning for Medicaid Work?

Contrary to popular belief, estate planning isn’t just for individuals with large financial estates. Anyone with assets that should be preserved and handed on to their heirs can benefit from an estate plan. Your attorney may recommend three common estate-planning approaches to help you prepare for Medicaid: trusts, annuities, and protecting your home from “estate recovery.”


As a general rule, Medicaid will count all or part of your trust assets as a resource when determining your Medicaid eligibility. When placing your assets in a trust, you can choose to make a “revocable” or “irrevocable trust.”

In an irrevocable trust, the trust income is payable to you (as the trust-maker) during your lifetime, and when you pass, the principal goes to your heirs. When you use an irrevocable trust, any portion of the trust that could be paid to you is part of your resources. Medicaid counts money paid directly to you as income. It will not count any money paid directly to someone for your benefit (e.g., food, shelter, telephone bills, education, entertainment, etc.).

A pooled income trust is a form of an irrevocable trust. With a pooled income trust, you place excess income into the trust to pay for household expenses. Medicaid does not count the income you place into the pooled income trust against your eligibility criteria.

A revocable trust exists when the trust documents state that you retain control of the trust and its property. You name a “successor trustee” to take over and manage the trust after you die. Because you can access the funds at any time, Medicaid considers the whole trust as your resource.


A second approach is to set up an immediate annuity. An annuity is a contract with a life insurance company that provides regular payments for life or a certain number of years. In many circumstances, Medicaid counts an annuity as an investment rather than a source of income. Like the irrevocable trust, Medicaid will not count an annuity if it is irrevocable and non-assignable. Additionally, Medicaid will not consider certain retirement annuities (as defined in Section 408 of the Internal Revenue Code of 1986) as countable assets.

Protecting Your Home From Medicaid “Estate Recovery”

Under New York’s Medicaid rules, the state has the right to recover compensation for the amount paid as Medicaid coverage after you die. Often the only asset left after an individual passes is their home. Your New York Medicaid matters lawyer will explain several ways you can protect your home from a medical lien. For example, you could place your home in an irrevocable trust. Or, you could create a life estate for your home. With a life estate, you own the home while you are alive. Then, the home’s ownership passes to your designated beneficiary when you die. The law also provides exceptions if your spouse, minor child, or disabled child resides in the house. Still, the state reserves the right to oppose a transaction that it believes you made to qualify you for Medicaid, avoid a lien, or prevent Medicaid from collecting for monies paid.

Andrew M. Lamkin, P.C.—Helping You and Your Family Prepare for Medicaid with Estate Planning

Preparing for Medicaid is an essential step in estate planning. Estate planning involves preparing for your care as you age and protecting your assets so you can pass them on after your death. You can be prepared to qualify for Medicaid coverage with effective estate planning. While Medicaid requires completing a lengthy application and certification period, estate planning and Medicaid don’t always have to be a burden. The Law Office of Andrew M. Lamkin, P.C. is well-versed in Medicaid law and can advise you on the best method to safeguard your assets and income for your family. We’ve helped many families prepare for their future, including preparing for Medicaid. Contact our experienced lawyer now.

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Andrew Lamkin is principal in the law firm of Andrew M. Lamkin, P.C., where he focuses his practice in the areas of elder law, estate planning and special needs planning, including Wills and Trusts, Medicaid planning, estate administration and residential real estate transactions. He is admitted to practice law in New York and New Jersey.

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