New York Medicaid Estate Recovery Explained
Understand how New York's Medicaid Estate Recovery Program impacts your assets and learn strategies to safeguard your family's inheritance.
New York Medicaid Estate Recovery: A Complete Guide for Families
New York’s Medicaid Estate Recovery Program (MERP) is a mandatory initiative designed to recoup certain healthcare costs paid by the state from the estates of deceased Medicaid recipients. Enacted under federal requirements, this program targets individuals aged 55 and older or those permanently institutionalized, ensuring taxpayer funds are reimbursed where possible.
Understanding the Foundations of Medicaid Estate Recovery
Federal legislation mandates that all states, including New York, implement an estate recovery system to offset Medicaid expenditures on long-term care services. In New York, the Office of the Medicaid Inspector General (OMIG) oversees MERP, partnering with contractors like Health Management Systems (HMS) to identify and pursue recoverable assets.
The program’s scope extends beyond nursing home stays to include home and community-based services (HCBS), hospital care, physician visits, prescription drugs, and managed care payments received after age 55 or institutionalization. This broad reach distinguishes New York’s approach, which maximizes federal allowances for recovery.
- Long-term care services: Nursing facilities and HCBS waivers.
- Medical support: Hospitalizations, doctor fees, and medications.
- Managed care: Capitation payments under Medicaid plans.
Recovery occurs post-death, with OMIG filing claims against the estate. Importantly, the state limits claims to the estate’s value, never pursuing heirs’ personal funds.
What Constitutes Your Estate Under MERP Rules?
New York defines the recoverable estate expansively, encompassing both probate and non-probate assets where the recipient held any legal interest or title at death. This includes real estate, bank accounts, investments, and personal property.
Since 2011, state law (N.Y. Soc. Serv. Law §369(6)) has expanded “estate” to cover assets bypassing probate, such as joint tenancy, tenancy in common, life estates, payable-on-death accounts, and living trusts. Even insurance policies naming the estate as beneficiary or lacking a named beneficiary are vulnerable.
| Asset Type | Probate Assets (Typically Recoverable) | Non-Probate Assets (Also Recoverable in NY) |
|---|---|---|
| Real Property | Home, land (solely owned) | Jointly owned with survivorship, life estates |
| Financial Accounts | Individually held bank/CDs | POD/TOD accounts, joint accounts |
| Investments | Stocks/bonds in sole name | Transfer-on-death securities |
| Insurance | Policies payable to estate | No named beneficiary policies |
This inclusive definition means traditional probate avoidance tactics offer limited protection in New York.
Circumstances That Delay or Waive Recovery
While aggressive, MERP includes statutory delays and waivers to protect vulnerable heirs. Recovery halts under these conditions:
- Surviving spouse: No action until their death.
- Dependent children: Under 21, blind, or disabled.
- Caregiving relatives: Sibling or adult child who provided care and resided in the home for at least two years prior to institutionalization.
These delays apply estate-wide, pausing claims on all assets, including non-probate transfers. Hardship waivers may apply if recovery causes undue burden, such as when the estate is survivors’ sole income source or the home’s value is modest.
Native Americans, Alaska Natives, and assets from reparation payments are fully exempt. Long-term care insurance under the New York State Partnership for Long-Term Care protects the home from liens for the first 36 months of nursing home coverage.
Home Liens and Medical Assistance Recovery
New York imposes liens on real property during a recipient’s lifetime if permanently institutionalized and no disqualifying factors exist (e.g., surviving spouse residing there). These liens secure recovery claims and activate post-delay periods.
Liens are deferred if:
- A spouse, minor child under 21, blind/disabled child, or caregiving sibling/child lives in the home.
- The home equity limit (adjusted periodically) is not exceeded.
Families can negotiate payment plans or demonstrate financing inability to delay lien enforcement.
Strategies to Shield Assets from MERP Claims
Proactive estate planning is crucial. While Medicaid has a five-year look-back for transfers, strategic tools can minimize exposure:
- Irrevocable Trusts: Transfer assets into Medicaid Asset Protection Trusts (MAPTs) beyond the look-back period.
- Lady Bird Deeds: Enhanced life estates allowing retained control while designating heirs.
- Beneficiary Designations: Direct IRAs, 401(k)s, and life insurance to heirs, bypassing the estate.
- Joint Ownership: With right of survivorship, though consult counsel for Medicaid eligibility impacts.
- Special Needs Trusts: For disabled heirs, preserving benefits.
Consulting elder law attorneys early facilitates transfers compliant with rules, protecting inheritances.
Real-World Examples of MERP in Action
Consider a 60-year-old New Yorker entering nursing care, receiving $200,000 in Medicaid over five years. Post-death, with a $300,000 home as the main asset and no delays, OMIG claims up to $200,000 via lien sale.
Contrast with a case where a caregiving adult child lived in the home two years pre-institutionalization: Recovery delays until they vacate or pass, potentially allowing sale or transfer.
In hardship scenarios, if heirs prove the home is their only asset and modest-valued, waiver may prevent recovery.
Frequently Asked Questions (FAQs)
Who does New York MERP apply to?
MERP targets deceased recipients aged 55+ or permanently institutionalized, recovering costs paid post-that milestone.
Can MERP take my house if I have a spouse?
No, recovery delays until the spouse’s death or other disqualifiers resolve.
Are retirement accounts safe from recovery?
Yes, if payable to named beneficiaries; otherwise, vulnerable if estate-bound.
How much can the state recover?
Only the lesser of Medicaid costs paid or estate value—no personal liability for heirs.
Can I avoid MERP entirely?
Not always, but planning with trusts, designations, and exemptions minimizes impact. Seek professional advice.
Planning Ahead: Steps for New York Families
To navigate MERP effectively:
- Assess assets: Inventory probate and non-probate holdings.
- Review eligibility: Check for delays/waivers.
- Engage experts: Elder law attorneys for compliant planning.
- Document care: Evidence for caregiver exemptions.
- Explore insurance: Partnership policies for lien protection.
Early action preserves legacies amid rising long-term care costs. New York’s MERP underscores the need for informed, strategic estate management.
References
- New York Medicaid Estate Recovery Program (MERP) Strategies — E.J. Rosen Law. 2025-08-13. https://ejrosenlaw.com/new-york-medicaid-estate-recovery-program-merp-law/
- New York’s Medicaid Estate Recovery Program — Nolo. Accessed 2026. https://www.nolo.com/legal-encyclopedia/new-york-medicaid-estate-recovery-program.html
- What is the Medicaid Estate Recovery Program (MERP)? — Medicaid Planning Assistance. Accessed 2026. https://www.medicaidplanningassistance.org/medicaid-estate-recovery-program/
- How Does Medicaid Estate Recovery in New York Affect You? — KTS Trust. Accessed 2026. https://ktstrust.org/how-does-medicaid-estate-recovery-in-new-york-affect-you/
- Understanding Medicaid’s Estate Recovery Program — Littman Krooks LLP. 2024-03. https://www.littmankrooks.com/2024/03/understanding-medicaids-estate-recovery-program-and-proposed-legislative-changes/
- NY Medicaid Estate Recovery: Protection Guide — Alatsas Law Firm. Accessed 2026. https://www.alatsaslawfirm.com/library/medicaid-estate-recovery-in-new-york.cfm
- What is Medicaid Estate Recovery? — Kaiser Family Foundation (KFF). Accessed 2026. https://www.kff.org/medicaid/what-is-medicaid-estate-recovery/
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