Do You Have to Pay Back Medicaid in New York?

In New York, you generally do not have to pay back Medicaid during your lifetime, but after you die the state can file a claim against your estate for the cost of care it covered if you were 55 or older when you received those services, or if you were permanently living in a nursing home or other medical institution at any age. The program that does this is run by the Office of the Medicaid Inspector General (OMIG) under Social Services Law § 369.¹ Separate rules let Medicaid recover from personal injury settlements and from anyone who received benefits through error or fraud.

When Repayment Is Triggered

Estate recovery kicks in on two tracks. The first is age: if Medicaid paid for your care when you were 55 or older, those payments are recoverable. The second is placement: if you were permanently institutionalized at any age, payments made during that institutionalization are recoverable. Recoverable services include nursing facility care, home and community-based services, hospital stays, physician services, prescription drugs, and capitation payments for Medicaid managed care enrollees.²

One point worth being clear on: the claim is against the deceased recipient’s assets, not against the heirs personally. Your children do not owe Medicaid out of their own money. What they inherit, however, can be reduced or consumed by the claim before it reaches them.²

What Counts as Your Estate

This is where many families are caught off guard. Since September 2011, Chapter 59 of the Laws of 2011 amended Social Services Law § 369(6) so that New York’s “estate” for recovery purposes reaches well beyond probate assets. It includes jointly owned financial accounts, jointly held real property, life estate interests, living trusts, and certain annuities with named beneficiaries.³ Adding a child’s name to a bank account or holding the house as joint tenants does not put those assets out of Medicaid’s reach.

Recovery is limited to what remains in the estate after funeral and burial expenses are paid.³ The claim amount can also shift. Providers have up to a year after the recipient’s death to submit bills, and earlier payment figures may be adjusted, so the number on the first notice is not necessarily the final one.²

When Recovery Is Deferred or Waived

Even when the age or institutionalization trigger is met, the state must wait in several situations.

A surviving spouse: recovery is deferred for the spouse’s entire lifetime. If the spouse later dies, the state may then seek recovery from assets the spouse received from the Medicaid recipient’s estate.
A child under 21: recovery is deferred until the child turns 21.
A child who is certified blind or has a permanent disability: recovery is deferred for that child’s lifetime, regardless of age.

These deferrals come from federal law and Social Services Law § 369.⁴

Hardship Waivers

You can also ask for a full or partial waiver on hardship grounds. Two situations commonly qualify. One is when the asset is the family’s sole income-producing resource, such as a family farm or small business with limited income. The other is when the asset is a modest-value home used as the beneficiary’s primary residence. New York treats a home as “modest value” if it is worth no more than 50 percent of the average selling price in the county where it sits.⁴

A hardship waiver request is due within 30 days of the date you receive OMIG’s notification of the claim. Treat that letter as urgent, because missing the window makes it much harder to push back on the amount.⁴

Deferred Payment When the Home Would Otherwise Be Sold

If an heir was living in the home before the recipient’s death and the Medicaid claim cannot be paid without selling it, the state may allow a deferred payment arrangement rather than force a sale. The heir has to show they cannot obtain financing to pay the claim and must sign a written agreement to pay on a reasonable schedule, with interest.⁴

Liens While You Are Still Alive

New York can also attach a lien to your real property during your lifetime in two situations. One is when a court finds that benefits were incorrectly paid; a lien can be imposed under that judgment. The more common one is a TEFRA lien, placed on your home if you are permanently in a nursing facility or other medical institution and are not reasonably expected to return home.¹

A TEFRA lien cannot be placed if any of these people lawfully live in the home:

Your spouse
Your child who is under 21, blind, or permanently disabled
Your sibling who has an equity interest in the home and has lived there for at least one year before you entered the facility

If you are discharged and return home, the lien must be removed.¹ An adult child who lived in the home for at least two years before your institutionalization and provided care that delayed the need for facility placement also blocks a lien against the homestead.⁵

Repayment From a Personal Injury Settlement

Medicaid is the payor of last resort. If someone else is legally responsible for your medical costs and you later receive a settlement, verdict, or insurance payout that covers those costs, Medicaid has the right to be reimbursed out of the proceeds for the care it already paid. This comes up most often in personal injury and workers’ compensation cases. The state can place a lien on the claim, and a portion of the recovery goes to Medicaid before the balance reaches you. The lien amount can often be negotiated, but it has to be addressed before settlement funds are distributed.

Repayment for Benefits You Weren’t Entitled To

Separate from estate recovery, the state can come after a living recipient directly for benefits paid in error. Two main paths:

If the Medicaid agency made an administrative error and paid benefits that shouldn’t have been paid, it can seek repayment of the overpaid amount. If you provided incomplete or inaccurate information on your application, such as not disclosing income or assets, Medicaid can demand the money back, discontinue your coverage, and in serious cases refer the matter for civil recovery or criminal prosecution.⁶

An honest omission and deliberate concealment are treated differently, but either way, once the state identifies benefits paid while you were ineligible, expect a demand for repayment.

Ways Assets Can Be Protected From Repayment

Some planning moves genuinely take assets off the table for Medicaid, and some backfire. A few that bear directly on repayment:

Transfers to a spouse or disabled child. Transfers of any asset to your spouse carry no penalty, and neither do transfers to a child who is blind or permanently disabled (outright or into a trust for that child’s sole benefit). Assets can also be placed in a trust for the sole benefit of any disabled person under 65.⁷

Transferring the home to certain family members. You can transfer your home without penalty to a child under 21, to a sibling with an equity interest in the home who lived there for at least a year before you entered a facility, or to an adult child who lived in the home for at least two years before your institutionalization and provided care that delayed facility placement. The caregiver-child exception is the one families stumble over: you need a doctor’s statement that the care prevented or delayed institutionalization, plus solid proof of the child’s residency in the home for the full two years.⁷

Mind the look-back. Transfers that aren’t exempt and are made within the look-back period before applying for Medicaid trigger a penalty period during which Medicaid won’t pay for your care. For nursing facility services, the look-back is 60 months. For community-based long-term care services, New York applies a 30-month look-back for applications submitted on or after January 1, 2022, reviewing transfers made on or after October 1, 2020.⁸

The home equity cap. Your primary residence is an exempt asset for eligibility, but only up to a point. For 2026, the home equity interest limit is $1,130,000. Equity above that disqualifies you from Medicaid coverage of nursing facility services unless a spouse or dependent relative lives there.⁹ Being exempt during life does not shield the home from estate recovery after death unless one of the family-member protections applies.

Long-Term Care Partnership policies. If you already hold a qualifying New York Partnership long-term care insurance policy, assets equal to the insurance benefits paid out are disregarded for Medicaid eligibility and protected from estate recovery. A Total Asset Protection plan blocks lifetime liens and estate recovery entirely; a Dollar-for-Dollar plan protects assets up to the benefits paid.⁷⁵ One important limit: as of January 1, 2021, no insurance companies are offering new Partnership-qualified policies in New York, so this is only an option for people who already have a policy in force.¹⁰

What to Do When the OMIG Notice Arrives

After a recipient dies, OMIG sends a Notice of Intent to File a Claim and an Estate Questionnaire to the beneficiary or estate representative. The questionnaire asks about the deceased person’s assets. If there are no estate assets, or if a deferral or exemption applies (surviving spouse, minor or disabled child, sibling protection on the home, hardship), noting that on the questionnaire can resolve the matter.²

If you think the claim is wrong or that a hardship waiver should apply, you have 30 days from the notification date to request consideration. A post-death lien will be placed on any real property the recipient owned unless recovery is deferred or waived.⁴ For disputes about benefits allegedly received in error or about third-party liens, you can request a fair hearing to present evidence and challenge the state’s determination.

1
New York State Senate. New York Social Services Law SOS 369
2
Office of the Medicaid Inspector General. Casualty and Estate Recovery – Estate Recovery
3
New York State Department of Health. Expanded Definition of Estate for Medicaid Recoveries
4
New York State Department of Health. Important Information Regarding Medicaid Estate Recovery
5
New York State Department of Health. Other Eligibility Requirements – Recoveries – Liens
6
Medicaid.gov. Estate Recovery
7
Office of the Law Revision Counsel. 42 USC 1396p – Liens, Adjustments and Recoveries, and Transfers of Assets
8
New York State Department of Health. 30-Month Lookback for Community Based Long Term Care Services
9
New York State Department of Health. GIS 26 MA/03 – 2026 Medicaid Standards
10
New York State Partnership for Long-Term Care. New York State Partnership for Long-Term Care