Founding Attorney
Transferring assets can have severe consequences for Medicaid eligibility in New York, especially when applicants are planning for nursing home care. Below is a comprehensive, expert-level guide about uncompensated transfers, providing practical options, tips for trust management, and current updates on home care Medicaid look-back requirements.
What Is an Uncompensated Transfer?
An uncompensated transfer occurs when an individual gives away assets or sells them for less than fair market value within the Medicaid look-back window (usually five years for nursing home Medicaid). Common examples include:
- Cash gifts to relatives
- Donations to charity
- Funding an irrevocable trust
- Reimbursing family for undocumented expenses
Any transfer not exchanged for equal value is scrutinized by Medicaid as a possible attempt to qualify for benefits improperly.
The 5-Year Look-Back and Penalty Calculation
For nursing home Medicaid, New York applies a 5-year look-back period. During this time, Medicaid reviews all financial transactions to identify any gifts or transfers for less than fair value. If such transfers are found, Medicaid imposes a penalty, delaying coverage for nursing home expenses for a period calculated according to the amount transferred and the cost of local care.
Permitted Transfers That Don’t Trigger Penalties
Some transfers are allowed and will not result in a Medicaid penalty. These include:
- Transfers to a spouse
- Transfers to a blind or disabled child, regardless of the child’s age
- Transfers to a trust for the sole benefit of a disabled person under 65
- Transfers to a “caretaker child” who lived with and cared for the applicant for at least two years before nursing home placement
- Transfers to a sibling with an equity interest in the home who lived there for at least one year prior to institutionalization
- Transfers that are strictly documented as fair market transactions (e.g., sales with full paperwork)
Special planning is required for these exemptions to be recognized, and full legal documentation is essential.
No Look-Back Penalty for Home Care Medicaid (for Now)
As of September 2025, New York has not implemented a look-back penalty for Community (Home Care) Medicaid. While multiple delays have pushed back this policy’s roll-out, applicants should be aware that a 30-month look-back is likely to be implemented sometime in late 2025 or 2026. For now, transfers made by individuals applying for home care Medicaid are not penalized, but this is expected to change soon—advance planning is highly recommended.
Handling Trusts, Gifts, and the Penalty Start Date
Creating and funding an Irrevocable Medicaid Asset Protection Trust is an essential estate planning strategy. However, any subsequent uncompensated gifts—even after the trust is initially funded—will create separate transfer penalties. Critically, if multiple gifts are made after the trust is set up, the Medicaid penalty period starts from the date of the last uncompensated gift—not the earliest one. This can delay Medicaid eligibility far beyond the look-back itself if ongoing gifts are made.
Common Mistakes and Safe Strategies
- Mistake: Continuing to give gifts to children or others after funding a trust, believing the trust itself is “protection enough.”
- Mistake: Failing to document payments or sales at fair market value.
- Mistake: Moving assets without consulting an experienced elder law attorney.
Safe Strategies:
- Stop all gifts once planning begins, especially after a trust is funded.
- Use allowed transfer exceptions where appropriate.
- Document and prove fair market value for all sales.
- Seek elder law attorney guidance for timing, documentation, and strategic planning.
When to Seek Legal Guidance
Medicaid transfer and penalty rules change frequently and are highly technical. Anyone considering asset transfers, trust funding, or Medicaid planning should consult with a qualified elder law attorney to avoid costly mistakes and ensure families’ assets are protected and care is available when needed.
Sverdlov Law PLLC. helps you build plans that work—for your real life, with real guidance, and real accountability. Get in touch and let’s do it right.
Contact Sverdlov Law PLLC today at www.sverdlovlaw.com or 212-709-8112 or book a time on our calendar https://calendly.com/rochelle-sverdlovlaw/15min for a FREE evaluation of your case and get started with a plan tailored to your family’s needs.
This information is provided as a general overview and does not constitute legal advice. For personalized guidance, consult a New York special needs attorney.