Medicaid Home Care When Your Parent Owns a Home in NYC: Does the House Count?

Medicaid Home Care and Owning a Home in New York: The Basics

Medicaid looks at two things when deciding financial eligibility: income and resources (also called assets). Resources include bank accounts, investments and property. But some things are exempt, meaning they are not counted against the resource limit. In New York, the home where the applicant lives is one of the most important exemptions.

That means a parent who owns a one-family house in Bayside, a two-family house in Canarsie, or a co-op in Riverdale can usually still qualify for Medicaid home care, provided their other countable assets and income fit within the rules. If you have not looked at eligibility yet, start with our 2-minute self-check for home care in NYC.

When the House Is Exempt

You can check the current home equity limit on the New York State Department of Health Medicaid pages or with HRA, since the figure is updated annually.

When the House Can Cause a Problem

Rental income from a two-family home

This is the issue that surprises NYC families most. The house itself may be exempt, but rent from a tenant upstairs or in the basement unit is income. Medicaid counts net rental income (after allowable expenses such as mortgage interest, taxes, insurance and repairs) toward the monthly income limit. In Brooklyn and Queens, where many older owners live in a two- or three-family house, rental income can push someone over the limit. That does not end the road. It usually means the person enters a spend-down or uses a pooled income trust, explained below.

A second property

Only the home your parent lives in is exempt as a residence. A second house, a country place upstate, or a rental building is generally a countable resource unless it falls under a specific exception. Families often need professional help to plan around this.

Very high equity

If the equity is above New York’s limit and no spouse or qualifying child lives there, the excess can create an eligibility problem. Options may include a reverse mortgage or a home equity loan to reduce equity, but these have trade-offs and should be discussed with an attorney and a financial advisor first.

Income Over the Limit? Spend-Down and Pooled Trusts

Many homeowners have a pension or Social Security plus rental income that is over the Medicaid income limit. New York lets people qualify anyway through a spend-down, where the “excess income” is applied toward medical bills each month. Our guide to Medicaid spend-down in New York explains how that works.

A common alternative for home care is a pooled income trust. The excess income goes into a trust account run by a nonprofit, which then pays the person’s household bills, such as property taxes, utilities and home repairs. That can be a good fit for homeowners because it lets them keep paying for the house. Read more about excess income and pooled income trusts in NYC.

Should You Transfer the House to the Kids?

This is the most common question, and the answer is “not without advice.” Here is why.

• Look-back rules. Nursing home Medicaid in New York has a 60-month look-back on transfers. For community Medicaid, which covers home care, New York passed a 30-month look-back in 2020, but its start has been delayed. Check the current status before relying on it either way.
• Future nursing home needs. A transfer that seems fine for home care today could cause a penalty if your parent needs nursing home care within five years.
• Taxes. Giving a house during life can mean the children lose the “step-up” in tax basis they might get if they inherited it, which can mean a larger capital gains tax when they sell.
• Exempt transfers. Some transfers do not cause penalties, such as a transfer to a spouse, to a child who is blind or disabled, or to a “caregiver child” who lived in the home and provided care that kept the parent out of a nursing home for a set period. These have specific requirements.
• Trusts. Some families use an irrevocable trust to hold the house. That is a legal strategy with real consequences and should only be set up by an elder law attorney.

Estate Recovery: What Happens to the House Later

New York can seek repayment from the estate of a Medicaid recipient who was 55 or older for long-term care costs Medicaid paid, including home care. In New York, recovery is generally limited to assets that pass through the probate estate. Recovery is deferred while a surviving spouse is alive, or if there is a surviving child under 21 or a child who is blind or disabled. Hardship waivers also exist.

Because the rules are technical, families who want to preserve the home for the next generation should talk to an elder law attorney early, ideally before applying.

What If Your Parent Lives With You, Not in Their Own Home?

If your parent sold their house or moved in with you, the situation is different. Proceeds from a sale become countable cash. And when a parent lives in your home, the way family help is considered can affect the hours. See Medicaid home care when your parent lives with you.

Steps to Take Before Applying

1. Gather property documents. The deed, the most recent property tax bill, mortgage statements, and any home equity loan statements.
2. Document rental income. Leases, rent receipts and records of expenses, so net income is calculated correctly.
3. Get a rough value. A recent assessment or appraisal helps you see whether equity is anywhere near the limit.
4. Do not transfer anything yet. Hold off on deeds, gifts or trusts until you have talked to an attorney.
5. Get application help if needed. Property and rental income make applications more complicated. A Medicaid application service can help gather and submit documents.
6. Plan the care side. Once Medicaid is approved, the independent assessment and plan enrollment decide the hours. Our guide on how to choose an MLTC plan covers that step.

Related Guides

Caring for a spouse at home and spousal refusal · Nursing home vs home care in NYC · How many Medicaid home care hours you can get