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 the state will seek reimbursement from your estate after you die if you were 55 or older when Medicaid paid for your care, or if you were permanently living in a nursing home or other medical institution at any age. New York can also recover money from a personal injury settlement that covered medical costs Medicaid already paid, and it can demand repayment from a living recipient who received benefits through error or misstatement. Beneficiaries and heirs are not personally on the hook: any claim attaches to the deceased recipient’s assets, not to your own money.

Estate Recovery After Death

The main way New York recoups Medicaid spending is through the Medicaid Estate Recovery Program, run by the Office of the Medicaid Inspector General (OMIG) under Social Services Law § 369.¹ Federal law requires every state to pursue this recovery. After a recipient dies, OMIG sends a Notice of Intent to File a Claim, along with an Estate Questionnaire, to the estate’s beneficiary or representative.²

Recovery applies in two situations: the recipient was 55 or older when Medicaid paid for their care, or the recipient was permanently institutionalized at any age. Covered services subject to recovery 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 families often miss: OMIG’s claim is not a bill sent to you. Heirs and estate representatives are not personally responsible for satisfying the Medicaid claim. It attaches only to what the deceased recipient owned.²

What Counts as the “Estate”

New York’s definition of “estate” is broader than most people expect. Since September 2011, Chapter 59 of the Laws of 2011 amended Social Services Law § 369(6) to reach assets that normally bypass probate. These include jointly owned financial accounts, jointly held real property, life estate interests, living trusts, and certain annuities with named beneficiaries.³

In practical terms, putting a child’s name on a bank account or holding the house in joint tenancy does not shield those assets from Medicaid’s claim. Recovery is limited to whatever remains in the estate after funeral and burial expenses are paid.³

The claim amount itself can take time to finalize. Healthcare providers have up to one year after the recipient’s death to submit bills, and prior payment figures may be adjusted, so the initial number OMIG mentions may not be the final one.²

When Recovery Is Deferred or Waived

Even when a recipient meets the age or institutionalization criteria, the state must defer recovery while any of these people are alive or qualify:

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 deceased 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, at any age. Recovery is deferred for that child’s lifetime.

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

Hardship Waivers

Even when no deferral applies, you can request a full or partial waiver if recovery would cause undue hardship. Two situations commonly qualify. One is when the asset subject to recovery is the family’s sole income-producing resource, such as a small farm or family business with limited income. The other is when the asset is a modest-value home that serves 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

You have 30 days from the date you receive OMIG’s notification to request a hardship waiver. Miss that window and challenging the recovery amount gets much harder. Treat the letter as urgent.⁴

Deferred Payment for an Heir Living in the Home

When an heir has been living in the home before the recipient’s death and the claim cannot be paid without selling the property, 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 enter a written agreement with the Medicaid program for a reasonable payment schedule, subject to interest.⁴

Liens on Your Home While You Are Alive

New York can place a lien on your real property before you die in two circumstances. If a court finds Medicaid benefits were incorrectly paid, a lien can be imposed under that judgment. More commonly, a TEFRA lien can be placed on your home if you are permanently living in a nursing facility or other medical institution and are not reasonably expected to return home.¹

A TEFRA lien cannot be placed on your home if any of these people lawfully live there:

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 Liens also may not be imposed against the homestead when an adult child lived in the home for at least two years before institutionalization and provided care that delayed the need for facility placement.⁵

Repayment From an Injury Settlement

Medicaid is the payor of last resort. If someone else is legally responsible for your medical costs and you receive a settlement, verdict, or insurance payout that includes compensation for those costs, Medicaid has the right to be reimbursed for what it already paid. This comes up most often in personal injury and workers’ compensation cases.

The state can place a lien on a personal injury claim to make sure it is repaid from the proceeds. A portion of the settlement goes to Medicaid to cover the medical expenses it funded in connection with the injury. You cannot collect for the same medical bills twice, once from Medicaid and once from the person who caused the harm. If you are on Medicaid and have a pending injury case, the lien needs to be addressed before settlement funds are distributed, and the amount can often be negotiated.

Repayment for Benefits Received in Error

Unlike estate recovery, this happens while you are alive. New York can pursue repayment directly from you if you received benefits you were not entitled to. There are two typical paths. An administrative error by the Medicaid agency may result in benefits being paid when they should not have been, and the state can seek repayment. Separately, if you provided incomplete or inaccurate information on your application, such as failing to disclose 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

The line between an honest mistake and fraud matters here. Forgetting to report a small bank account is not the same as hiding a property deed. Either way, if the state finds you received benefits while ineligible, expect a demand for repayment.

What Happens When You Get a Notice

For estate recovery, OMIG sends the 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, and OMIG uses your responses to decide whether a claim is appropriate and how much is owed. If the estate has no assets, or a deferral or exemption applies, noting that on the questionnaire can resolve the matter.²

If you believe 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 Because OMIG’s final claim amount can change for up to a year while providers submit late bills, the first figure you see may not be the final number.²

For disputes about benefits received in error or about third-party liens, you can request a fair hearing through the New York Office of Temporary and Disability Assistance to present evidence and challenge the state’s determination.

A Note on Planning Ahead

Two things worth knowing before you assume assets can be moved out of Medicaid’s reach. New York applies a 60-month look-back on transfers when you apply for nursing facility coverage, and a 30-month look-back on transfers for community-based long-term care applications submitted on or after January 1, 2022, reviewing transfers made on or after October 1, 2020.⁷ Gifts and below-market transfers within those windows trigger a penalty period of Medicaid ineligibility. Transfers to a spouse, to a blind or disabled child, or into a trust for a disabled person under 65 do not carry a penalty, and special rules protect transfers of a home to a minor child, a co-owner sibling who lived there for at least a year, or a caregiver child who lived there for at least two years and delayed the need for facility care.⁸

New York’s Long-Term Care Partnership Program historically let buyers of qualifying insurance protect assets equal to the benefits paid out from both Medicaid spend-down and estate recovery. Existing policyholders keep their protections, but as of January 1, 2021, no insurers are issuing new Partnership-qualified policies in New York.⁹

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
New York State Department of Health. 30-Month Lookback for Community Based Long Term Care Services
8
Office of the Law Revision Counsel. 42 USC 1396p – Liens, Adjustments and Recoveries, and Transfers of Assets
9
New York State Partnership for Long-Term Care. New York State Partnership for Long-Term Care