Do You Have to Pay Back Medicaid in NY: Liens and Hardship Waivers

In New York, you do not have to pay back Medicaid during your lifetime. After a recipient dies, the state can seek reimbursement from the estate through the Medicaid Estate Recovery Program, but only in specific circumstances and only from certain assets. The rules come from New York Social Services Law § 369 and its implementing regulations.¹

When the State Can Pursue Repayment

Estate recovery only kicks in under two conditions. The recipient was 55 or older when they received Medicaid-covered services, or, at any age, they were permanently living in a nursing home or other medical facility with no realistic expectation of returning home.¹ If neither is true, the state has no basis to file a claim.

For people who qualified based on being 65 or older, the state can only recover the cost of certain services: nursing facility care, home and community-based services, and related hospital and prescription drug costs. It cannot recover more than Medicaid actually paid for those services.¹

Routine Medicaid coverage received before age 55, for someone who never entered permanent institutional care, is not recoverable.

Which Assets Are Actually at Risk

Federal law lets each state define “estate” broadly enough to include assets that pass outside probate, such as jointly held property, life estates, and living trusts.²³⁴¹

In current practice, the state pursues only probate assets: property titled solely in the deceased recipient’s name that must pass through Surrogate’s Court. A house owned only by the recipient, or a bank account with no co-owner or payable-on-death beneficiary, are the typical examples. The claim is against the estate, not against heirs personally, and it is capped at the value of those probate assets.

Assets that pass outside probate are generally safe under current practice. These include:

Property held in joint tenancy with rights of survivorship
Bank accounts with a payable-on-death beneficiary
Life insurance with a named beneficiary
Assets held in certain trusts

The broader 2011 regulation remains on the books, so this could change if the state decides to enforce it again.

Family Members Who Stop or Delay Recovery

Both federal and state law bar the state from collecting while certain relatives of the deceased are alive: a surviving spouse, a child under 21, or a child of any age who is certified blind or has a permanent disability.²⁵

These are deferrals, not cancellations. The Office of the Medicaid Inspector General (OMIG) will pursue the claim later. When a surviving spouse is the basis for the deferral, the state can review recovery from that spouse’s own estate after they die.⁶ For a minor child, the claim waits until the child turns 21.

Liens on the Home During the Recipient’s Life

Separate from estate recovery, New York can place a lien on a Medicaid recipient’s home while they are still alive, but only when the recipient is permanently living in a nursing facility and not expected to return home. The state must give notice and an opportunity for a hearing first.²

Even if a lien exists, the state cannot force a sale of the home while any of these relatives lawfully lives there:

The recipient’s spouse
A child under 21, or a child who is blind or permanently disabled
A sibling with an ownership interest in the home who lived there for at least one year before the recipient entered the facility and has continuously lived there since⁵
An adult child who lived in the home for at least two years before admission, provided care that let the recipient stay home longer, and has continuously lived there since the admission⁷

The continuous-residency requirement trips up families. If the sibling or caregiver child moves out at any point after the recipient enters the facility, the protection is lost. If the recipient is later discharged and returns home, the lien must be removed. Otherwise it stays attached, and the debt gets paid from the sale proceeds whenever the home is sold.

Hardship Waivers for Heirs

Heirs who would face serious financial harm from collection can ask the state to reduce or drop the claim through an undue hardship waiver. Two grounds are recognized:

The estate asset is the heir’s primary home and its value is no higher than 50 percent of the average selling price of homes in the county, measured as of the recipient’s date of death.
The asset is the heir’s sole source of income, such as a family farm or small business, and produces limited income.⁶

To request a waiver, note the hardship on the Estate Questionnaire that comes with the state’s Notice of Intent to File a Claim. A waiver will not be granted just because collection would lower an heir’s standard of living, and the state will reject hardship claims tied to planning where assets were deliberately transferred away to avoid recovery.⁶

Gifts and Transfers Before Applying: A Different Problem

Giving assets away in the years before applying for Medicaid long-term care creates a separate issue from estate recovery. When someone applies, the state looks back 60 months at their financial transactions. Assets given away or sold below fair market value during that period can cause a penalty period of ineligibility for nursing home coverage.²

Some transfers are exempt. Transferring a home to a spouse triggers no penalty. Neither does transferring it to an adult child who lived there for at least two years before admission and provided care that delayed institutionalization. Those exemptions apply at the application stage, not after death.

What Happens After Death

OMIG runs estate recovery in New York. After a recipient dies, OMIG sends a Notice of Intent to File a Claim along with an Estate Questionnaire to the heir, estate representative, or the estate.⁶ The questionnaire asks about estate assets, surviving relatives who might trigger a deferral, and any hardship grounds.

Return the questionnaire even if the estate has no assets or a deferral clearly applies. Ignoring the notice does not make the claim disappear. If real property is involved, OMIG may place a post-death lien to preserve the state’s interest during administration. Provide copies of any probate filings with the completed questionnaire.

If nothing goes through probate, the state has nothing to collect from. When probate assets do exist, the Medicaid claim is paid from the estate before distributions to heirs, alongside other creditor claims in Surrogate’s Court.

1
New York State Senate. New York Code SOS 369 – Application of Other Provisions
2
Office of the Law Revision Counsel. 42 USC 1396p – Liens, Adjustments and Recoveries, and Transfers of Assets
3
New York State Department of Health. 11 OHIP/ADM-8 – Expanded Definition of Estate for Medicaid Recoveries
4
New York State Department of Health. GIS 11 MA/028 – Expanded Definition of Estate Regulations
5
Legal Information Institute. New York Comp Codes R and Regs Tit 18 360-7.11
6
Office of the Medicaid Inspector General. Casualty and Estate Recovery – Estate Recovery
7
New York State Department of Health. Important Information Regarding Medicaid Estate Recovery