Medicaid Planning Across the Hudson: Key Differences Between New York and New Jersey
February 25, 2026
When it comes to protecting your assets while planning for long-term care, location matters more than most people realize. New York and New Jersey maintain fundamentally different Medicaid eligibility rules, and understanding these differences can save hundreds of thousands of dollars for families planning across state lines.
Why This Matters for Manhattan Residents and other New Yorkers
Many New Yorkers maintain strong ties to New Jersey—perhaps you own a vacation home there, your adult children live across the river, or you're considering a move to be near your children and/or to reduce your cost of living. These connections create both planning opportunities and potential pitfalls when it comes to Medicaid qualification.
The stakes are significant. Long-term care in Manhattan can cost upwards of $185,000 per year for skilled nursing care. Without proper planning, these costs can rapidly deplete a lifetime of accumulated wealth.
Asset Eligibility: Fundamental Differences
Here's where things get interesting. New York maintains an individual asset limit of $32,532 (2026) for Medicaid eligibility, while New Jersey sets its threshold at $2,000 for most applicants. This fivefold difference has immediate planning consequences for Manhattan residents—and other New Yorkers—who own property or maintain financial accounts in both jurisdictions.
The Community Spouse Resource Allowance (CSRA) further distinguishes the two states. New York permits the non-institutionalized spouse to retain up to $162,660 in countable assets, whereas New Jersey's CSRA reaches $162,660 as well for 2026.
These limits apply to countable assets such as savings, investments, second homes, and similar resources. Non-countable assets—like a primary residence (up to certain equity limits), one vehicle, and personal belongings—may be protected, but the margin for protection is extremely narrow.
Calculation methods and categories of exempt assets vary by state, making careful analysis essential.
Income Treatment and Spend-Down Requirements
New York uses an income cap for Medicaid eligibility, setting a monthly income limit of $1,800 (2026) and operates as a medically needy state, allowing individuals with income above the limit to "spend down" any excess income through medical expenses or use of pooled income Trusts.
New Jersey also uses an income cap for Medicaid eligibility which is $2,982 (2026). Applicants exceeding this threshold must establish a Qualified Income Trust (QIT or "Miller Trust") to achieve eligibility.
In New Jersey, only the applicant spouse’s income is counted – the non-applicant spouse’s income is not considered. This distinction proves particularly significant for Manhattan residents with substantial pension income or investment returns.
The QIT requirement adds procedural complexity but provides predictable planning parameters, whereas the spend-down approach offers flexibility at the cost of month-to-month variability.
Look-Back Period and Transfer Penalties
Both states enforce a five (5) year look-back period for asset transfers, scrutinizing any gifts or below-market-value transactions made within five years of the Medicaid application. However, the methods used to calculate penalties differ significantly.
If you gifted assets or sold property below market value during this period, you'll face a penalty period of Medicaid ineligibility. However, the length of that penalty depends on which state you're applying in.
New York calculates transfer penalties by dividing the total value of improper transfers by the regional average monthly cost of nursing home care ($15,282 in the New York City region for 2026). The resulting figure determines the number of months of Medicaid ineligibility, forcing the applicant to pay privately for that period. New Jersey employs a similar approach but uses a daily cost of $402.74 (approx. $12,082 per month), creating different penalty outcomes for identical transfers.
Strategic Considerations for Dual-State Residents
Manhattan residents and other New Yorkers— with connections to New Jersey—whether through property ownership, family relationships, or business interests—must approach Medicaid planning with special attention to jurisdictional issues. Several strategic considerations emerge:
Establish Clear Residency: Your legal residence at the time of application determines which state's rules apply. Document your primary residence through voter registration, tax returns, driver's license, and other indicia of domicile.
Review Asset Titling and Trusts: Consider how different asset limits affect the optimal structure for your property and financial accounts. A trust designed exclusively for New York law may prove inadequate for New Jersey Medicaid qualification.
Understand Treatment of Tax Deferred Assets (e.g. 401Ks, IRAs): New York follows several of the broader state-specific allowances and exemptions. Retirement assets such as 401(k)s and IRAs are generally exempt, provided they are in payout status—meaning that one’s required minimum distribution (RMD) is being withdrawn. In New Jersey, retirement assets are countable resources for Medicaid eligibility purposes.
Consider Spousal Refusal: In New York, “spousal refusal” is a Medicaid planning strategy in which the healthy “community spouse” signs a notarized statement refusing to make their income and/or assets available to the ill “institutionalized spouse,” so that Medicaid assesses eligibility primarily on the applicant’s more limited resources and the ill spouse may qualify sooner for long term care coverage, while more assets are preserved for the healthy spouse. Although this can substantially protect the community spouse’s finances and reduce or avoid a significant spend down, it carries a real risk that the NYC Human Resources Administration (HRA) or the local social services district will later sue the refusing spouse to recover some or all of the Medicaid benefits paid, which can result in substantial repayment obligations, legal expenses, and pressure to settle. In contrast, New Jersey does not permit or recognize spousal refusal as a Medicaid planning option.
Transfer Timing: Given the identical sixty-month look-back periods, strategic asset transfers should consider the potentially different penalty calculations and begin with sufficient lead time before anticipated need.
Estate Recovery Differences: Both states operate estate recovery programs to recoup Medicaid expenses from a beneficiary’s estate after death, but they differ in scope and intensity. New York limits recovery to probate estates, whereas New Jersey uses a broader definition of “estate” for Medicaid recovery that also encompasses non-probate assets, such as jointly owned real estate, joint bank accounts, and other financial assets.
The Importance of Early Planning
Here's the reality that many families learn too late: effective Medicaid planning requires time. The five-year look-back period isn't just a government restriction—it defines the optimal planning horizon.
Ideally, you should consult with an elder law attorney at least five years before you anticipate needing long-term care. This allows for the implementation of irrevocable trusts, systematic gifting programs, and other strategies that require the full look-back period to mature.
Can planning still help if you're facing an immediate need? Absolutely. Even crisis planning techniques can preserve significant assets. But the range of available strategies narrows considerably when you're working within compressed timeframes.
The Role of Legal Counsel in Dual-State Planning
The complexity inherent in dual-state Medicaid planning underscores the value of specialized legal counsel. An elder law attorney practicing in both New York and New Jersey can navigate the interplay between jurisdictions, identify optimization opportunities, and structure planning to achieve the most favorable outcome under either state's rules.
For Manhattan residents—and other New Yorkers—this expertise proves particularly valuable given the premium cost of long-term care in the New York City area. A nursing home stay can exceed $185,000 annually, making strategic Medicaid planning a matter of substantial financial consequence.
Take Action Before You Need To
The best time to plan for Medicaid was five years ago. The second-best time is today.
If you own property in both New York and New Jersey, if your family spans both states, or if you're simply uncertain which state might govern your eventual Medicaid application, a comprehensive planning consultation can provide clarity and direction.
Contact Muchnik Elder Law to discuss your specific situation. Our practice spans both jurisdictions, and we can help you navigate the complexities of dual-state Medicaid planning to protect your assets and ensure access to quality care when you need it.