New York couple drains savings before qualifying for Medicaid care

A New York couple drained retirement and savings accounts paying out-of-pocket for health care before they could tap Medicaid, a path that leaves many older adults stuck between the income limit and the cost of long-term care.

In New York, people whose monthly income is above the Medicaid level may still qualify through the Medicaid Excess Income program, also called the Medicaid spend-down program. The state allows applicants to deduct certain medical expenses from income, including doctor visits, prescription drugs, over-the-counter medications and insurance premiums, until they meet the threshold for coverage.

The squeeze is especially severe when care stretches beyond a short illness. New York State says long-term care can include medical, social, housekeeping or rehabilitation services needed over months or years, and those services may be delivered in nursing homes, at home or in community-based settings. That definition captures the kind of care that often follows a stroke, dementia diagnosis or gradual loss of mobility, when bills arrive month after month and a fixed income is already spoken for.

KFF has identified Medicaid eligibility for older adults and people with disabilities as a non-MAGI category, meaning asset and income rules vary by state. Its 50-state survey on Medicaid financial eligibility for seniors and people with disabilities, first published in 2019 and updated in 2025, shows how differently states handle the same basic problem: retirees who are not poor enough for immediate aid, but not wealthy enough to absorb prolonged care costs.

The National Council on Aging says spend-down is one way older adults can qualify when their income is too high for Medicaid. The Medicare Rights Center’s New York Medicaid guidance makes the same point more directly: if monthly income is above the Medicaid limit, applicants may still get help with medical bills through the Excess Income program.

The need is not rare. A 2025 AP/KTLA report noted that the U.S. Department of Health and Human Services estimates more than half of people over 65 will need help with daily activities at some point. For many families, that care lands in the most expensive part of aging: the years when savings are already being used to cover housing, prescriptions and premiums.

That pressure has sharpened as advocacy groups warn that Medicaid is the primary payer for nursing home care. One 2025 advocacy brief said the House budget resolution passed on February 25, 2025, required $880 billion in Medicaid cuts over 10 years, raising stakes for the program that many older Americans only reach after their own finances have already been depleted.