New Medicaid Rule in January (2026!) Could Help Protect Your Retirement Savings

Good news for New Yorkers planning for long-term care: a new Medicaid rule taking effect in January 2026 could help you keep more of your retirement savings if you ever need Medicaid benefits.

What Changed?

In the past, Medicaid required applicants to take out the largest possible withdrawals from their retirement accounts, such as IRAs, before they could qualify for benefits. This was called “maximizing” withdrawals.

For many people, that meant pulling out more money than they needed, shrinking their savings much faster than planned. In some cases, it wiped out funds meant to last through retirement or be left to family members.

What’s Different Now?

Under the new rule, Medicaid no longer requires you to take out the maximum amount from your retirement accounts.

Instead, you only need to take “reasonable, regular withdrawals”, such as:

• Required Minimum Distributions (RMDs) – these are the minimum amounts the IRS requires you to withdraw from certain retirement accounts once you reach a specific age.

• Other normal, consistent payments that follow a reasonable schedule.

If your retirement account is in “payout status” (meaning you are taking regular withdrawals), the remaining balance can stay protected. That means your savings don’t have to be drained faster than necessary and they can even continue to grow.

Why This Matters

This change is especially important for individuals and couples planning ahead for long-term care. You now have more flexibility and control over your retirement money while still meeting Medicaid’s eligibility rules.

In short:

✔ You can qualify for Medicaid

✔ Without emptying your retirement accounts

✔ And without taking out more than you need

What Should You Do Next?

If you’re wondering how this change could affect your Medicaid eligibility or your long-term plans, now is a smart time to review your options.

Schedule a consultation with Sammartino & Sultan to discuss how this new Medicaid rule could help protect your retirement savings and your future.

About the Author

Christina has been practicing law in New York State, for over 7 years. She is a Pace University School of Law graduate. After passing the New York and New Jersey Bar Exams, she went on to work for several law firms with primary practice areas in Real Estate, Estate Planning, Estate Administrations, Guardianship proceedings under Article 81 of the Mental Hygiene Law, and Article 17A, Medicaid planning and applications. Christina is also certified as a Guardian, Court Evaluator, and Attorney for the AIP under Part 36 of the Rules of the Chief Judge.