Ipilimumab and Decitabine in Treating Patients With Relapsed or Refractory Myelodysplastic Syndrome or Acute Myeloid Leukemia

Inclusion Criteria: * Subjects with evidence of AML or myelodysplastic syndrome (MDS) that meet at least one of the following criteria: * Relapsed AML: evidence of \>= 5% blasts in the bone marrow; or reappearance of blasts in the peripheral blood; or development of extramedullary disease (according to 2003 IWG criteria) who relapse after: * Allogeneic hematopoietic stem cell transplant, or * After one cycle of standard cytotoxic chemotherapy or two cycles of any hypomethylating agent-based therapy * Refractory AML: =\< 2 prior induction regimens (example: patients who receive 7+3 followed by 5+2 would count as one induction regimen) or a minimum of two cycles of any hypomethylating agent-based therapy * Treatment-naive AML: must be 75 years and older with de novo or secondary AML to be considered eligible * Relapsed MDS: disease recurrence after CR, partial remission (PR) or hematologic improvement with bone marrow blasts \>= 5% who relapse after: * Allogeneic hematopoietic stem cell transplant, or * After four cycles of any hypomethylating agent-based therapy * Refractory MDS: disease progression at any time after initiation of hypomethylating agent treatment or persistent bone marrow blasts \>= 5% despite a minimum of four cycles of hypomethylating agent therapy * Untreated or previously treated therapy- related or secondary MDS * Allowed prior allogeneic hematopoietic stem cell transplantation (allo-HCT) regardless of stem cell source; pati…