Does Medicaid Take Your House?
In most cases, Medicaid does not take your house while you are alive. The home is usually exempt when you apply for long-term care. The risk comes later, through estate recovery, a lien, or a transfer that breaks the look-back rule. Here is how the rules work and what families can do before they apply.
The Short Answer: Medicaid and Your Home
Does Medicaid take your house? Not when you apply. For long-term care Medicaid, the home is usually an exempt asset, which means it does not count against the asset limit. A parent can own a home and still qualify for nursing home Medicaid.
That protection has conditions. The home has to be the applicant's primary residence, or the place they intend to return to. A spouse or a dependent child may live there. The home equity also has to be under a limit the state sets each year. In most states that limit is well above $700,000, so most family homes fall under it.
The house is most at risk in three situations: when it is sold and the money counts as an asset, when it is given away during the look-back period, and after the Medicaid recipient dies, when the state can seek repayment from the estate. LifeCare Senior Advocates helps families see which of these applies before they file.
Applying for Nursing Home Medicaid?
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When the Home Is Exempt from Medicaid
When someone applies for long-term care Medicaid, the home usually stays exempt if one of these is true. Each state applies the rules in its own way, so check before you rely on one.
Your parent lives there
The home is the applicant's primary residence, and their equity is under the state limit.
They plan to return
Your parent is in a nursing home but intends to go home. Many states accept a written statement of intent. Some states set time limits.
A spouse lives there
When a spouse still lives in the home, it stays exempt, and the equity limit does not apply.
A dependent lives there
A child under 21, or a child who is blind or disabled, lives in the home.
How Families Lose the House to Medicaid
Most families who lose a home to Medicaid do not lose it at the application. They lose it through one of these four paths.
Selling the home
Once a home is sold, the money from the sale is no longer an exempt home. It is cash, and it counts toward the asset limit. A parent who sells the house to pay for care can lose Medicaid eligibility until that money is spent.
Giving the home away
Deeding the house to a child, or selling it for less than it is worth, is a transfer. If it happens within the five years before the application, Medicaid can set a penalty period with no coverage. Read how the Medicaid look-back period works before anyone signs a deed.
A lien on the home
Some states place a lien on the home of someone who is permanently in a nursing home and not expected to return. A lien means the state is repaid when the home is sold. States cannot place this lien while a spouse, a child under 21, a blind or disabled child, or certain siblings live in the home.
Estate recovery after death
Federal law requires every state to seek repayment for long-term care costs from the estate of a Medicaid recipient who was 55 or older. The home is often the largest part of that estate. Recovery is delayed while a surviving spouse is alive, or while a child under 21 or a blind or disabled child survives. Some states reach only the probate estate. Others reach more. This is where planning matters most.
Home Transfers That Do Not Cause a Penalty
Federal rules allow a home to go to certain family members without a look-back penalty. These exemptions have strict proof rules, so plan the paperwork before the transfer.
- A transfer to a spouse
- A transfer to a child under 21
- A transfer to a child who is blind or permanently disabled
- A transfer to a sibling who owns part of the home and lived there for at least one year before your parent entered a nursing home
- A transfer to a caregiver child who lived in the home for at least two years and gave care that kept your parent out of a nursing home
Ways Families Protect the Home
There is no single answer that fits every family. The right step depends on who lives in the home, how soon care is needed, and the rules in your parent's state. These are the options Dave reviews with families most often.
- Keep the home exempt. If your parent may return home, or a spouse lives there, the home can stay exempt during the application. The question then becomes estate recovery.
- Use an allowed transfer. If a caregiver child or a disabled child qualifies, the home may pass to them without a penalty.
- Plan years ahead. A home placed in an irrevocable trust more than five years before an application is generally outside the look-back. This only works when it is done early.
- Check state deed options. Some states allow deeds that pass the home outside probate, which can limit estate recovery where the state reaches only the probate estate.
- Plan around the spouse at home. When one spouse needs care, the spouse at home has added protections for the home and income.
Each of these has trade-offs, and some need an attorney to carry out. Dave looks at the whole picture as part of Medicaid planning for your family and brings in the right professional when legal work is needed. Do not sign a deed or move a home into someone else's name until you have talked it through.
Questions About Medicaid and Your House
Can I keep my house and still qualify for Medicaid?
Usually, yes. The home is an exempt asset if it is the applicant's primary residence or they intend to return, and the equity is under the state limit. A spouse or dependent child living there also keeps it exempt.
Can Medicaid take my house after I die?
It can, through estate recovery. The state may seek repayment from the estate of a recipient who was 55 or older. Recovery is delayed while a surviving spouse, a child under 21, or a blind or disabled child is living.
Can I give my house to my children to avoid Medicaid?
Giving the home away within five years of applying usually causes a penalty period with no coverage. Some transfers to children are allowed, such as to a caregiver child or a disabled child. Plan before any deed is signed.
What happens if my parent sells the house?
The money from the sale counts as an asset. Your parent may lose eligibility until that money is spent on care or other allowed costs.
Does a reverse mortgage affect Medicaid?
The loan money is not income, but any of it left in the bank at the start of a month can count as an asset. A reverse mortgage also reduces equity in the home, which affects what is left for heirs.
Why Trust LifeCare Senior Advocates
Dave Brandt
Senior advocate and founder, LifeCare Senior Advocates
Dave Brandt brings more than 25 years in long-term care and works with families in all 50 states. He plans with each state's own Medicaid and estate recovery rules.
This page is general information, not legal advice. Medicaid rules change and differ by state. Dave Brandt is a licensed insurance agent. LifeCare Senior Advocates is not a law firm and does not provide legal or investment advice.
Talk Before You Sign a Deed
Decisions about the house are hard to undo. A short conversation now can protect what your parents worked for. Your first conversation with Dave is always at no charge.
Dave Brandt is a licensed insurance agent. LifeCare Senior Advocates is not a law firm and does not provide legal or investment advice.