When Can a Nursing Home or Medicaid Take Your House? Understand the Rules and Protect Your Home

Understanding When a Nursing Home or Medicaid Can Take Your House

For many families, the family home is their most significant asset. When a loved one needs nursing home care and Medicaid assistance, a common worry is whether the house could be lost to pay for those care costs. The answer is complex: while nursing homes themselves generally do not seize property, Medicaid has the legal authority to recover costs from a recipient’s estate after their death, which often means targeting the home. Understanding how and when this can happen is crucial to protecting your assets and planning for your family’s future.

Medicaid Estate Recovery: What It Is and Why It Matters

Medicaid is a joint federal and state program that pays for long-term nursing home care for people who meet strict income and asset limits. While you may qualify for Medicaid and keep your house during your lifetime, the rules change after you pass away. Under federal law, states are required to recover the costs of Medicaid long-term care from the estates of recipients over age 55 or younger recipients who were permanently institutionalized. This program is known as Medicaid Estate Recovery [2] [4] .

Estate recovery is the process where, after the Medicaid recipient dies, the state seeks reimbursement for the amounts spent on that individual’s long-term care. The most common and valuable asset in the estate is often the home, even though it was exempt from counting toward Medicaid’s eligibility limits while the person was alive [4] .

When Can Medicaid Place a Lien or Claim on Your Home?

Medicaid can place a lien on your house in two main situations:

During Your Lifetime: If you enter a nursing facility and are not expected to return home, some states may place a pre-death lien on the property. However, they cannot force a sale or evict family members while you are alive if certain protected relatives still live there. The lien is typically removed if you recover and return home [2] .
After Death: After the Medicaid recipient dies, the state can seek recovery from the estate, which includes the home if it is still in the deceased’s name. This is the most common scenario for estate recovery [1] .

It’s important to note that the nursing home itself does not take your house . Any estate recovery or claim is made by the state Medicaid agency, not the care facility. The home is only at risk if it’s part of your probate estate when you die and if you received Medicaid benefits for nursing home or similar long-term care on or after your 55th birthday [3] .

Who Is Protected from Medicaid Estate Recovery?

Federal and state laws provide several important protections for families:

Surviving Spouses: If your spouse is still living and occupies the home, Medicaid cannot recover against the house until after their death.
Minor or Disabled Children: If you have a child under age 21, or a child of any age who is blind or disabled, living in the home, Medicaid cannot force a sale or place a claim while they reside there [2] .
Siblings with Equity: If a sibling with an ownership interest lived in the home for at least one year before you entered the nursing home, they are also protected from recovery.

These protections are designed to avoid forcing vulnerable family members out of their home. If none of these exceptions apply, however, the house can be claimed for estate recovery after your death [4] .

What Assets Are Subject to Medicaid Estate Recovery?

The assets Medicaid can recover are generally those in your estate at the time of your death. In many states, this means any property subject to probate, such as:

The home if titled solely in your name
Bank accounts without designated beneficiaries
Vehicles and other personal property
Stocks, bonds, and other investments solely in your name

However, assets that pass outside of probate-like those held in certain trusts, joint tenancies with right of survivorship, or with valid beneficiary designations-are typically not subject to estate recovery. The specific rules vary by state, so it’s important to check your local laws or consult a qualified attorney [3] .

How Can You Protect Your Home from Medicaid Estate Recovery?

There are several legal strategies that may help protect your home or other assets from Medicaid estate recovery. These strategies must be implemented
before
you apply for Medicaid or before you require long-term care. Some common approaches include:

Irrevocable Trusts: Placing the home in an irrevocable trust can remove it from your estate for recovery purposes, but must be done at least five years before applying for Medicaid (due to the “look-back” period).
Lady Bird Deeds (Enhanced Life Estate Deeds): In some states, this special type of deed allows you to retain control of the property for life, but automatically transfers it to your chosen beneficiary upon death, bypassing probate and thus estate recovery [1] .
Transfer-on-Death Deeds: Available in some states, this instrument allows the property to pass directly to beneficiaries, avoiding probate.
Joint Ownership: Adding a co-owner with right of survivorship may protect the home, but this approach has risks, including potential gift taxes and exposure to the co-owner’s creditors.
Spousal Transfers: The home can usually be transferred to a spouse without penalty or recovery, but upon the spouse’s death, recovery may still apply.

Every situation is unique, and improper transfers can result in Medicaid penalties or ineligibility. It is critical to seek advice from a qualified elder law attorney or estate planning professional to ensure your plan complies with state and federal law [2] .

Real-World Example: How Estate Recovery Can Affect Families

Consider this scenario: Mary, age 82, lives alone in her longtime home. She enters a nursing home and qualifies for Medicaid. Her house is exempt for eligibility, so she keeps it while she is alive. After her passing, her only asset is the home, now worth $200,000. The state Medicaid agency reviews her case and files a claim against her estate to recover $90,000 in care costs paid on her behalf. Unless her heirs can pay this amount out-of-pocket, the home must be sold to satisfy the Medicaid claim. If, however, Mary had placed her home in a properly structured irrevocable trust more than five years before applying for Medicaid, the home would not have been part of her probate estate, and Medicaid would not have been able to recover against it.

Steps to Take If You’re Concerned About Losing Your House

Here’s a practical guide if you are worried about Medicaid estate recovery and your home:

Consult an Elder Law Attorney: Laws are highly state-specific, and professional guidance is crucial. Look for attorneys with experience in Medicaid planning and asset protection.
Review Your Assets: Determine what is in your name alone, what is jointly owned, and what has named beneficiaries or is in trust.
Consider Your Family Situation: If you have a spouse, minor, disabled child, or a sibling living in the home, discuss your options with your attorney, as you may qualify for key exemptions.
Explore Legal Planning Tools: Investigate irrevocable trusts, Lady Bird deeds, and other state-specific options that could help protect your home.
Plan Early: Many strategies require action years in advance. The sooner you plan, the more options are available.

To find professionals in your area, you can search terms like “elder law attorney near me” or contact your state’s Area Agency on Aging for referrals.

Alternative Options and What to Do If You’ve Already Entered Care

If you or a loved one are already in a nursing home and on Medicaid, options to protect the home are more limited. However, there are sometimes hardship waivers or exemptions available if estate recovery would cause undue hardship to surviving family members. Each state has its own waiver process, so you should contact your state Medicaid office or visit their official website for details.

You may also request information about estate recovery rules directly from your state’s Department of Health or Human Services. For example, in California, the Department of Health Care Services provides information and a contact phone number for estate recovery questions. Search for your state’s Medicaid estate recovery program or call your state Medicaid agency for guidance.

Key Takeaways

Medicaid cannot take your house while you are alive if certain relatives reside there, but after your death, your home may be subject to estate recovery for nursing home costs paid by Medicaid . The best protection is early, informed planning with qualified legal advice. If you are concerned, take action now-review your state’s rules, understand your exemptions, and seek professional help to secure your family’s future.