Can Medicaid Take Your House? Estate Recovery Rules Explained
Short answer: not while you are living in it. The home is an exempt asset for Medicaid eligibility as long as you, a spouse or a dependent relative lives there or you intend to return. The real risk is after death, through Medicaid estate recovery.
What estate recovery is
Federal law requires every state to seek repayment from the estates of people who received Medicaid long-term care services after age 55. The state files a claim against the probate estate; some states also pursue assets that pass outside probate. The home is usually the largest asset, so it is the usual target.
When the state cannot recover
- A surviving spouse is alive
- A child under 21, or a blind or disabled child of any age, survives you
- A sibling with an equity interest lived in the home for at least a year before you entered care
- An adult child lived with you for two years and provided care that kept you out of a facility
- Recovery would cause undue hardship under state rules
The home equity limit
For nursing home coverage, home equity above a federal cap (about $730,000 in 2025, higher in a few states) disqualifies you unless a spouse or dependent lives there. Equity is market value minus mortgages.
Planning options
Common tools include a life estate deed, an irrevocable Medicaid asset protection trust funded more than five years before applying, and in some states a transfer-on-death deed. Each has tax and control trade-offs, and transfers inside the 60-month look-back can create a penalty. A Medicaid planner or elder law attorney should review your situation before you sign anything.
What to do next
- Check whether anyone in the exempt categories lives in the home.
- Ask the state agency for its estate recovery policy; a few states are narrower than federal minimums.
- If planning for care more than five years out, discuss trusts with an attorney now.