Can Medicaid take your house? Explained the different scenarios

One of the most common concerns for seniors applying for Medicaid, particularly those seeking nursing home care or other long-term services, is the fate of their home.

Many individuals worry about whether Medicaid can seize their property or demand its sale. Unfortunately, the answer isn't always straightforward and depends on various factors, including the applicant's family situation and state laws.

Under the Medicaid Estate Recovery Program (MERP), states are required to attempt to recover the costs of long-term care paid for Medicaid recipients aged 55 and older after they away.

This mandate, established under the Omnibus Budget Reconciliation Act of 1993, aims to reimburse state Medicaid agencies for expenses related to nursing home care, assisted living, and in-home care. Estate recovery is also required for those under 55 if they were receiving Medicaid-funded nursing home care.

The primary asset targeted by MERP is typically the recipient's home. However, there are certain exceptions that can protect a home from recovery efforts, such as when a surviving spouse, a child under 21, or a blind or disabled child of any age resides in the property.

Notably, states have varying rules regarding estate recovery, and these differences can significantly affect the outcome.

Can Medicaid take my home? Different scenarios explained

Single and Living Alone: ?If you are single and live in your home, it is exempt from Medicaid's asset limits as long as your home equity is below a certain threshold. For 2025, this limit is either $730,000 or $1,097,000, depending on the state. Medicaid cannot force the sale of your home while you are alive. However, after your death, Medicaid may seek reimbursement through the sale of the home unless certain exceptions apply.

Single and Moving to a Nursing Home: When a person moves to a nursing home, they should submit a written "Intent to Return Home" statement. This document allows the home to remain an exempt asset as long as its equity value is below the specified threshold. However, if Medicaid considers the nursing home stay to be permanent, a lien may be placed on the home to secure repayment. While this lien does not force an immediate sale, it ensures the state receives payment upon the property's eventual sale.

Single with Grown Children Living in the Home?: If an adult child who is blind or disabled lives in the home, the property is protected from estate recovery. Additionally, if a child provides caregiving services that delay the applicant's need for nursing home care for at least two years before ission, the Child Caretaker Exemption may apply, allowing the property to be transferred to them without penalty.

Married with One Spouse in a Nursing Home: ?If one spouse enters a nursing home while the other continues living in the home, Medicaid does not count the home as an asset. Additionally, transferring the home to the community spouse is allowed without penalty, safeguarding it from estate recovery even after the community spouse es away.

Both Spouses ed Away?: If both spouses are deceased, the state may attempt to collect reimbursement from the sale of the home. However, certain protections remain if an adult child residing in the home is blind, disabled, or meets other exemption criteria.

Can you sell your house while on Medicaid?

Yes, you can sell your house while on Medicaid, but doing so could impact your eligibility. Once sold, the home is no longer an exempt asset, and the proceeds from the sale could push you above Medicaid's asset limit, which is generally $2,000. The funds would need to be "spent down" appropriately before you can requalify for Medicaid benefits.

Protecting your home from Medicaid estate recovery

There are several strategies to protect your home from Medicaid estate recovery, including:

• Creating Irrevocable Trusts: Placing your home into an irrevocable trust can shield it from being counted as part of your estate, but this must be done well before applying for Medicaid.
• Using Long-Term Care Partnership Programs: These programs allow you to protect assets equal to the value of benefits paid out by a qualifying insurance policy.
• Applying for Caregiver and Sibling Exemptions: Under specific circumstances, you can legally transfer your home to certain family without violating Medicaid's look-back rules.
• Working with a Certified Medicaid Planner: Given the complexity of Medicaid rules, consulting a professional can be essential to ensure your assets are protected.

Medicaid rules surrounding home ownership and estate recovery are complex and vary by state. Planning ahead and understanding your state's regulations are critical steps in protecting your home. Consulting a Medicaid planning expert is highly recommended to navigate these rules effectively.