Protect Your House When You Want to Qualify for Medicaid

Medicaid is a public assistance program that provides millions of individuals nationwide with health care coverage. For certain qualifying Medicaid recipients, the program also covers nursing home care. To be eligible for Medicaid, you typically must meet a certain income limit.

You generally do not have to sell your home to qualify for Medicaid for nursing home coverage. However, it’s possible for the state to file a lien against your home after you die. So, you may want to take steps to protect your house.

If you get help from Medicaid to pay for the nursing home, the state must pursue estate recovery. This is an attempt to recoup from your estate whatever benefits it paid for your care. The only property of substantial value that a Medicaid recipient is likely to own at death is their home. If possible, consult with an elder law attorney before you enter a nursing home (or immediately afterward) to discuss ways to protect your home.

In most states, Medicaid will not count your home as an asset when you're applying for Medicaid if the equity of the home is under $713,000 (in 2024). In all states, you may keep your house with no equity limit if your spouse or another dependent relative lives there.

Transferring a Home to Your Children

In most states, transferring your house to your children (or someone else) may lead to a Medicaid penalty period. This can disqualify you from Medicaid benefits for a certain length of time.

Depending on your circumstances, it can be legal to transfer a house, however. Consult an attorney before making any transfers. You may freely transfer your home to the following without incurring a transfer penalty:

• Your spouse
• A child who is under age 21 or who is blind or disabled
• A trust for the sole benefit of a disabled individual under age 65 (even if the trust is for the benefit of the Medicaid applicant, under certain circumstances)
• A sibling who has lived in the home during the year preceding the applicant's move to a nursing home and who already holds an equity interest in the home
• A caretaker child of the applicant who lived in the house for at least two years prior to when the applicant moved into a nursing home and who, during that period, provided care that allowed the applicant to avoid a nursing home stay

While you can sell your house for fair market value, it may disqualify you for Medicaid. In addition, you may have to apply the proceeds of the house sale to your nursing home bills.

Medicaid Liens for Estate Recovery

Except in certain circumstances, Medicaid may put a lien on your house for the amount of money spent on your care. If the property is sold while you are still living, you would have to satisfy the lien by paying back the state. The exceptions to this rule are cases where a spouse, a disabled or blind child, a child under age 21, or a sibling with an equity interest in the house is living there.

If your spouse, a disabled or blind child, a child under age 21, or a sibling with an equity interest in the house lives in your home, the state can't file a lien for reimbursement of Medicaid nursing home expenses. However, once your spouse or dependent relative dies or moves out, the state can try to collect. Again, this is known as estate recovery.

Tenancy by the Entirety

But there are some circumstances under which the value of a house can be protected from Medicaid recovery. The state can't recover if you and your spouse owned the home as tenants by the entirety. (Under tenancy by the entirety, married couples can jointly own property. If one spouse passes away, the surviving spouse automatically takes ownership of the house without any debt.)

It also cannot recover it if the house is in your spouse’s name and you have relinquished your interest. If the house is in an irrevocable trust, the state cannot recover from it, either.

Undue Hardship

In addition, some children or relatives may be able to protect a nursing home resident’s house if they qualify for an undue hardship waiver. For example, if your daughter took care of you before you entered the nursing home and has no other permanent residence, she may be able to avoid a claim against your house after you die. Consult with a qualified elder law attorney to determine whether the undue hardship waiver applies to you.

Work With an Elder Law Attorney

To learn more about Medicaid as well as your long-term care options, find a qualified elder law attorney nearby to assist you. Medicaid eligibility requirements vary from state to state. This is because each state Medicaid agency sets its own criteria for the program.

An elder law expert in your area will understand the rules specific to where you live. They also can assist you in determining whether you are eligible for Medicaid nursing home coverage.

You also may find it useful to consult the following articles to learn more:

• What Is a Life Estate? Estate Planning Basics
• How to Get Into a Nursing Home as a Medicaid Recipient
• What Makes a 'Good' Nursing Home? 10 Points to Consider
• Protecting Your House From Medicaid Estate Recovery