Medicaid & Your House at a Glance

If you only have a minute, this table answers the questions that brought you here. Each row links to a fuller explanation below — and every answer comes with the same caveat: the details vary by state.

Quick Answers to the Top Questions

Will I lose my house just by going on Medicaid?

Almost certainly not while you are alive. Your home is generally an exempt asset for eligibility — especially if you intend to return to it or a close family member lives there. The main lifetime risk is the TEFRA lien described below, not a loss of ownership. The bigger question is what happens to the home after death, which is where estate recovery comes in.

Is my spouse protected?

Yes. A surviving spouse is an absolute bar to estate recovery under federal law. The state cannot force a sale or file a claim that displaces your husband or wife. (After the surviving spouse dies, some states may pursue what remains — another reason to plan ahead.)

Can I just give my house to my kids?

Please don’t do this without advice. A gift can trigger the 5-year lookback penalty, cost your children a valuable tax break, and strip you of control. There are far safer tools, covered below.

What’s the best way to protect it?

It depends on your state, but the most powerful options are usually a Lady Bird or transfer-on-death deed (in states that allow them) or an irrevocable Medicaid asset protection trust set up well in advance.

Can they take my bank account?

A nursing home can’t, but the state’s estate claim can reach accounts in your name — including joint accounts in many cases. Beneficiary (payable-on-death) designations can help in some states.

What Is Medicaid Estate Recovery (MERP)?

Medicaid Estate Recovery is a federal mandate. Under the Omnibus Budget Reconciliation Act of 1993 (OBRA ’93), every state must seek reimbursement from the estates of deceased Medicaid recipients who were 55 or older when they received certain long-term-care benefits — nursing facility care, home and community-based services, and related hospital and prescription drug costs. States may also recover for other Medicaid services they paid on the person’s behalf.

Two points cut through most of the fear. First, this is a post-death claim against your estate, not a seizure during your lifetime and not an act by the nursing home. Second, the amount can be substantial — nursing home care often runs well over $100,000 a year — which is precisely why advance planning matters. (Note: estate recovery is about cost. If your concern is the quality of care a facility provided, that’s a separate legal issue covered in our guide on suing for nursing home negligence.)

Medicaid vs. Medicare — don’t mix them up

This confusion trips up more families than almost anything else on this page. Medicare is federal health insurance available at 65+ regardless of income; it covers only short skilled-nursing stays (up to 100 days per benefit period, with a copay kicking in after day 20) and does not pay for long-term custodial care. Medicaid is the needs-based program that actually pays for extended nursing home stays — and it’s Medicaid, not Medicare, that carries the estate recovery rules on this page. If a hospital discharge planner mentioned “100 days of coverage,” that was Medicare, and it does not trigger MERP.

TEFRA Liens: Can They Put a Claim on the House While You’re Alive?

This is the piece most articles skip, and it’s the source of a lot of legitimate fear. Under the federal Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA), a state can place a lien on a Medicaid recipient’s home before death — but only under narrow conditions, and it works very differently than most people assume.

• When it can happen: the recipient must be “permanently institutionalized” — typically defined as an inpatient in a nursing facility for at least six consecutive months with no reasonable expectation of returning home.
• When it cannot happen: a TEFRA lien is blocked if a spouse, a child under 21, a blind or disabled child, or (in many states) a qualifying sibling or caregiver child lives in the home — the same protected people as post-death recovery.
• What it actually does: a lien is not a seizure. It’s a claim recorded against the property. You can still live there (if you return), and nothing forces a sale.
• If you go home: the lien must be released — the recipient returning home and reasonably intending to stay ends it.
• If the home is sold while you’re alive: Medicaid is repaid out of the sale proceeds, up to the amount spent on care.
• If you die with the lien in place: the property becomes part of the estate and is pursued through the normal MERP process described throughout this article.

Not every state uses TEFRA liens aggressively, and the notice-and-hearing procedures differ. If you or a family member has just been told a facility stay is likely to become permanent, this is exactly the moment to call an elder law attorney — before a lien is filed, not after.

Probate vs. Expanded Recovery: The Key to Protection

This is the single most important concept on the page, and most articles bury it. Whether your home is reachable usually comes down to one question: what counts as your “estate”?

Every state recovers from the probate estate — the assets that pass through the court process after death under your will or state intestacy law. But states are split on whether they stop there:

• Probate-only states limit recovery to assets that go through probate. If your home passes outside probate — by deed, trust, or survivorship — it is generally safe. Roughly 23 states plus D.C. take this approach.
• Expanded-recovery states use a broader definition of “estate” that can reach assets passing outside probate, including jointly held property, certain trusts, and life estates. Roughly 27 states take this approach.

That’s why the core protection strategy — keeping the home out of probate through a Lady Bird or transfer-on-death deed, a properly structured trust, joint tenancy with right of survivorship, or a payable-on-death designation — works cleanly in probate-only states but may offer less protection where recovery is expanded. Before you rely on any of this, confirm which category your state falls into with a licensed elder law attorney, or check the state lookup tool above for a starting point. This distinction frames everything below.

The Home Equity Cap (2026 Limits)

Separate from recovery, there is a limit on how much home equity you can have and still keep the home exempt while you qualify for long-term-care Medicaid. Equity means your home’s market value minus any debt against it. Exceed your state’s cap (with no protected occupant living there) and the home can become a countable asset, which may disqualify you from coverage entirely until you reduce the equity.

These figures are set federally and adjust each year for inflation. The 2026 minimum is $752,000 and the maximum is $1,130,000. Most states use the minimum; Alabama, California, Colorado, Connecticut, D.C., Hawaii, Maine, Massachusetts, New Jersey, New York, Tennessee, and Washington use the higher figure (California has no cap at all), while Idaho and Wisconsin set a figure in between and should be confirmed directly. Equity is also re-checked at each renewal, so rising property values can push you over the line later — one more reason to plan with a professional in an appreciating market. Confirm your state’s exact figure with your Medicaid agency or an elder law attorney, or use the lookup tool above as a starting point.

Official 2026 Home Equity Limits & Estate Recovery Scope, State by State

The table below expands on the lookup tool with a full-list view. Figures reflect the 2026 federal minimum/maximum framework and each state’s general recovery approach.

Who’s Exempt? Spouse, Children & Siblings

Federal law creates absolute bars to estate recovery. While any of these people are alive, the state cannot recover at all:

• A surviving spouse;
• A child under 21; and
• A blind or disabled child of any age.

So if your question is “can Medicaid take my house if my spouse lives in it?” — the answer is no, not while your spouse survives. Separately, states must offer an undue-hardship waiver when recovery would, for example, force the sale of a modest home that is a family’s sole income source or residence; the standards and applications are state-specific and time-sensitive. Common hardship examples that states have recognized include a working farm or small business on the property that is the family’s primary income source, or a home that would leave a low-income heir without adequate housing — but approval is never automatic and documentation requirements are strict.

There are also exemptions for transferring the home during life without triggering a lookback penalty:

• Caregiver-child exemption. You can transfer the home to an adult child who lived with you for at least two years before you entered care and provided care that delayed your need for a nursing home.
• Sibling exemption. You can transfer the home to a sibling who already holds an equity interest in it and lived there for at least one year before your institutionalization.

Both require solid documentation, and both are easy to get wrong. Don’t attempt them on your own — have an elder law attorney confirm eligibility and handle the transfer.

The 5-Year Lookback (and the Penalty Trap)

When you apply for long-term-care Medicaid, the state reviews the previous 60 months of your finances. Gifts or transfers for less than fair market value during that window create a penalty period — a stretch of time during which Medicaid won’t pay for your care, even though you’re otherwise eligible.

The length is calculated by dividing the amount you gave away by your state’s penalty divisor (its average monthly private-pay nursing home cost). Here’s the trap that catches families: the penalty doesn’t start when you make the gift. It starts when you’re in care, broke, and would otherwise qualify — exactly when you can least afford to pay privately.

A worked example. Suppose you gifted a home worth $300,000 to your children and later applied for Medicaid. Using an illustrative divisor of about $10,645 a month:

• $300,000 ÷ $10,645 ≈ 28 months of ineligibility.

That’s more than two years with no Medicaid coverage. And because the divisor varies dramatically by state — roughly $6,000 to $22,000 per month — the same $300,000 gift could produce anywhere from about 14 months to 50 months of penalty depending on where you live. This is why panic-gifting the house is so dangerous, and why early planning is everything: the right tools (next section) avoid the lookback entirely. Penalty divisors and lookback specifics vary by state, so confirm yours before transferring anything.

Does a Lady Bird or TOD deed trigger the lookback?

No — and this is worth stating plainly because it’s one of the most-searched questions on this topic. Because you keep full ownership and control until death (you can still sell, mortgage, or revoke the deed), it is not a completed gift, so it does not count as a transfer for lookback purposes. That’s exactly why these deeds are so useful compared with an outright gift of the house.

The Best Ways to Protect Your House

Here is the part you came for. The right tool depends on your state and your timeline, but these are the options elder law attorneys reach for most. Compare them first, then read the details.

Traditional Life Estate vs. Lady Bird (Enhanced Life Estate) Deed — Don’t Confuse Them

These two sound alike and get mixed up constantly, but they behave very differently under Medicaid rules:

• Traditional life estate deed. You deed the home to your children (the “remaindermen”) now, keeping only the right to live there for life. You cannot sell, mortgage, or take back the property without their consent. Because you’ve given away a real ownership interest immediately, this is treated as a completed gift and generally does trigger the 5-year lookback in most states.
• Lady Bird / enhanced life estate deed. You keep the unrestricted right to sell, mortgage, change your mind, or revoke the deed entirely during your lifetime — your children have no present interest at all. Because nothing is actually given away until death, it is not a completed gift and generally does not trigger the lookback, and it still avoids probate.

If someone offers to “just deed the house to the kids and keep a life estate,” ask specifically whether it’s an enhanced (Lady Bird) version — the ordinary kind can create the exact penalty you were trying to avoid.

Lady Bird and Transfer-on-Death Deeds

These are often the standout tools because they do something rare: they let you keep full control of your home for life (you can still sell, mortgage, or change your mind), pass it automatically to your heirs outside probate at death, and — because you never gave up control — don’t trigger the 5-year lookback. Your heirs also typically receive a stepped-up tax basis, which can erase capital gains tax.

The important caveat: availability is limited. Lady Bird (enhanced life estate) deeds are recognized in only about five states — Florida, Michigan, Texas, Vermont, and West Virginia. (Arkansas is sometimes mentioned online as a sixth state — that’s a common myth; Arkansas does not recognize Lady Bird deeds under current law.) Transfer-on-death (TOD) deeds serve a similar purpose and are available in roughly 30 states, but not all. And in expanded-recovery states, even a probate-avoiding deed may not fully shield the home. Whether a deed protects you depends entirely on your state’s rules, and a botched deed can cause Medicaid denial — so this is not a do-it-yourself project.

Irrevocable Trust vs. Revocable Trust

An irrevocable Medicaid asset protection trust can protect your home and other assets, but it comes with two strings: it must be funded more than five years before you apply for Medicaid (or the lookback penalty applies), and you must give up control — you can’t be the trustee or freely take assets back. For families planning years ahead, it’s a powerful option.

Here is a misconception that costs families their homes: a revocable living trust does NOT protect your home from estate recovery. Because you keep the power to revoke it and control the assets, Medicaid still treats those assets as yours for both eligibility and recovery. A revocable trust is excellent for avoiding probate and managing assets — but it is not a Medicaid protection tool. Don’t confuse the two.

Caregiver-Child and Sibling Transfers

As covered under exemptions, you can transfer the home without a penalty to a caregiver child who lived with you for two years and delayed your institutionalization, or to a sibling with an equity interest who lived there for a year. These require careful documentation and professional handling — see the FAQ below for what evidence typically holds up.

Personal Care Agreements: A Legal Way to Compensate a Caregiver Child

If an adult child (or another relative) is providing significant hands-on care — bathing, meals, transportation, medication management, overnight supervision — you can pay them for it under a written personal care agreement (sometimes called a caregiver contract), without it counting as a disqualifying gift. Done correctly, this legitimately reduces countable cash (a form of Medicaid “spend-down”) while fairly compensating the family member who is actually doing the work. To hold up under scrutiny, the agreement generally needs to be:

• In writing and signed before care begins — not created retroactively after a Medicaid application is already filed.
• Priced at a reasonable, local market rate for the services provided, not an inflated amount.
• Backed by records — a care log or timesheet showing what was actually done.
• Reported as income by the caregiver for tax purposes.

Get an elder law attorney to draft or review this; an informal or backdated arrangement is exactly what caseworkers are trained to flag as a disguised gift.

Home Modifications as a Legitimate Spend-Down

If you have countable cash above your state’s Medicaid asset limit, spending it on your own exempt home is often a legitimate way to become eligible faster — without gifting anything away. Common examples include a wheelchair ramp, a walk-in shower or grab bars, a stairlift, widened doorways, or general repairs and roof work. Because the home itself is generally an exempt asset (up to the equity cap), money converted into home improvements is no longer sitting in a countable bank account. Keep receipts and get a receipt-backed appraisal if the improvement is substantial, since the state may ask you to document that the spending was genuine and at fair value.

Can a Reverse Mortgage Help?

Sometimes — but it’s nuanced. A reverse mortgage converts home equity into cash you can use for care, which can reduce countable equity. But the proceeds can become a countable asset if not spent down, and the loan must be repaid (often from the home’s sale) when you die or move out, which can affect what heirs inherit. It’s a significant transaction with real trade-offs; weigh it carefully against alternatives in our guide on reverse mortgage pros, cons, and eligibility, and run it past an elder law attorney first.

Putting the House in an LLC — Does That Help?

Generally, no — and it can backfire. Moving your personal residence into an LLC you control doesn’t remove it from your countable assets for Medicaid purposes, since you still effectively own and control it through your membership interest; the state can look through the entity. It can also jeopardize the home’s status as an “exempt” primary residence, disrupt the capital-gains tax exclusion available on a personal home sale, and complicate title insurance and financing. LLCs are a business and liability-protection tool, not a Medicaid planning tool — don’t use one for this purpose without an elder law attorney’s sign-off.

Can the Nursing Home Take Money From a Joint Account?

Again, the nursing home itself can’t — but Medicaid’s rules can reach a joint account, and this surprises many families. For eligibility, Medicaid generally presumes the entire balance of a joint account belongs to the applicant unless you can prove the other owner actually contributed the funds. Keep records if a child’s name is on your account.

For recovery after death, it depends on titling and on your state. Many joint accounts pass automatically to the surviving owner by right of survivorship and stay out of probate — which protects them in probate-only states. But expanded-recovery states can reach jointly held assets, and a payable-on-death (POD) or transfer-on-death (TOD) designation may be treated differently than joint ownership. The treatment of accounts varies by state, so confirm how yours handles joint and POD accounts before relying on either.

2026 Update: What OBBBA Changed

The One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, makes major Medicaid changes — but it’s important to separate what affects estate recovery from what doesn’t, and to note that the headline provisions are not in force yet.

• Home-equity cap fixed at $1 million (effective January 1, 2028). Starting in 2028, federal law will cap the home-equity limit at $1 million regardless of inflation. In practice, the limit will drop in the higher-cost states that currently use the federal maximum, and a $1 million cap will be reinstated in California (which has none today). The cap won’t apply to homes on agricultural property.
• 80-hour monthly work requirement (effective January 1, 2027). Adults aged 19–64 in the ACA Medicaid expansion group will need to work or do qualifying activities for 80 hours a month. This targets the expansion population — not seniors in nursing-home or long-term-care Medicaid — so it’s largely tangential to estate recovery, though some states may begin sooner.

The key takeaway for homeowners: OBBBA did not change the core estate-recovery rules. The age-55 mandate, the absolute exemptions for spouses and children, the lookback, the TEFRA lien framework, and the probate-vs-expanded distinction all remain in place. Because these 2028 and 2027 provisions are future-effective and implementation details are still being written, verify the current state of the law before acting.

What to Do If You Get a MERP Notice

If your loved one has died and an estate-recovery notice arrives, take a breath — but don’t ignore it. A measured, prompt response often protects far more than panic does.

• Don’t ignore the deadline. Response windows are short (often around 30 days) and missing one can forfeit defenses.
• Verify the amount. Ask for an itemized accounting; recovery claims sometimes include costs that shouldn’t be there.
• Check exemptions and waivers. Is there a surviving spouse, a minor, or a blind or disabled child? Could an undue-hardship waiver apply? Any of these can block or reduce recovery.
• Respond and, if appropriate, negotiate. States may settle, defer, or waive claims in qualifying circumstances.
• Get an attorney. An elder law or probate attorney in your state can identify defenses you may not know exist.

Frequently Asked Questions