For millions of aging Americans, Medicaid is the only viable option when long-term care becomes necessary. Nursing homes and in-home support services are staggeringly expensive, and few families have the financial cushion to cover them out-of-pocket.
Yet what many people don’t know is that Medicaid help often comes with strings attached. After a recipient passes away, the state may come for the family home as repayment. Understanding how estate recovery works, who is vulnerable, and what legal options exist can help you defend and protect a home you've spent a lifetime building.
Can Medicaid Take Away My Home?
Under federal law, states are required to recover certain Medicaid costs from the estates of deceased beneficiaries. This includes a wide range of long-term care services paid for after the recipient turned 55.
The program is called the Medicaid Estate Recovery Program (MERP), and every state operates one. Though the scope and enforcement vary by jurisdiction, the core rule remains: states must seek reimbursement for certain Medicaid benefits paid out after a specific age.
What does that look like in practice? After a person dies, their estate goes through probate. If Medicaid paid for that person’s nursing home, home health services, or similar care, the state files a claim against the estate. If the only asset of significant value is the home, it can be sold to repay the state.
Who Is Affected by Medicaid Estate Recovery?
If you or a loved one received Medicaid-funded long-term care services, your estate may be subject to recovery. It can also apply to individuals of any age who received Medicaid benefits while permanently institutionalized.
However, there are specific circumstances under which Medicaid recovery may be delayed or waived:
- Surviving Spouse. Recovery is typically delayed if there is a surviving spouse. The state cannot pursue recovery as long as the spouse is alive.
- Minor, Blind, or Permanently Disabled Child. Recovery is also delayed if the deceased Medicaid recipient has a surviving child who is under 21, blind, or permanently disabled.
- Undue Hardship. If recovery would cause an "undue hardship" for the heirs, the state may waive or compromise its claim. This is a high bar to meet and requires demonstrating that recovery would leave the heirs without food, shelter, or medical care.
It is crucial to understand that these are specific exemptions and delays, not outright protections that eliminate the possibility of recovery entirely. Careful planning is often necessary to fully shield assets. Many people wrongly assume a will protects their home. It doesn’t. A will puts your property into probate, and that’s exactly where estate recovery applies.
Which Benefits Qualify for Estate Recovery?
Not every Medicaid service triggers estate recovery. Under federal guidelines, states must recover the cost of long-term care-related services, which typically include:
- Nursing home or institutional care
- Home and community-based services
- Related hospital stays
- Prescription drugs associated with long-term care
Some states choose to go further and recover all Medicaid expenses incurred, not just those tied to long-term care. This is known as expanded estate recovery, and it can include everything from doctor’s visits to prescription drugs.
How Can I Protect My Home from Medicaid Estate Recovery?
Protection requires proactive planning. The tools available to avoid Medicaid estate recovery aren’t secret, but they need to be deployed correctly. In many cases, they must be enacted years in advance of needing care. Here are the most effective methods:
- Irrevocable Medicaid Asset Protection Trust (MAPT). By transferring your home into an irrevocable trust, you remove it from your probate estate, making it off-limits to estate recovery. The trust must be created and funded at least five years before applying for nursing home Medicaid. During that period, known as the “look-back,” the transfer can disqualify you from benefits. But once that window passes, the asset is protected.
- Life Estate Deed. With a life estate deed, you retain the right to live in your home for the rest of your life but legally transfer the future interest to your heirs. Upon your death, the home passes directly to them without going through probate. Because it avoids probate, it often avoids estate recovery. However, some states still attempt to file claims against life estates, so legal guidance is critical.
- Caregiver Child Exemption. If an adult child lived with the Medicaid recipient for at least two years before institutionalization and provided care that delayed the need for nursing home placement, the home can sometimes be transferred to that child without penalty.
- Sibling Exemption. If the Medicaid recipient has a sibling who co-owned the home and lived there for at least one year before they entered care, the property can be transferred without recovery. This is rare but valuable in families with shared homeownership.
- Joint Ownership with Rights of Survivorship. When two or more people own a property with survivorship rights, the home may pass outside of probate to the surviving owner. But Medicaid rules are strict; if the deceased’s share is considered part of the probate estate, the state may still try to claim it.
How Can a Medicaid Planning Lawyer Protect My Home from Estate Recovery?
Avoiding estate recovery requires a clear understanding of the complex, overlapping systems of federal and state law that govern Medicaid eligibility, estate planning, and probate. These laws are often unforgiving when mistakes are made.
A Medicaid planning lawyer provides:
- Asset analysis to determine what’s at risk
- Legal structuring of property through trusts, deeds, and exemptions
- Guidance during the five-year look-back period to avoid disqualification
- Document preparation to support caregiver or sibling exemptions
- Crisis planning when long-term care is suddenly needed
- Defense or negotiation in cases where estate recovery claims are contested
What’s at Stake Is More Than a House
Medicaid estate recovery was created to ease pressure on public budgets. But in execution, it often punishes the very families Medicaid was meant to help. The good news is that the law allows for planning and protection. But those protections don’t apply retroactively.
A Medicaid planning lawyer can help you navigate laws around estate recovery, avoid unintended consequences, and protect your legacy with the dignity it deserves. Backed by decades of guiding clients through Medicaid planning and estate planning, Raiser and Kenniff, P.C. works to defend what families have built over a lifetime.
To learn how we can help you or a loved one protect your home and your future, schedule a consultation today by contacting us online or calling (888) 646-0025.