Does Owning a Home Affect Medicaid Eligibility?

Owning a home does not, by itself, disqualify you from Medicaid. For long-term care coverage, your primary residence is generally an exempt asset, so you can hold the house and still meet the program’s strict resource limits. The protection has conditions attached, though, and it works differently while you are alive than after you die. Home equity caps, the five-year look-back on transfers, and the estate recovery program that kicks in at death all decide whether the house actually stays with your family.

Why the House Doesn’t Count Against the Asset Limit

The individual asset limit for Medicaid long-term care is $2,000 in most states, matching the federal SSI resource standard.¹ Almost no homeowner could clear that threshold if the house counted. It doesn’t, because federal rules exclude the value of your primary home as long as it is your principal place of residence or is lived in by your spouse, a child under 21, or a blind or disabled child of any age.²

The exemption is narrow in one important way. It applies only to your primary residence. Vacation homes, rental properties, and undeveloped land you don’t live on are countable assets, and their full market value goes toward the $2,000 limit.

The Home Equity Cap

There is a ceiling on how much equity your primary home can hold before Medicaid stops treating it as exempt. For 2026, states must set an equity limit somewhere between a federal minimum of $752,000 and a maximum of $1,130,000.³ If your equity is above your state’s chosen figure, the home loses its protected status and its value is counted against you.

Equity means fair market value minus any outstanding mortgage or home equity loan balance. A house worth $900,000 with a $200,000 mortgage has $700,000 in equity, which falls under both federal limits.

The cap does not apply when a spouse, a child under 21, or a blind or permanently disabled child of any age lives in the home.⁴ In those cases the house stays exempt regardless of how much equity has built up.

What Happens When You Move to a Nursing Home

Entering a nursing facility does not automatically strip the exemption. Federal rules recognize an “intent to return.” If you state that you intend to return home should your condition improve, most states continue to treat the property as your principal residence, even when a return is medically unlikely.² Put it in writing. A signed letter or affidavit creates a record that holds up during periodic eligibility reviews.

Some states cap how long the intent-to-return provision lasts or let medical professionals override it. The equity limit still applies during this period, so if your equity is over the state’s threshold and no qualifying relative lives in the house, intent to return alone will not save the exemption.

The house is also protected from a Medicaid lien while certain people are still living there. Federal law prohibits placing a lien when a spouse, a child under 21, a blind or permanently disabled child, or a sibling with an equity interest who lived there for at least a year before your admission is still residing in the property.⁴

Transfers and the Five-Year Look-Back

This is where families cause themselves serious problems. Giving the house away, or selling it below fair market value, before you apply is treated as an attempt to qualify artificially. Medicaid reviews every asset transfer you made in the 60 months before your application under a federal look-back period.⁴

A disqualifying transfer triggers a penalty period. Medicaid divides the value of what you gave away by the average monthly cost of nursing home care in your state to get the number of months you must pay for care yourself. A $300,000 house in a state where nursing care averages $10,000 a month produces a 30-month penalty.

The trap is when the penalty clock starts. It does not run from the date of the transfer. It starts on the date you would otherwise be eligible for Medicaid and are already receiving institutional care. Families who transfer a house three years out, assuming that puts them safely inside the window, can find themselves in a nursing facility with no coverage and no way to pay.

Transfers That Do Not Trigger a Penalty

Federal law lists specific transfers of the home that carry no penalty. You can transfer title to:⁴

Your spouse, with no timing or residency conditions.
A child under 21, or a child of any age who is blind or permanently disabled.
A sibling who has an equity interest in the home and lived there for at least one year immediately before your admission to a nursing facility.
An adult son or daughter who lived in the home for at least two years immediately before your institutionalization and provided care that allowed you to stay home rather than enter a facility.

The caregiver child exemption catches the most families out. The two-year residency has to be continuous, and the child must be able to show the care they gave was substantial enough to have actually delayed nursing home admission. Regular visits and help with errands do not count. If the child moved out even briefly before the parent entered the facility, the exemption fails.

If Your Spouse Stays at Home

When one spouse enters a facility and the other stays home, the community spouse is protected from being wiped out. The Community Spouse Resource Allowance lets the at-home spouse keep a share of the couple’s combined assets. For 2026 the federal figures are a minimum of $32,532 and a maximum of $162,660, with each state setting its own number in that range.³ The house itself sits outside that calculation because it is already exempt as the community spouse’s residence.

The community spouse also gets a Monthly Maintenance Needs Allowance, which shields part of the couple’s income. The 2026 federal maximum is $4,066.50 per month.³ If the community spouse’s own income falls short of the state’s minimum allowance, some of the institutionalized spouse’s income can be redirected to close the gap. These rules come from a separate federal statute on spousal impoverishment.⁵

Estate Recovery After Death

The home exemption protects you during your lifetime only. After a Medicaid recipient dies, federal law requires every state to run an estate recovery program that seeks repayment for nursing home services, home and community-based care, and related hospital and prescription drug costs paid on behalf of anyone age 55 or older.⁶ The house, exempt while you were alive, becomes the main target after death because it is usually the largest asset in the estate.

States may also place a lien on the home during your lifetime once they determine you are unlikely to return from a nursing facility. That lien cannot be enforced while a protected family member is still living in the house.⁴ The claim sits and waits. When the protected occupant dies or moves out, it gets paid from the sale.

When Estate Recovery Cannot Proceed

Federal law blocks estate recovery entirely as long as any of these survive the recipient:⁶

A surviving spouse
A child under 21
A child of any age who is blind or permanently disabled

Recovery against the home specifically also has to wait when certain family members are still living there. A sibling who lived in the home for at least a year before the recipient’s nursing home admission and has an equity interest in the property is protected. So is a son or daughter who lived there for at least two years before admission and provided care that delayed institutional placement.⁴ These are the same caregiver child and sibling rules that shield lifetime transfers, and they require continuous residence right through the date of death.

When none of those exemptions apply, heirs can ask for an undue hardship waiver. Every state must have a hardship waiver process, but the criteria and deadlines vary.⁶ Common grounds include recovery pushing an heir onto public assistance, or the property being a working farm or family business that provides the heir’s primary income. Waivers require a formal application with documentation, and missing the filing deadline can forfeit the claim.

Probate-Only vs. Expanded Estate Recovery

How much of the house the state can actually reach depends on how your state defines “estate.” Every state must attempt recovery from the probate estate, which is property held in the deceased person’s name alone. Federal law also lets states use an expanded definition that includes assets passing outside probate, such as jointly held property, assets in a revocable living trust, and life estates.

About half of states use the expanded definition. In those states, common planning moves like adding a child to the deed or placing the home in a revocable living trust may not shield it. The house passes outside probate, but the state’s claim follows. In states limited to probate recovery, those same moves can effectively protect the home, though they carry other risks, including a look-back violation if done within 60 months of applying.

Before making any ownership change to the home, confirm whether your state uses probate-only or expanded recovery. Restructuring a deed or funding a trust that gives no real protection means paying legal fees for nothing, and possibly starting a fresh five-year clock in the process.

1
Social Security Administration. 2026 Cost-of-Living Adjustment (COLA) Fact Sheet
2
U.S. Department of Health and Human Services. Medicaid Treatment of the Home: Determining Eligibility and Repayment for Long-Term Care
3
Centers for Medicare & Medicaid Services. CMCS Informational Bulletin – 2026 SSI and Spousal Impoverishment Standards
4
Office of the Law Revision Counsel. 42 USC 1396p – Liens, Adjustments and Recoveries, and Transfers of Assets
5
Office of the Law Revision Counsel. 42 USC 1396r-5 – Treatment of Income and Resources for Certain Institutionalized Spouses
6
Medicaid. Estate Recovery