Does Owning a House Affect Medicaid Eligibility?

Owning a house does not by itself disqualify you from Medicaid. For the Medicaid categories where assets matter at all, your primary residence is generally treated as an exempt resource, so the house is set aside when the state adds up what you own. The complications come from other rules layered on top: a cap on how much equity you can have, penalties for giving the house away in the years before you apply, liens the state can place while you are still living, and claims against your estate after you die.

Which Medicaid Programs Actually Look at Your House

Medicaid is not one program. Most working-age adults and children qualify through income-based rules (often called MAGI Medicaid) that have no asset test at all. If you qualify that way, your house, savings, and other property have nothing to do with your eligibility.

The asset tests kick in for specific groups: people 65 or older, people who are blind or disabled, and anyone applying for long-term care coverage like nursing home care or home-and-community-based services. Everything below is about those asset-tested categories. If you are under 65 and enrolled on income alone, you can stop worrying about the house.

Why the Home Is Usually Exempt

For asset-tested Medicaid, the general resource limit is $2,000 for an individual and $3,000 for a couple in 2026.¹ Those numbers would be impossible for a homeowner to meet if the house counted, but it doesn’t. As long as the property is your principal place of residence, its value is excluded from the resource calculation entirely.²

Moving into a nursing home does not automatically end the exemption. Federal rules let the house stay exempt as long as you express an intent to return, even when returning is medically unlikely. A signed statement is enough. No doctor has to certify anything, no time limit applies, and the length of your stay in the facility does not extinguish the exemption.²

The Home Equity Cap

The exemption has a ceiling. Home equity is fair market value minus any debts against the property, such as a mortgage. For 2026, federal law sets the minimum equity cap at $752,000 and the maximum at $1,130,000, and each state picks a figure in that range.¹ Most states use the lower number. The underlying statutory amounts of $500,000 and $750,000 are adjusted for inflation each year.³

If your equity is above your state’s cap, you cannot get long-term care Medicaid until you bring it down, whether by borrowing against the home, taking a reverse mortgage, or selling.

The cap does not apply at all when certain family members live in the house: your spouse, your child under 21, or your child of any age who is blind or permanently disabled.³ In those cases, the home stays fully exempt no matter how much it is worth.

When a Spouse Stays in the Home

When one spouse needs long-term care Medicaid and the other stays in the community, federal law protects the community spouse. Beyond letting the community spouse remain in the home without triggering the equity cap, the rules also protect a share of the couple’s other savings through the Community Spouse Resource Allowance. For 2026, states set that allowance somewhere between $32,532 and $162,660.¹ Only countable assets above that number have to be spent down before the institutionalized spouse qualifies.

The Five-Year Look-Back

Medicaid also examines the past, not just the present. When you apply for long-term care coverage, the state reviews every asset transfer you made in the previous 60 months. The look-back exists to stop people from gifting property to relatives right before applying.³

If you transferred the house for less than fair market value during those five years, you face a penalty period during which Medicaid will not pay for your care. The length is the value you gave away divided by the average monthly private-pay nursing home cost in your state. The penalty does not begin on the day of the transfer. It starts when you are in a facility and would otherwise be eligible for Medicaid.³ That timing is what catches families who thought they had planned early enough.

Transfers That Don’t Cause a Penalty

Federal law lists specific transfers that carry no penalty even inside the look-back window:

A transfer to your spouse.
A transfer to your child who is under 21, or to your child of any age who is blind or permanently disabled.
A transfer to a sibling who already has an equity interest in the home and lived there for at least one year immediately before you entered a care facility.
A transfer to a caretaker child: an adult child who lived in your home for at least two years immediately before you entered a facility and provided care during that time that kept you out of a facility longer than would otherwise have been possible.

Each exception comes straight from the federal statute.³ The caretaker child rule draws the closest scrutiny. States want proof that the care your child provided actually substituted for institutional care: physician letters, care logs, and documentation of your functional limitations all help.

Liens on Your Home While You’re Alive

People often think of Medicaid’s claim on a house as something that only happens after death, but some states can also place a lien while you are living. These are TEFRA liens, from the 1982 law that authorized them.⁴

A TEFRA lien is only available against someone who is permanently institutionalized. The state has to determine that you cannot reasonably be expected to come home, and it has to give you a hearing to contest that finding. If you are discharged and return home, the lien is dissolved.³

No TEFRA lien can be placed on your home if any of these people live there:

Your spouse.
Your child under 21, or your child of any age who is blind or permanently disabled.
Your sibling who owns an interest in the home and has lived there for at least one year before you entered the facility.

If a liened property is sold voluntarily, Medicaid gets paid first from the proceeds, up to the total the program spent on your care.⁴

Estate Recovery After You Die

Even a house that stayed exempt your entire life is exposed after death. Federal law requires every state to seek reimbursement for long-term care costs from the estates of Medicaid recipients who were 55 or older. That covers nursing facility services, home-and-community-based services, and related hospital and prescription drug costs. States may also recover the cost of any other Medicaid services these individuals received.³

For many recipients, the home is the only asset of real value left, so it becomes the target. The state files a claim against the probate estate and can force a sale to recoup what it paid.

Recovery is blocked in three situations. The state cannot pursue estate recovery if you are survived by a spouse, a child under 21, or a child of any age who is blind or disabled. Recovery is also deferred while a surviving spouse is alive, even when that spouse does not live in the home. And every state must have a process for waiving recovery when it would create undue hardship for the heirs.⁵

What Undue Hardship Usually Means

Federal guidance points to two typical hardship scenarios: the home is a modest homestead when measured against average home values in the county, or the property is income-producing (a farm or family business) that surviving family members rely on for their livelihood.⁶ Beyond that, states have wide discretion, and some set the bar high. Applying is worth the effort when the home is the family’s primary asset, but approval is not guaranteed.

Probate-Only vs. Expanded Recovery

Federal law requires states to recover from the probate estate: assets in your name alone that go through probate. Some states have expanded their definition to include non-probate assets as well, such as property held in a living trust, in joint tenancy, or with a beneficiary designation. Which approach your state uses changes what planning tools actually work. In probate-only states, keeping the home out of probate can shield it. In expanded-recovery states, those same techniques offer less protection.

Ways to Protect the Home

Families have several legal tools for reducing the risk to the house, each with trade-offs.

Lady Bird Deeds

In a handful of states, including Texas, Florida, Michigan, Vermont, and West Virginia, you can use a Lady Bird deed (also called an enhanced life estate deed). It names a beneficiary who takes the home when you die, but you keep full control during your lifetime, including the right to sell or change your mind. Because you have not actually given anything away, the deed does not trigger a transfer penalty. And because the home passes outside probate, it can bypass estate recovery in states that limit recovery to probate assets. Where available, this is one of the simplest tools.

Irrevocable Trusts

Transferring the home into an irrevocable Medicaid asset protection trust removes it from your countable resources, but the transfer is itself subject to the five-year look-back. If you need Medicaid before five years pass, the transfer triggers a penalty period like any other below-market gift. The trust has to be truly irrevocable, meaning you give up the right to sell the property or take it back. This approach fits people planning years ahead, not people already facing a health crisis.

Using the Statutory Exceptions

The penalty-free transfer categories, spouse, disabled child, resident sibling with an ownership interest, caretaker child, remain available right up to the moment of institutionalization. Because they do not depend on timing around the look-back, they are the most reliable planning tools when a crisis is already underway. The catch is documentation, particularly for the caretaker child exception, where the state will want real evidence that the child’s care substituted for a facility stay.

The families that lose homes to Medicaid are almost always the ones who waited until a health event forced their hand. Five years passes faster than it sounds when health is uncertain, so if the house is something you want to keep in the family, the time to look at these rules is well before anyone needs care.

1
Centers for Medicare & Medicaid Services. 2026 SSI and Spousal Impoverishment Standards
2
U.S. Department of Health and Human Services ASPE. Medicaid Treatment of the Home: Determining Eligibility and Repayment for Long-Term Care
3
Office of the Law Revision Counsel. 42 USC 1396p – Liens, Adjustments and Recoveries, and Transfers of Assets
4
ASPE. Medicaid Liens
5
Medicaid.gov. Estate Recovery
6
ASPE. Medicaid Estate Recovery