Medicaid does not seize your home while you live in it, but federal law does require states to seek repayment from your estate after death. This guide separates the eligibility rules from the estate recovery rules, covers the 2026 home equity limits and look-back mechanics, and explains the exemptions that protect a spouse, a disabled child, or a caregiver child.
Plain-English guide to Medicare, Medigap, Advantage, and Part D — 2026 rates included.
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Medicaid does not take your house while you are living in it (learn more about complete guide to nursing homes: when skilled nursing is needed) (learn more about reverse mortgage strategy guide: unlock your home's equity for retirement) (learn more about retirement income strategies for 2025) (learn more about medicare advantage vs medicare supplement). In nearly every state the home you live in — or intend to return to — is an exempt asset (learn more about best medicare advantage plans in 2026: top rated plans by coverage, cost, and star rating), so owning it does not by itself keep you from qualifying for long-term care Medicaid. What can happen comes later: federal law requires every state to try to recover what it spent on your care from your estate after you die, (learn more about medicare part b costs 2025: what to expect) and for many families the house is the largest thing left. That is estate recovery — a claim against an estate, not a seizure during your lifetime.
A home can be fully exempt for eligibility and still face a recovery claim years later. Both are true at once.
Under federal law (42 U.S.C. § 1396p), your primary residence is generally exempt while you live in it. It also stays exempt if you move into a nursing facility but state in writing that you intend to return home, even when returning is medically unlikely. Some states limit how long that holds, so confirm with your own state agency. The home stays exempt regardless of intent when a spouse, a child under 21, or a blind or disabled child of any age lives there.
There is a ceiling. If your equity — market value minus what you still owe — exceeds your state''s limit, the home can be counted toward the asset test. Limits are set annually and vary by state.
| 2026 figure | Amount | What it means |
|---|---|---|
| Equity limit, federal minimum | $752,000 | The figure most states apply |
| Equity limit, federal maximum a state may adopt | $1,130,000 | Roughly a dozen states plus D.C. use this figure |
| Coming national ceiling | $1,000,000 | 2025 budget reconciliation law; effective January 2028 |
| Look-back period | 60 months | Nursing home and home- and community-based services |
| Penalty divisor | About $6,000–$22,000 per month | Set by each state, updated annually |
| Community Spouse Resource Allowance | $32,532 to $162,660 | What a spouse at home may keep; up from $157,920 in 2025 |
California does not currently apply an equity limit. And equity is what counts, not sale price: a $900,000 home with a $300,000 mortgage is $600,000 in equity, under every state''s 2026 limit.
A state may place a lien while you are living only if you are permanently institutionalized — in a nursing facility with no reasonable expectation of returning home. This is a TEFRA lien. Even then, federal law prohibits it if your spouse, your child under 21, your blind or disabled child of any age, or a sibling with an equity interest who lived there a year before admission lawfully lives in the home. If you return home, the state must release it. A lien is not a foreclosure — it does not force a sale, it means the state is repaid if the property ever sells.
The Omnibus Budget Reconciliation Act of 1993 made estate recovery mandatory nationwide. Every state must attempt to recover from the estates of people who were 55 or older when they received nursing facility care, home- and community-based services, or related hospital and prescription drug services, and from people of any age who were permanently institutionalized.
That is the federal floor. Roughly two-thirds of states go further with an "expanded estate" definition that captures assets which normally skip probate: joint tenancy, life estates, and living trusts. A few states, New York among them, keep recovery to the probate estate only.
| Situation | What generally happens |
|---|---|
| Surviving spouse | Deferred; in most states the deferral ends when the spouse dies |
| Surviving child under 21 | Deferred; a few states waive permanently |
| Blind or disabled child, any age | Deferred; several states waive permanently |
| Sibling with equity interest, resident 1+ year | Protected from a lifetime lien |
| Caregiver child, resident 2+ years providing care | Home transfer generally not penalized |
| Undue hardship | Every state must offer a waiver process |
Hardship standards and filing deadlines are set state by state, and some windows are a matter of weeks after notice.
Medicaid reviews the 60 months before your application for assets sold or given away below fair market value. An uncompensated transfer generally creates a penalty period during which Medicaid will not pay for your care, calculated by dividing the transferred value by your state''s penalty divisor. There is no cap on how long that penalty runs, which is why timing deserves care. The Medicaid 5-Year Look-Back Rule Explained walks through the arithmetic.
Federal law does carve out exceptions. Transferring the home is generally not penalized when it goes to a spouse, a blind or disabled child, a caregiver child who lived there at least two years before your move into care and provided care that kept you out of a facility, or a sibling with an existing equity interest who lived there at least a year before admission. Living in the house is not enough on its own — the caregiving has to be documented. These protections turn on paperwork and timing, which is why they are worth reviewing with an elder-law attorney well before a crisis.
Selling is legitimate in some situations — the proceeds simply become countable cash, which reshapes the picture rather than solving it. If a move is already on the table, How to Talk With a Parent About Moving to Assisted Living and the Home Downsizing Checklist for Seniors are better starting points than a rushed deed transfer.
This guide draws on federal statute (42 U.S.C. § 1396p), estate recovery guidance from Medicaid.gov and CMS, 2026 eligibility figures published by state Medicaid agencies, and the equity provisions of the 2025 budget reconciliation law. We verified the 2026 equity limits, look-back period, and spousal allowance against current-year sources rather than carrying prior-year numbers forward, and deliberately did not publish one national penalty divisor, because each state sets its own. Last reviewed September 2026.
No. Your home is exempt while you live in it, and in most cases while you intend to return. The only lifetime claim is a TEFRA lien, and only if you are permanently institutionalized with no protected relative in the home.
No. A spouse living in the home blocks a lifetime lien outright, and recovery is deferred while the surviving spouse is alive. In most states recovery becomes possible after that spouse dies.
Generally not, as long as your equity is below your state''s limit — $752,000 in most states in 2026, up to $1,130,000 in states that adopted the higher figure.
It is the federally required process by which each state seeks repayment from the estate of a deceased recipient for long-term care it covered. It has applied nationwide since 1993 to people 55 or older when they received that care.
Sixty months — five years — before the application date, for nursing home and home- and community-based services Medicaid. Transfers below fair market value inside that window can trigger a penalty period.
Usually not without consequences. A gift inside the five-year window generally creates a penalty period and may expose your children to capital gains tax they would have avoided by inheriting instead.
A revocable living trust does not. Because you retain control, the assets stay countable and reachable for recovery in most states. Irrevocable arrangements work differently and carry their own trade-offs.
If an adult child lived in the parent''s home at least two years immediately before the parent entered care, and that care is what delayed the move into a facility, the home may transfer to that child without penalty.
No. Medicare does not pay for long-term custodial care and has no estate recovery program. The confusion is common — Does Medicare Pay for Assisted Living? explains where the coverage line falls.
Every state must offer an undue hardship waiver, often applying when the home is the survivors'' only income-producing asset or their only housing. Deadlines vary and some are short, so ask as soon as a notice arrives.
This article is for educational purposes only and is not legal, tax, or financial advice. Medicaid rules are set partly by federal law and partly by each state, and thresholds change every year. Figures reflect 2026 federal amounts verified at the time of writing. Before making any decision about your home, a transfer, or a Medicaid application, consult an elder-law attorney licensed in your state.
Plain-English guide to Medicare, Medigap, Advantage, and Part D — 2026 rates included.
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Plain-English guide to Medicare, Medigap, Advantage, and Part D — 2026 rates included.
