When thinking about moving into a nursing home, many seniors wonder how they’ll pay for nursing home care. To help with these costs, people often turn to Medicaid. But if you’re living in a nursing home, you may be wondering: can Medicaid or Medicare take your house?

Can Medicare Take Your House? It Depends.

Key Takeawaysdistant view of a medium-sized suburban home

  • Medicaid uses a process called Estate Recovery to recoup the benefits it paid for on nursing home care by recollecting a recipient’s house.
  • Medicaid cannot take your house while you are still living, but may reclaim the home after your death.
  • Institutional Medicaid can offer coverage for nursing homes and skilled care facilities.
  • Liens – including pre and post-death liens – are legal claims that states may impose on a property to support estate recovery.
  • To prevent Medicaid from taking your house, you can consult with an attorney or transfer your home to a family member.

What Is Skilled Care?

Skilled care refers to nursing or rehabilitation services conducted by licensed nurses under a doctor’s orders. Skilled nursing facilities are usually Medicare-approved facilities that offer short-term care or post-hospital extended care services. Usually, Medicare will cover up to 100 days per benefit period of some skilled nursing facility care. Once the 100 days pass, Institutional Medicaid may help cover the rest. Institutional Medicaid may cover a stay in a nursing home if you need this level of care, meet the functional eligibility criteria, and if you have an income and assets that fall below the state’s chosen limit.

Costs of Skilled Care

Unfortunately, Original Medicare usually doesn’t cover copayments, coinsurances, and deductibles, but Medicaid can. Institutional Medicaid typically works with a small asset limit of $2,000 and provides a personal care allowance of about $50 a month. So in conclusion, Medicare may not cover the costs of skilled care, but that’s where institutional Medicaid can help.

The Role of Medicaid in Nursing Care

Medicaid is a federal and state program that helps those with limited income and resources with paying for medical costs. It also serves as a supplement to Medicare to cover additional costs that Medicare might not typically cover, like nursing homes. Over time, Institutional Medicaid has become the primary payer for this kind of long-term care. This is a type of Medicaid that covers general nursing home expenses like room and board, personal care, and therapy.

Can Medicaid or Medicare Take Your House?

If you decide to move into a nursing home, you might be wondering if Medicaid or Medicare can take your house after you move out. The answer depends. Medicaid can take your house using a process called Estate Recovery, where they recoup the nursing home care benefits they paid for by recollecting your house. After the death of those 55 or older, states must seek this recovery of payments for services provided through either a trust previously set up or through claiming the home. There are certain situations where Medicaid cannot collect on the home in the event of someone’s death. In the case that a spouse, disabled or blind child, a child under the age of 21, or a sibling with an equity interest lives in the home, Medicaid cannot take your house. Families can also file to waive Estate Recovery when it appears as if it would cause an undue hardship.

What Are Medicaid Liens on a Property?

State Medicaid programs under Medicare can protect their right to take your house through liens. A lien is a document that allows people or companies to keep possession of property belonging to another person until a debt owed by that person is paid. Liens can prevent owners from giving away or selling their home in a way that would compromise the equity of their property. Overall, liens are a protective measure favoring Medicaid.

Pre-Death Liens

What many call a pre-death lien is the Tax Equity and Fiscal Responsibility Act (TERFA). State governments can place this lien on patients who are permanently institutionalized and no longer living at home. This allows governments to place a lien on Medicaid recipients who are still alive and receiving health coverage. In this situation, the interests of Medicaid overrule the personal wishes of relatives with some claim on the patients’ home. Medicaid or Medicare will take your house with little regard to family members tied to the estate. Granted, there are restrictions on these kinds of liens. For example, the recipients must attend a hearing to determine if they need permanent institutionalization. Additionally, Medicaid cannot place this lien if a spouse, child under 21, or permanently disabled child of any age are living in the home, and if a sibling with an equity interest in the home has lawfully resided there for 1 year prior to the institutionalization of the recipient.

Post-Death Liens

It is possible for Medicaid or Medicare to take your house after your death. States can file post-death liens against the personal property of those receiving Medicaid services after the age of 55 and those permanently living in an institution. So far, twenty-seven states have used these kinds of liens on probated assets as a part of their estate recovery programs. These programs are ever-evolving as states try to cope with budgeting and spending priorities. Different states have different laws in regards to these kinds of liens, so check your state’s regulation on these claims.

How to Protect Yourself from Medicaid Taking Your House

Although these circumstances might sound scary or intimidating, there is no need to fret. Luckily, here are some options to avoid Medicaid from seizing your home.

Consult With an Attorney

One of the most valuable steps in protecting your home from Medicaid Estate Recovery is speaking with an attorney. Doing so will inform recipients and their families on what their options are, and help them feel at ease. It’s best to speak with an attorney before moving into a nursing home.

Transfer the Home

Transferring a home improperly may incur a transfer penalty, so consider consulting an attorney when doing so. Thankfully, there are certain situations where homeowners can transfer their homes without incurring any transfer penalties. People can freely transfer their homes to their spouses, a child with a disability, a child under 21, or a child that is also their caretaker. Recipients who are institutionalized can also transfer their home to a sibling with an equity interest in the home as long as they lived there before the institutionalization. Recipients can also transfer the property’s money value into a trust for a disabled individual under the age of 65.

Paying for medical expenses as you age isn’t easy. If you aren’t careful, you could lose some major assets due to unpaid Medicare or Medicaid bills. But with the help of a good attorney and knowledge about the process, you can certainly strike a fair balance.

by Lindsay Malzone, Lindsay Malzone is the Medicare expert for Medigap.com. She's been contributing to many well-known publications as an industry expert since 2017. Her passion is educating Medicare beneficiaries on all their supplemental Medicare options so they can make an informed decision on their healthcare coverage.
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