One of the biggest fears families face when navigating long-term care is the possibility of losing their home. The idea that a nursing home might “take” your house can feel overwhelming, especially when you’ve worked hard to build a life and leave something behind for loved ones.
While nursing homes themselves don’t directly seize homes, the real threat lies with Medicaid. Through a process called estate recovery, Medicaid can claim a portion of your estate, including your house, to recoup the costs of your care after you pass away.
In this guide, we’ll break down how Medicaid works, when your home might be at risk, and the key legal and financial strategies you can use to protect your property. Whether you’re preparing for the future or facing urgent care needs, these insights can help you safeguard your home and secure your family’s financial future.
Key Takeaways
- Nursing homes do not directly take your house.
- Medicaid may seek repayment for long-term care through estate recovery after one’s death.
- Your home may be at risk if no exempt individuals (like a spouse or child with a disability) are living in it.
- Planning strategies like irrevocable trusts, life estate deeds, and spousal protections can shield your property.
- Life insurance settlements may offer a way to privately pay for care and avoid Medicaid altogether.
Can the Nursing Home Take Your House?
Despite the common fear, nursing homes don’t have the legal authority to take ownership of your home. What often causes confusion is the role of Medicaid—a government program that helps cover the cost of long-term care for those who qualify financially.
When someone receives Medicaid-funded care, the state can later attempt to recover the costs by placing a claim against the individual’s estate after death. This process is known as Medicaid Estate Recovery, and it’s the mechanism that can put your home at risk, not the nursing home itself.
How Medicaid Estate Recovery Works
If you use Medicaid to pay for long-term care services, your estate could be billed after your death for the cost of those services. In many cases, the largest asset in someone’s estate is their home, making it a prime target for estate recovery.
What Triggers Medicaid Recovery
Medicaid recovery typically begins after a Medicaid recipient passes away. If that individual received benefits for nursing home care or other long-term services, the state may file a claim against the estate to recover expenses paid.
When is the Home at Risk?
A house is vulnerable to estate recovery if:
- The Medicaid recipient owns the home, and
- There’s no surviving spouse, child with a disability, or dependent relative living there
If the home is left vacant or inherited by someone not protected by Medicaid’s exemptions, it may need to be sold to satisfy the state’s claim.
Exemptions to Medicaid Recovery
Certain individuals and circumstances protect a home from estate recovery, such as:
- A surviving spouse
- A minor or a child with a disability
- A sibling with an equity who lived in the home for at least one year before nursing home entry
- A caregiver child who lived in the home for at least two years and delayed the need for nursing home care
Legal and Financial Strategies to Protect Your Home
The good news is that there are proactive steps you can take to protect your home from Medicaid recovery. The key is to act early and understand how Medicaid’s rules affect your options.
1. Use of Irrevocable Trusts
Placing your home in an irrevocable trust removes it from your countable assets, making it unavailable for Medicaid recovery, if done at least five years before applying for Medicaid. This strategy allows you to retain some control while protecting the asset from future claims.
2. Life Estate Deeds
With a life estate deed, you transfer ownership of the home to a beneficiary, but keep the legal right to live in it during your lifetime. This setup can help avoid probate and reduce the home’s exposure to estate recovery.
3. Gifting the Home in Advance
Some families choose to give the home to a child or relative, but this comes with risk. If done within five years of applying for Medicaid, it may trigger penalties and delays in eligibility due to Medicaid’s look-back period.
4. Spousal Protections
If you’re married, Medicaid allows your spouse to remain in the home. The state cannot pursue recovery while the spouse is still alive, providing critical protection for couples navigating long-term care decisions.
5. Paying Privately with Life Insurance Settlements
If you have a life insurance policy, you may be able to sell it for a lump-sum cash payment, a process called a life settlement. This option can provide funds to pay for long-term care without needing to rely on Medicaid, reducing or eliminating the risk of estate recovery.
Curious what your policy might be worth? Use our Life Settlement Calculator to see your potential payout.
When Should You Start Planning?
The best time to plan is before a health crisis hits. Once you or a loved one requires nursing home care, your ability to shift or protect assets becomes more limited.
Early planning gives you more financial flexibility, better legal protection, and peace of mind for your family’s future.
Consulting with an elder law attorney or estate planner can help you build a personalized strategy that reflects your health, goals, and financial situation.
Protect Your Home and Future with Ovid Life
Your home is more than just property; it’s a symbol of your hard work, your memories, and your legacy. With careful planning, you can protect it from being used to pay for long-term care costs.
If you’re looking to avoid Medicaid altogether, a life settlement could provide a powerful alternative. By selling your life insurance policy for a cash payout, you can pay for care on your own terms, without sacrificing your home or passing on debt to loved ones.
Get started today with a free policy estimate and explore how Ovid Life can help you fund care, preserve your legacy, and take control of your financial future.
Frequently Asked Questions
Can the nursing home take your house while you’re alive?
No. Nursing homes cannot seize your property. However, if you use Medicaid to cover care and don’t meet exemption criteria, Medicaid may place a lien on your home while you’re still living in it, especially if it’s not occupied by a spouse or dependent.
How can I protect my house from Medicaid estate recovery?
You can use strategies such as:
- Placing the home in an irrevocable trust
- Creating a life estate deed
- Leveraging spousal protections
- Selling your life insurance policy to privately pay for care
What is the Medicaid 5-year look-back period?
The look-back period refers to Medicaid’s review of asset transfers made in the five years before applying for benefits. If you’ve given away or transferred assets during this window, you could face penalties or delays in coverage.
Can I sell my life insurance policy to pay for care instead of using Medicaid?
Yes. Through a life insurance settlement, you can convert your policy into cash, which you can then use to pay for care privately, helping you avoid Medicaid eligibility and estate recovery altogether.
Will my spouse lose the house if I go into a nursing home?
No. Under spousal protection rules, your spouse can continue living in the home, and it’s exempt from recovery during their lifetime.
