How to Protect Your Home from Medicaid Estate Recovery

Key Takeaways: Protecting Your Home from Medicaid Recovery 💡

1. Can Medicaid really take my house? Yes. A home that is exempt during a Medicaid recipient’s lifetime is frequently subject to estate recovery after their death unless planning strategies were implemented beforehand.

2. When does estate recovery kick in? Only after the Medicaid beneficiary dies, and states cannot recover from someone survived by a spouse, a child under 21, or a blind or disabled child of any age.

3. Does every state do this? Every single one. All 50 states and the District of Columbia operate Medicaid estate recovery programs, though the rules vary significantly by state.

4. What is the single best tool to protect my home? A Medicaid Asset Protection Trust created at least five years before you need long-term care.

5. Is there a cheaper option? In five states (Florida, Texas, Michigan, Vermont, West Virginia), a Lady Bird Deed costs as little as $200 to $500 and can be created even after you are on Medicaid.

6. Can I just give my house to my kids? Not without major risk. Transferring assets to children can create a five-year penalty period where Medicaid will deny coverage.

7. Is there a way to fight back after a loved one dies? Yes. Every state must offer an undue hardship waiver that can reduce or eliminate estate recovery.

8. Is Congress trying to end this program? The Stop Unfair Medicaid Recoveries Act was introduced in January 2026 to repeal the mandatory estate recovery requirement. It is currently with the House Committee on Energy and Commerce.

9. Does my state only go after probate assets? Twenty-three states and D.C. only pursue probate assets, while 27 states use expanded recovery that can reach non-probate assets too.

10. Who should I call first? A certified elder law attorney in your state. Free consultations are widely available, and acting early multiplies your options.

🏛️ 1. Yes, Medicaid Can Claim Your Home After Death, but Only Under Specific Conditions

Let us clear up the biggest misconception right away. While you are alive and on Medicaid, your primary residence is generally treated as an exempt asset, meaning it does not count against you when qualifying for benefits. The spousal impoverishment provision protects assets worth up to $157,920 in 2025 for a spouse living in the community.

But that exempt status evaporates when the Medicaid recipient dies. The 1993 Omnibus Budget Reconciliation Act requires all states to seek reimbursement of certain long-term care costs for individuals age 55 and older who received benefits, and for those under 55 who were permanently institutionalized.

The state cannot collect more than what it paid. So if Medicaid spent $180,000 on your care but your estate is worth $120,000, they can only claim $120,000.

💡 Pro Tip: Life insurance policies are not considered property that the state will collect on, as long as a person other than the estate is named as the beneficiary. Make sure every policy has a named individual, not “my estate.”

🛡️ 2. A Medicaid Asset Protection Trust Is the Gold Standard, but You Must Act Five Years Early

If there is one strategy that elder law attorneys recommend above all others, it is the Medicaid Asset Protection Trust, commonly abbreviated as a Mapt. Assets placed in a Mapt are not only excluded from Medicaid’s asset limit, but they are also shielded from estate recovery because the state cannot pursue assets that are no longer in the deceased’s name.

Here is how it works in plain language. You transfer your home and potentially other assets into a specially designed irrevocable trust. You give up legal ownership, but you can still live in the home and the trust can be written to allow you to receive income from trust assets. A trusted family member or professional serves as trustee.

The catch is the five-year look-back period. Any assets transferred into an irrevocable trust within five years of applying for Medicaid could affect eligibility and delay benefits. This is why planning early, while you are still healthy, is so powerful.

Michigan considers a home in a trust, even if irrevocable, a countable asset, while California has very lenient rules where even a home in a revocable trust can be safe from estate recovery. This state-by-state variation is exactly why you need local legal guidance.

💡 Pro Tip: Do not try to create a Mapt using an online template. Incorrectly setting up a Mapt can inadvertently cause one to be ineligible for Medicaid, defeating the entire purpose. Hire a certified elder law attorney who knows your state’s specific rules.

📜 3. Lady Bird Deeds Let You Protect Your Home Without Giving Up Control, Even After You Are on Medicaid

This is the strategy most people have never heard of, and it is remarkably powerful where it is available. A Lady Bird Deed, also called an enhanced life estate deed, allows the homeowner to maintain full control of their property during their lifetime while naming a beneficiary who automatically inherits the home upon death, bypassing probate entirely.

Because the home never enters probate, it is generally beyond the reach of Medicaid estate recovery in probate-only states. And here is what makes Lady Bird Deeds exceptional: they do not violate Medicaid’s look-back period because the homeowner retains control, so the home is not considered “given away.” You can create one even after you are already receiving Medicaid benefits.

Currently, only five states allow Lady Bird Deeds: Florida, Michigan, Texas, Vermont, and West Virginia. South Carolina introduced a bill in March 2025 to permit them, but it has not yet passed.

The cost is shockingly affordable. Professional assistance typically costs between $200 and $500, including drafting the deed and filing it with the local register of deeds.

💡 Pro Tip: If you live in a state that does not allow Lady Bird Deeds, ask your elder law attorney about Transfer on Death Deeds, which are similar tools available in about 30 states that can also help property avoid probate.

⚖️ 4. The Undue Hardship Waiver Can Save Your Family Home After a Loved One Has Already Passed

Most families do not know this option exists until it is almost too late. States are required to establish procedures for waiving estate recovery when recovery would cause an undue hardship. This means if losing the family home would devastate your financial stability, you may be able to stop or reduce recovery.

The most common undue hardship waiver, used by 41 states, is an exemption for an heir’s sole or primary income-producing asset. So if you are working the family farm or running a small business from that property, you may qualify. Other common grounds include situations where the heir would be forced onto government assistance if recovery happened, or where the home’s value falls below a certain threshold.

For example, Texas will not pursue recovery if the homestead is worth under $100,000 and the heirs have family income below $46,950 for one person (2025 figure), or $63,450 for a family of two.

The deadlines are tight. In Ohio, an undue hardship waiver must be requested within 30 calendar days after the notice of estate recovery claim was mailed. Many states have similarly short windows, so acting immediately upon receiving a recovery letter is essential.

💡 Pro Tip: A hardship waiver will generally not be granted if the individual created the hardship by divesting, transferring, or encumbering assets to avoid estate recovery. In other words, you cannot engineer a hardship situation. The need must be genuine.

👨‍👩‍👧 5. Certain Family Members Living in the Home Automatically Block Estate Recovery

This is one of the most overlooked protections in the entire Medicaid system. Federal law prohibits states from recovering from the estate of a deceased Medicaid enrollee who is survived by a spouse, a child under age 21, or a blind or disabled child of any age.

Additionally, states cannot impose liens on real property when the enrollee’s spouse, a child under 21, a blind or disabled child, or a sibling with an equity interest in the home resides there.

There are also two powerful transfer exemptions that let you move your home to a family member without triggering the five-year look-back penalty.

The Child Caregiver Exemption allows you to transfer your home to an adult child who lived in the home and provided care that delayed your institutionalization for at least two years before you entered a nursing facility. The Sibling Exemption allows a transfer to a sibling who has an equity interest in the home and lived there for at least one year before your institutionalization.

💡 Pro Tip: Document everything thoroughly. Keep medical records, living arrangements, and caregiving logs well organized. States will verify these exemptions, and lacking proof can disqualify you even when the facts are on your side.

📰 6. A New Federal Bill Could Eliminate Estate Recovery Entirely, and You Should Know About It

The Stop Unfair Medicaid Recoveries Act (H.R. 6951) was introduced on January 6, 2026, by Representative Janice Schakowsky of Illinois with 20 co-sponsors. If passed, this legislation would repeal the federal requirement that states operate Medicaid estate recovery programs and would require states to withdraw all existing liens within 90 days.

This bill has been introduced multiple times before, in the 117th and 118th Congresses, without becoming law. However, it continues gaining co-sponsors and advocacy support. Elder advocacy groups have praised the bill, arguing that forcing the sale of family homes keeps families in poverty and increases the risk of homelessness.

The Medicaid and Chip Payment and Access Commission has also weighed in, recommending that estate recovery be made optional rather than mandatory.

Even if the bill does not pass in this session, staying informed gives you leverage. Contact your House representative to express support, and ask your state Medicaid office whether any state-level reform efforts are underway.

🏗️ 7. Your State’s Rules Make a Massive Difference, and Here Is How to Figure Out Where You Stand

In 23 states and D.C., estate recovery programs only pursue the deceased’s probate estate, meaning assets that pass through a will. In the remaining 27 “expanded recovery” states, Medicaid can also go after non-probate assets, including jointly owned property and assets in living trusts.

This distinction is enormous. If you live in a probate-only state, simply keeping your home out of probate through a Lady Bird Deed, transfer-on-death deed, or even a properly structured revocable living trust (in states like California) can be enough to protect it. In expanded recovery states, you need more aggressive strategies like irrevocable trusts.

The Hhs Office of Inspector General has been actively auditing state estate recovery programs. A 2024 review found that Kansas’s estate recovery contractor was not filing liens or initiating probate in a timely manner, and Utah lacked formal written policies and procedures for estate recovery. This means enforcement is uneven, but you should never count on state inefficiency as a protection strategy.

📞 8. These Are the Exact People You Need to Call, and Most Offer Free Initial Consultations

Planning is only as good as the professional guidance behind it. Here are the critical contacts every family should know about.

💡 Pro Tip: When calling an elder law attorney, ask specifically whether they hold the Certified Elder Law Attorney designation from the National Elder Law Foundation. This credential requires passing a specialized exam and demonstrates deep expertise in Medicaid planning.

⏰ 9. The Absolute Worst Mistake Is Waiting Until a Health Crisis Hits

Let us be direct about this. The families who lose their homes to Medicaid estate recovery are almost always families who did not plan ahead. The five-year look-back period means that transferring assets after a health crisis has already begun can trigger severe penalties, including months or even years of Medicaid ineligibility during which nursing home costs must be paid entirely out of pocket.

Starting early allows assets to mature in the trust and fully protects them once the look-back period passes, while also giving families time to coordinate other parts of an estate plan like wills, advance directives, and healthcare powers of attorney.

If you are already past the planning window and a loved one is in a facility or has recently passed, do not give up. You still have options: hardship waivers, family member exemptions, and negotiating payment plans with the state. An elder law attorney can evaluate your specific situation rapidly.

💡 Pro Tip: Even if a loved one has already passed and you have received an estate recovery notice, many families successfully negotiate reduced settlements or payment plans. States would rather collect something than nothing, and the administrative cost of forcing a home sale can exceed the recovery amount for modest estates.