Can Medicaid Take a Home: Rules on Home Ownership and Eligibility

Summary
Losing your home because you need Medicaid Long Term Care is a common worry. While there are some circumstances that might force an individual to sell their home to become Medicaid eligible or pay for long-term care out of pocket, there are are also ways to keep the home protected and still qualify for Medicaid Long Term Care.

How Home Ownership Impacts Medicaid Long Term Care Eligibility

There are many requirements for Medicaid eligibility, including an asset limit, which is $2,000 for an individual in most states in 2025. If a home is counted against the asset limit, the Medicaid applicant would most likely be well over the $2,000 limit and would not be eligible. However, there are several circumstances and strategies that make the home exempt and keep it from counting against the asset limit. These allow the applicant to keep their home and qualify for Medicaid, and they are detailed below.

When a Home is Protected When Using Medicaid

-If the Medicaid Beneficiary Lives at Home

There are three types of Medicaid Long Term Care relevant to seniors – Nursing Home Medicaid, Home and Community Based Services (HCBS) Waivers and Aged, Blind and Disabled (ABD) Medicaid. Many people who have HCBS Waivers or ABD Medicaid will live at home, and that makes the home exempt from the asset limit, as long as it is the primary residence of the Medicaid applicant and is below the state’s home equity interest limit (more on that in the next paragraphs). Vacation homes or other second homes will count against the asset limit. A primary residence doesn’t have to be a single-family home, it can be a condominium, a multi-family home, a mobile home or a houseboat, as long as it is the primary residence of the Medicaid applicant.

For HCBS Waiver and Nursing Home Medicaid applicants, the home must also be under the state’s home equity interest limit for it to be exempt from the asset limit. For most states in 2025, the home equity interest limit is either $730,000 or $1,097,000 (for states with higher property values) except in California, where there is no home equity limit. ABD Medicaid applicants are not required to meet the home equity interest limit in their state.

To be clear, home equity interest is the portion of the home’s equity value that the applicant owns minus any outstanding mortgage or debt on the home. For example, let’s use a home that has a fair market value of $1,100,000. If there is still $200,000 outstanding mortgage on the home, and the applicant is the sole owner, the home equity interest is $900,000.

-If the Spouse of the Medicaid Beneficiary Lives in the Home

If the Medicaid applicant is married and will move out of the home but their spouse will remain living in the home, the home will be exempt and not counted against the asset limit for Medicaid eligibility. This happens most often with Nursing Home Medicaid applicants/recipients. However, it might also apply if an individual receiving an HCBS Waiver moves into a non-nursing home assisted living residence, like a memory care unit for Alzheimer’s disease or dementia patients, but their spouse remains living at home.

The home must also be the primary residence of the spouse for it to be exempt in this situation, second homes or vacation homes cannot be exempt. However, home equity limits do not apply when a spouse lives in the home. So, the home could have an equity value above their state’s home equity limit and it would still be exempt if the spouse of the Medicaid applicant or recipient is living there.

It’s important to note that if the spouse moves out of the home, it is no longer exempt and will be counted toward the asset limit during the annual Medicaid Renewal, unless the beneficiary files an intent to return home statement, which is discussed below.

-If a Qualifying Child Lives in the Home

The home of a Medicaid applicant will not be counted against the asset limit if they have a child who is blind, disabled or under the age of 21 living in the home. The home must be the primary residence of the qualifying child in order for it to be exempt, but it does not need to meet any home equity limits. It’s important to note that if the child moves out of the home, it is no longer exempt and will be counted toward the asset limit during the annual Medicaid Renewal, unless the beneficiary files an intent to return home statement, which is discussed below.

-If the Child Caregiver Exemption is Used

The Child Caregiver Exemption allows a Medicaid applicant or recipient to transfer ownership of their house to a qualifying adult child to keep the home exempt from the asset limit without violating any Medicaid rules. In order to qualify, the adult child must have lived in the home for at least two years before the applicant begins receiving Medicaid Long Term Care, and during that time the adult child must have been providing a level of care that kept the applicant from needing to move to a nursing home. The adult child must be biological or adopted. Stepchildren, foster children, nieces, nephews and other family members are not eligible for this exemption.

The adult child will need to prove they have been living in the home as a primary residence and providing the necessary level of care. They can do this with appropriate documents, such as paid utility bills and signed doctor’s statements. If the adult child doesn’t have proof, or the state does not deem the proof or actions to be enough, transferring the home to the adult child would violate Medicaid’s Look-Back Period (more on that below) and make the applicant Medicaid ineligible.

To learn more about the Child Caregiver Exemption, click here.

-If the Sibling Exemption is Used

The Sibling Exemption allows a Medicaid applicant to transfer ownership of their house to a qualifying sibling, which will keep the home exempt from the asset limit without violating any Medicaid rules. The sibling is qualified if they have equity interest in the home, meaning they share ownership with the Medicaid applicant or beneficiary. They need to prove this co-ownership with documentation like a deed or canceled checks that have been used for mortgage payments or utility bills. The sibling must also be able to prove they have been living in the home for at least a year prior to the applicant receiving long-term care (which usually means moving into a nursing home) to be eligible for this exemption.

The sibling must also be biological or adopted to be eligible for this exemption. Step-siblings or foster-siblings are not eligible. To learn more about the Sibling Exemption, click here.

How Intent to Return Home Protects the Home

Even if no one is living in the home of a Medicaid applicant or recipient, the home can still be exempt from the asset limit if the applicant/recipient files an intent to return home. This is an official signed document stating that even though the Medicaid applicant/recipient is not currently living in the home, they still consider it their primary residence and they intend to return living there. Some states have standard intent to return forms, but there is no common form used across all 50 states.

Even if it’s unlikely the Medicaid applicant/recipient will actually return home, most states still honor the intent to return home statement and the home can stay exempt, but only for a limited amount of time. The time limit varies by state, but it is usually between six and 12 months. After that, the state will consider the move permanent, so the home will no longer be the primary residence of the applicant/recipient and it will count against the asset limit.

To learn more about intent to return home statements, click here.

Using Trusts & The Look-Back Period to Protect a Home

When someone applies for Nursing Home Medicaid or HCBS Waivers, the state will look back into the last five years of their financial records to make sure they haven’t made any transactions that violate Medicaid’s rules. That includes not giving away any assets, like a home, or selling them at less than fair market value to get below the asset limit. This is known as the Look-Back Period. If an applicant is found to be in violation of the Look-Back Period, their application will be denied and they will face a penalty period of ineligibility based on the amount of the violating assets and the average cost of long-term care in the state.

The Look-Back Period in most states is 60 months (5 years), which means the state will look back into the applicant’s financial records for the 60 months prior to application. The exceptions are New York and California. In California, there is no Look-Back Period for HCBS Waivers and it’s 30 months for Nursing Home Medicaid, although that will be phased out by July 2026. In New York, the Look-Back Period is the standard 60 months for Nursing Home Medicaid, but there is no Look-Back Period for Community Medicaid (New York’s version of HCBS Waivers), although that may change in 2025.

Transferring a home to a spouse who is not applying for Medicaid Long Term Care and will continue to live in the home does not violate the Look-Back Period. The Child Caregiver Exemption and Sibling Exemption discussed above do not violate the Look-Back Period, either.

There is no Look-Back Period for ABD Medicaid applicants. However, ABD applicants should be cautious about giving away their assets. They might eventually need Nursing Home Medicaid, or an HCBS Waiver, and those programs will deny or penalize the applicant for giving away assets if that transaction falls within the Look-Back Period window.

Medicaid Asset Protection Trusts
If it’s done in advance of the Look-Back Period, a home can be protected with a Medicaid Asset Protection Trust. A senior would create the trust, place the home in it, and name a trustee who would take ownership of the trust and everything in it (including the home) immediately upon the death of the senior. This will keep the home exempt from the asset limit when the senior needs to apply for Medicaid, but it will violate the Look-Back Period. So, these trusts are best used by seniors in good health who won’t need Medicaid Long Term Care any time in the next five years.

To lean more about placing a home in a Medicaid Asset Protection Trust, click here.

What Happens if the Home Is Not Medicaid Exempt?

If none of these circumstances apply to you or your home, you may need to sell your home and “spend down” the assets to become eligible for Medicaid long term care. It’s a complicated process, but essentially the Medicaid applicant would make a plan to spend the money from the home sale on long-term care costs until they get below the asset limit and then they would re-apply. This same “spend down” method can be used for a Medicaid beneficiary whose house becomes a countable asset while they are receiving benefits.

There are other planning methods that one could use if their home was no exempt, like the “Half a Loaf” strategy. These techniques tend to be complex, and using them on your own is not recommended. Instead, consult with a professional, like a Certified Medicaid Planner or an Elder Law Attorney.