Your mom is moving into a nursing home, and her house is the one big thing she owns. It's where you grew up, and she has always said she wants it to stay in the family. Then a friend tells you, "The nursing home will take the house." Is that true?
Usually not in the way people fear. A nursing home doesn't get a parent's house just because they live there. What families really need to understand is how Medicaid treats the home: whether it counts when your parent applies, whether the state can place a lien on it, and whether the state can recover costs from it after your parent dies3. This guide explains each in plain language. It's general information, and state rules vary, so for decisions about a specific home, talk with an elder law attorney.
The short answer
A nursing home is a business that bills for care. If your parent doesn't pay, the home can try to collect like any creditor, but it can't take the house without going through the courts. If your parent has borrowed against the home, see reverse mortgages. In practice, the bigger question is Medicaid, which pays for most long-term nursing home stays for people with limited income and assets4.
Medicaid affects the house at three points: when your parent applies (does the home count as an asset?), while they're living in the nursing home (can the state place a lien?), and after they die (can the state recover costs from the estate?). The answer at each stage depends on who lives in the home, your parent's plans and your state's rules. Some families plan years ahead with a Medicaid asset protection trust.
Does the house count when applying for Medicaid?
In most cases, the home is an exempt asset when your parent applies for Medicaid. It generally isn't counted if your parent lives there, or if they live in a nursing home and intend to return home, or if a spouse or dependent relative lives there1. Many states accept a simple statement of intent to return, even if a return seems unlikely.
There is a limit. Federal law caps how much home equity a single applicant can have and still qualify for nursing home Medicaid, with a higher limit some states choose. The cap doesn't apply when a spouse, a child under 21 or a blind or disabled child lives in the home2. Check your state's current figure with the Medicaid office.
If the home is sold while your parent is on Medicaid, the proceeds become a countable asset, which can end eligibility until the money is spent down. See Medicaid spend-down before listing a house.
Can the state put a lien on the house?
Federal law lets states place a lien on the home of a Medicaid recipient who is permanently in a nursing home and isn't expected to return, after notice and a chance for a hearing2. A lien means the state is repaid when the house is sold or when the estate is settled.
The state can't place this type of lien while a spouse, a child under 21, a blind or disabled child, or a sibling with an equity interest who lived there for at least a year before admission lives in the home2. Not every state uses liens, so ask your state Medicaid agency how it handles them.
Estate recovery after your parent dies
Federal law requires states to seek repayment from the estates of people 55 and older for Medicaid spending on nursing home care, home and community-based services, and related hospital and drug costs2. Some states recover more. For many families, the house is the largest part of the estate3.
States must wait until after the death of a surviving spouse, and can't recover while there is a surviving child under 21 or a blind or disabled child2. States must also have a process to waive recovery when it would cause undue hardship2. Some states only recover from the probate estate, while others reach property that passes outside probate. Read Medicaid estate recovery for more.
Transferring the house to a child
Giving the house away to qualify for Medicaid usually backfires. Medicaid looks back five years for transfers below fair market value and can impose a penalty period when nursing home care isn't covered2. Adding a child to a deed can count as a transfer too, and it can create tax and creditor problems for the child.
Federal law does allow some transfers of the home without a penalty2:
- To a spouse.
- To a child under 21, or a blind or disabled child.
- To a sibling who has an equity interest and lived there for at least one year before admission.
- To a child who lived in the home for at least two years before admission and provided care that kept the parent out of a nursing home.
The caregiver child exemption needs proof, such as records of the care provided and a doctor's statement. Read the Medicaid look-back period for how penalties work.
Can a trust protect the house?
A revocable living trust doesn't protect the house from Medicaid, because your parent still controls it, so it's treated as available2. Some families use an irrevocable trust, which can protect the home if it's set up more than five years before applying for Medicaid. Transfers into it count as gifts under the look-back rules2.
Irrevocable trusts mean giving up control, so they're a serious decision with tax effects. They're best handled by an elder law attorney who knows your state. If time is short, ask about other options first.
When a spouse still lives in the house
If your dad is in a nursing home and your mom still lives in the house, the home is protected while she lives there. It isn't counted when your dad applies for Medicaid, the state can't place a lien while she lives there, and estate recovery must wait until after her death2. The spouse at home can also keep some income and assets under spousal impoverishment rules5.
Couples sometimes move the house into the at-home spouse's name, which is allowed. Talk with an attorney about the spouse's own will so the home doesn't pass back to the spouse in the nursing home.
If the at-home spouse later needs care too, the same questions come up again, so it helps to plan for both parents at once. A single meeting with an attorney who looks at the whole picture, including the house, savings, wills and powers of attorney, can save a family from costly mistakes later. Our guide to nursing home residents' rights explains protections for the spouse in care.
Practical choices for the family home
- Keep it. If your parent intends to return, the home usually stays exempt. Keep paying taxes, insurance and upkeep, which may be allowed from income in some states.
- Rent it. Rental income goes toward your parent's care and may affect their share of cost, but the house can stay in the family.
- Sell it. The money can pay for care privately. Plan the sale with Medicaid rules in mind.
- Transfer it under an exemption. Only with careful records and advice.
Whatever you choose, document your parent's wishes, keep up the home insurance, and don't let the house sit empty without checking with the insurer.
Common myths about nursing homes and the house
- "The nursing home gets the deed." No. A nursing home can't take title to your parent's home because they live there.
- "You have to sell the house to get Medicaid." Usually not, as long as the home stays exempt under your state's rules1.
- "Putting my name on the deed protects it." Adding a child to the deed can count as a gift and trigger a penalty period2.
- "Estate recovery means the family loses everything." Recovery is limited to what Medicaid spent, it is delayed for a surviving spouse, and hardship waivers exist3.
Rumors spread quickly in hospital waiting rooms and family group chats. Check what you hear with your state Medicaid office or a qualified attorney before acting on it.
Steps to take now
- Find the deed and mortgage papers. Know exactly who owns the home and how the title is held.
- Make sure someone has legal authority. A durable power of attorney lets a trusted person handle the home and finances if your parent can't.
- Write down your parent's wishes. Whether they hope to return home, and who they want to have the house someday.
- Ask the state about liens and recovery. Learn how your state handles the home before you apply.
- Get advice before any transfer. An elder law attorney can check whether an exemption fits your family.
- Keep the house safe and insured. An empty home needs regular checks, and some policies change if no one lives there.
For the bigger financial picture, see how to apply for Medicaid for an elderly parent and downsizing tips for seniors if the family decides to sell. If siblings disagree, our guide to talking to parents about senior living has tips for hard conversations.
Other help
Free counseling through your State Health Insurance Assistance Program can explain Medicaid basics6, and the Eldercare Locator can connect you with local legal aid for older adults7. See how to pay for a nursing home and power of attorney for an elderly parent.
