Many older adults and caregivers worry about the state taking their home if they receive Medicaid—a process called estate recovery.
Under certain circumstances, Medicaid can seek repayment of some costs for services after a recipient dies.
Learn more about estate recovery, how it works, and how you can get help if you might be affected.
“If I get Medicaid, can the state take my home?” That’s a question many older adults and their caregivers worry about. Federal law permits states to attempt to recoup some of the costs of Medicaid nursing facility services, home and community-based services, and related hospital and prescription drug services from a person's estate—a process called estate recovery.
Who does estate recovery affect?
Medicaid estate recovery applies to anyone who is age 55 or older when receiving Medicaid benefits, and individuals of any age who are permanently institutionalized.
States also can pursue estate recovery for other Medicaid services for these individuals, except for payment of Medicare premiums (see below).
One way to think about estate recovery is that Medicaid “loans” beneficiaries financial support for long-term services and supports, and once the person becomes permanently institutionalized or passes away, the interest-free loan becomes due back to the state.
Does estate recovery apply to all Medicaid benefits?
No. It is important to understand that Medicare beneficiaries who qualify for help paying their premiums through one of the four Medicare Savings Programs (MSPs)—the Qualified Medicare Beneficiary (QMB), Specified Low-Income Beneficiary (SLMB), Qualifying Individual (QI) or Qualified Working Disabled Individual (QDWI)—are not subject to estate recovery for those benefits.
Some states combine the application for full Medicaid with MSP benefits. You and/or your loved one can choose to apply for a Medicare Savings Program without applying for full Medicaid, and therefore not be subject to estate recovery.
How does estate recovery work?
When a Medicaid beneficiary dies, the value of their estate (if they have one) is used to pay back debts before transferring to any heirs. The estate includes any assets, such as a home or savings or retirement account, that are solely in the name of the beneficiary. Depending on your state’s rules, jointly owned property, living trusts, and other assets can also be subject to estate recovery.
If the person has no assets at the time of death, there is nothing else the state can do. The state cannot ask the beneficiary’s living heirs for repayment if there is no estate.
Additionally, if the beneficiary has a spouse living in the community, a certain amount of their combined resources is protected for that spouse, so they are able to continue living independently. This is called the “spousal impoverishment” provision. In 2021, it protects assets worth up to $130,380.
Can Medicaid take away someone’s home?
Part of the estate recovery process looks at property owned by the Medicaid beneficiary, and recovering some of the debt through the value of that property (this is called putting a lien on the house).
The state can file a lien when the Medicaid recipient is institutionalized and not expected to return home, or after the beneficiary’s death. However, the state cannot seize or place a lien on a home if any of the following of the beneficiary’s family reside there:
- A living spouse
- A child under age 21
- A blind or disabled child of any age
- A sibling with equity interest in the home, who has lived there for at least one year prior to the beneficiary entering a nursing home
The lien is removed if the beneficiary returns home or the house is sold and Medicaid is reimbursed. Some states only put a lien on the home when the beneficiary is alive; others do this after death.
Where can I get help with estate recovery?
The rules around Medicaid estate recovery are complicated and vary by state. To get advice, you may want to reach out to:
- Your state or local Medicaid office
- Your local legal aid office serving low-income Americans
- Many states offer an estate recovery program helpline or website
In addition, every state has a State Health Insurance Assistance Program (SHIP) that can help people with Medicare apply for the Medicare Savings Programs.