Will Medicaid take my house after I die?

Medicaid estate recovery is the federally required process where a state Medicaid agency pursues reimbursement, after the recipient's death, for long-term care services Medicaid paid on the recipient's behalf. The federal statute is 42 USC § 1396p(b); the implementing regulation is 42 CFR 433.36. Recovery is mandatory for nursing facility services, home- and community-based services, and related hospital and prescription drug services for recipients age 55 or older when the services were received. States may, at their option, expand recovery to all Medicaid services for recipients 55+.

Federal law sets the floor at age 55. For Medicaid recipients 55 or older when they received long-term care services, the state must seek recovery from the estate after death. For recipients who received services before age 55, recovery is limited to services tied to the permanently institutionalized lien provisions — not general estate recovery. States may set a higher floor; they may not set a lower one. Source: 42 USC § 1396p(b)(1)(B).

No. Estate recovery is a post-death claim against the estate, not a lifetime taking. The only related lifetime mechanism is a TEFRA lien under 42 USC § 1396p(a), which a state may, at its option, place on the home of a permanently institutionalized recipient — but even a TEFRA lien cannot be enforced against the home while a spouse, a child under 21, a blind or disabled child, or a sibling with equity who lived there at least one year is in the home. Most states do not aggressively use TEFRA liens.

Federal law forbids any estate recovery while a surviving spouse lives. Under 42 USC § 1396p(b)(2), recovery may be made only after the death of the surviving spouse. What happens at the second death is state-specific: some states drop the claim entirely; others pursue it from whatever remains in the second spouse's estate. The state's published Medicaid Estate Recovery Plan is the document that controls.

The federal floor covers nursing facility services, home- and community-based services, and related hospital and prescription drug services for recipients 55+. States MAY, at their option, expand recovery to any other Medicaid services received by recipients 55+ — some states do, most do not. Medicaid for working-age adults under MAGI rules, pregnancy Medicaid, and children's Medicaid are not subject to estate recovery in any state. Source: 42 USC § 1396p(b)(1)(B)(i)–(ii).

Not without significant risk. Any uncompensated transfer made within the sixty-month look-back window before a long-term care Medicaid application can trigger a transfer penalty under 42 USC § 1396p(c) — a period of ineligibility calculated from the value transferred. The IRS gift-tax annual exclusion does NOT exempt a gift from the Medicaid look-back. Read the medicaid-five-year-look-back page before transferring, and talk to an elder-law attorney first.

A Lady Bird deed (also called an enhanced life estate deed) is a state-specific tool that lets the homeowner retain full lifetime control — including the right to sell or revoke — while transferring the remainder interest to named beneficiaries automatically at death, outside probate. Because the home passes outside probate, it can sometimes avoid recovery in states that limit recovery to the probate estate. Lady Bird deeds are recognized by Florida, Texas, Michigan, and Vermont; the rules and effectiveness vary, and some states use an expanded-estate definition that captures non-probate transfers. This is elder-law-attorney territory.

A TEFRA lien is a lifetime lien a state may place on a permanently institutionalized Medicaid recipient's home, named for the Tax Equity and Fiscal Responsibility Act of 1982. It is authorized at 42 USC § 1396p(a)(1)(B) and 42 CFR 433.36(g). It is distinct from estate recovery: TEFRA liens operate during the recipient's life on the home specifically; estate recovery is a post-death claim against the estate. TEFRA liens are state-optional and many states don't use them. The same family-member exemptions (spouse, minor child, disabled child, sibling with equity) prevent enforcement.

Federal regulations require every state to offer a written hardship waiver process. The legal standard at 42 CFR 433.36 incorporates the federal undue hardship test — broadly, that recovery would deprive a family member of medical care so that life or health would be endangered, or of food, clothing, shelter, or other necessities. To apply, contact the state Medicaid Estate Recovery Unit (named on the state's recovery notice) and request the waiver application in writing. Most state deadlines fall in the thirty-to-sixty-day window after the recovery notice. Miss the deadline and the waiver path closes.

Yes — federal law caps recovery at the actual Medicaid services paid on behalf of the recipient, and states must follow the exemption framework at 42 USC § 1396p(b)(2). If a state recovers from a protected estate (surviving spouse, minor child, disabled child) or in excess of services paid, the family has standing to challenge. The state's recovery notice must itemize the services and amounts being claimed; if the itemization is missing or wrong, that's the place to start. This is one of those areas where an elder-law attorney earns the consult fee in the first hour.