Nursing home care is expensive. In 2025, a private room costs over $10,000 per month. That’s more than $120,000 a year. Even people with decent savings may not afford it for long.
If you can’t pay out of pocket, Medicaid can help. But there’s a catch. After you pass away, the state may take your home to recover the money it spent on your care. This process is called the Medicaid Estate Recovery Program (MERP). It can take your house, savings, car, or anything of value left behind.
The good news? You can protect your home, if you plan early. This article explains how Medicaid works, what risks are involved, and how to avoid nursing home taking your house?
Can Medicaid Really Take Your House?
Let’s clear up a common myth. Nursing homes don’t take your house. But if you use Medicaid to pay for care, the state can claim your assets after you die.
Here’s how it works:
- Medicaid pays for your nursing home.
- When you pass away, the state checks your estate.
- If your home is still in your name, the state may put a claim on it.
- Your family won’t be able to keep or sell the home unless they repay the costs.
This only happens after death. The state won’t take your house while you’re alive.
Why Planning Early Matters?
Medicaid has a rule called the “5-year look-back period.” When you apply, they check all financial moves you made in the last five years. If you gave away or sold your home during that time, you may be disqualified or delayed from getting Medicaid.
So if you want to protect your home, you need to take action at least five years before applying. Waiting too long could cost your family the house.
7 Smart Ways to Protect Your House from Nursing Home Costs
Let’s look at the best ways to keep your home safe, even if you need long-term care.
1. Set Up a Medicaid Asset Protection Trust (MAPT)
This is one of the best options. You move your home into a special trust that protects it from Medicaid. Once the home is in the trust, it’s no longer yours—it belongs to the trust. But you can still live in it.
You must set up this trust at least five years before applying for Medicaid. If done right, the home won’t count as your asset, and the state can’t touch it after you die.
You’ll need help from an elder law attorney, but this option can save your home and pass it to your heirs without going through court.
2. Create a Life Estate
A life estate means you share ownership of your home with someone else, like a child. You keep the right to live there for life. When you pass away, full ownership goes to the other person.
Your home skips probate and can’t be claimed by the state. But this also needs to be done at least five years in advance.
You still control the house during your life, but can’t sell or refinance it without the other person’s okay.
3. Use Long-Term Care Insurance
This insurance helps cover the cost of nursing homes, assisted living, or in-home care. If you have it, you may not need Medicaid at all.
It’s best to buy this when you’re younger and healthy, as the premiums go up with age. Still, it’s a strong safety net for protecting your home and savings.
4. Stay at Home with In-Home Care
Instead of going to a nursing home, you can hire a caregiver to help you at home. In-home care is cheaper than nursing home care.
Family members can help too. If your care costs less, you might be able to pay out of pocket longer, avoiding Medicaid and its risks.
This option also helps you keep living in your home and maintain some independence.
5. Sell the House Early or Transfer It
Some people think they can give the house to a child or sell it cheaply before applying for Medicaid. This might work — but only if done more than five years in advance.
If you sell or transfer your house within five years of applying, Medicaid can penalize you. That means you’ll be delayed in getting help and might have to pay care costs yourself.
This method can work if you plan early and follow the rules. Don’t try this without legal advice.
6. Get a Medicaid-Compliant Annuity
An annuity is a financial product where you give a lump sum of money in exchange for fixed payments over time.
If structured correctly, this can help reduce your countable assets and help a married couple qualify for Medicaid.
In some cases, people sell their home and use the money to buy an annuity. Then they rent their home back or use payments to cover other expenses. But this method is complex and risky without expert help.
7. Sell Your Life Insurance Policy
If you have a life insurance policy, you might be able to sell it for cash. This is called a “life settlement.”
You can use the money to pay for care, avoiding Medicaid and keeping your home out of the state’s hands.
This only works with certain types of policies and amounts, so check with a financial advisor before selling.
Extra Tip: Work With a Medicaid Planning Expert
Each state has different rules. What works in one place may not work in another. That’s why it’s smart to talk to a Medicaid planning professional or elder law attorney. They know how to protect your assets without breaking the rules.
They can help with:
- Setting up trusts
- Timing transfers
- Explaining state-specific laws
- Avoiding penalties
Final Thoughts
If you need long-term care, failing to plan can cost your family the home. Medicaid is helpful, but it comes with strings attached. The government may try to take your house after you die to repay your care costs. But with the right steps and early action, you can protect your home and still get the care you need.
Start planning now, talk to the right experts, and use tools like trusts, life estates, or insurance to secure your family’s future.
FAQs
What are the disadvantages of a nursing home?
Nursing homes can feel strange at first. Many people need time to adjust. They can also be noisy or crowded. Good nursing homes cost a lot of money. Some people may feel lonely or miss their own home.
How can I avoid being put in a nursing home?
Take care of your health. Eat well, stay active, and go to the doctor regularly. If you need help later, try in-home care or move in with family. Planning early can give you more choices.
Can a nursing home take your house if it is in a trust?
If your house is in a special trust called an irrevocable trust and you did this at least five years before going into care, then Medicaid usually cannot take your house. But it must be set up the right way.
What happens to your assets if you go into a nursing home?
If you need help paying for a nursing home, Medicaid will check your money and property. They may use your savings or other assets to cover care. If you didn’t plan ahead, your home and other things could be at risk after you pass away.
How can I protect my parents’ assets from a nursing home?
Start planning early. You can help them set up a trust, give gifts ahead of time, or use legal tools like life estate deeds. It’s best to speak with an elder law expert.
Do nursing homes take your Social Security check?
Yes, if Medicaid pays for the nursing home, most of your Social Security check goes toward the cost. You are usually allowed to keep a small amount for personal items.
Can a nursing home force you to sell your house?
Not while you or your spouse is still living in it. But after you pass away, Medicaid may try to get money from the house. This is why planning ahead is important.
Can a nursing home take your inheritance?
If you get an inheritance while on Medicaid, you must tell them. It might affect your benefits. If you get a large amount, you may have to use some of it to pay for care.
How can I avoid nursing home fees?
There are legal ways to protect your money. You can use a trust, transfer assets early, or buy long-term care insurance. Always plan before you need care. The earlier, the better.
