Can Medicare Take Your House? Medicaid Estate Recovery and Liens

No, Medicare cannot take your house. Medicare has no estate recovery program and no legal authority to bill your estate or place a claim on your home after you die for any care it covered during your lifetime. The program that can do that is Medicaid, a separate benefit with a similar name, and because many older adults are enrolled in both, the two get confused constantly. If someone in your family has been warned that “the government will come for the house,” they are describing Medicaid estate recovery, not Medicare.

Why Medicare Has No Claim on Your Estate

Medicare is federal health insurance for people 65 and older and for some younger people with qualifying disabilities or conditions like end-stage renal disease or ALS.¹ It pays for hospital stays, doctor visits, and prescription drugs. When a Medicare beneficiary dies, no bill goes to the estate. Federal law gives Medicare no way to file a claim against a house, a bank account, or any other asset to recoup what it spent.

That’s the whole answer for Medicare. The rest of what follows is about Medicaid, because that is where the risk to a home actually lives.

Medicaid Estate Recovery Is the Real Concern

Medicaid is a joint federal-state program that covers health care for people with limited income and assets. It also pays for long-term nursing home care, which Medicare generally does not. Since 1993, federal law has required every state to run a Medicaid Estate Recovery Program to recoup certain costs after a recipient dies.²

At a minimum, states must seek recovery for nursing facility services, home and community-based services, and related hospital and prescription drug costs paid on behalf of anyone who was 55 or older when they received benefits.³ States may also choose to recover for all other Medicaid services provided to people 55 and older, and many do.² For most families, the house is the biggest thing in the estate, so it is the asset most exposed.

Liens Placed While You Are Still Alive

Estate recovery usually happens after death, but federal law also allows a state to place a lien on your home during your lifetime in narrow circumstances. These are sometimes called TEFRA liens.³

A state can file one only if you are an inpatient in a nursing facility or other medical institution, you are required to spend nearly all your income on care, and the state determines you cannot reasonably be expected to return home. That last piece matters. As long as you express an intent to return home, states generally cannot conclude you are permanently institutionalized. If a lien has been placed and you do return home, federal law says it dissolves.³

No lien can be placed while any of the following people live in the home: your spouse, a child under 21, a blind or disabled child of any age, or a sibling with an equity interest who has lived there for at least a year before your institutionalization.³

The Five-Year Look-Back on Transfers

The instinctive move is to give the house to a child before Medicaid ever gets involved. Federal law makes that harder than it looks. If you transfer your home, or sell it below fair market value, within 60 months of applying for Medicaid long-term care benefits, the state presumes the transfer was made to qualify for benefits and imposes a penalty period during which Medicaid will not pay for your care.³

The penalty is calculated by dividing the uncompensated value of what you gave away by the average daily cost of nursing home care in your state. Give away a $300,000 house in a state where nursing home care averages $300 a day, and you have a 1,000-day penalty. That is roughly 33 months where you owe the full nursing home bill yourself. Families discover this only after the fact, when the application comes back with a denial and there is no way to pay for the care that is already being delivered.

Transfers That Don’t Trigger a Penalty

Some transfers are exempt from the look-back rule entirely:³

Transfers to your spouse, at any time.
Transfers to a child under 21, or to a child of any age who is blind or permanently disabled.
Transfers to a sibling who has an ownership interest in the home and lived there for at least one year before your institutionalization.
Transfers to an adult son or daughter who lived in your home for at least two years immediately before you entered a nursing facility and provided care that let you stay at home instead.

The caregiver-child exception is the one families reach for most, and it is also the one that most often fails. The child has to be a biological or adopted son or daughter; stepchildren, grandchildren, and in-laws don’t count. The two-year residency must be continuous and immediately before institutionalization. The state also has to be satisfied that the care genuinely postponed the need for a nursing home. Vague help around the house won’t clear that bar. States look for evidence of daily hands-on care: medication management, bathing, meals, transportation to medical appointments.

Protections After Death

Even when a Medicaid recipient received years of covered nursing care, federal law blocks recovery while certain survivors are alive:²

A surviving spouse blocks recovery for the rest of the spouse’s lifetime.
A surviving child under 21 defers recovery.
A surviving child of any age who is blind or permanently disabled blocks recovery.

These protections don’t require the survivor to be living in the home. They just have to outlive the Medicaid recipient. Once the spouse dies or the child turns 21 without a qualifying disability, the state can resume its claim against whatever remains.

Hardship Waivers

Every state must offer a process for waiving estate recovery when collection would cause undue hardship to the heirs.² The definitions vary, but hardship typically applies when the estate is the sole income-producing asset for survivors, such as a family farm or small business, or when the home is of modest value. Some states tie eligibility to a percentage of the federal poverty level.

A hardship waiver is a legal right, not a favor, but you have to ask for one. States don’t apply them automatically. If a recovery notice arrives and the estate looks like it qualifies, file the waiver request promptly. Missing the state’s deadline can forfeit the protection.

Why Trusts and Joint Tenancy Often Don’t Help

People often assume that avoiding probate, by putting the house in a living trust or holding it in joint tenancy with a child, will keep it out of Medicaid’s reach. For ordinary creditors, that can work. For Medicaid, it often doesn’t. Federal law lets states define “estate” narrowly (probate assets only) or broadly (including property that passes outside probate, such as joint tenancies, life estates, and living trusts).⁴

Most states use the broader definition. Moving a home into a revocable living trust or adding a child’s name to the deed may do nothing to block recovery, and it can also trigger a look-back penalty if the timing is wrong. Before making any transfer or trust move aimed at protecting a home from Medicaid, talk to an elder law attorney licensed in your state. The wrong structure can leave you worse off than doing nothing.

If You Have Both Medicare and Medicaid

About 12 million Americans are enrolled in both programs at once. For dual eligibles, the estate recovery risk comes from the Medicaid side, not Medicare. Medicaid picks up services Medicare doesn’t cover, particularly long-term nursing facility care, and those are the costs states pursue after death.

One useful carve-out: if your only Medicaid benefit is through a Medicare Savings Program (Medicaid pays your Medicare premiums and cost-sharing, nothing more), those payments are not subject to estate recovery.² Some low-income Medicare beneficiaries turn down help with premiums and copays because they are afraid it will put the house at risk. It won’t.

1
HHS.gov. Who’s Eligible for Medicare?
2
Medicaid. Estate Recovery
3
Office of the Law Revision Counsel. 42 USC 1396p – Liens, Adjustments and Recoveries, and Transfers of Assets
4
U.S. Department of Health and Human Services (HHS) ASPE. Medicaid Estate Recovery