How far back can a nursing home take your house?

Oct 2, 2025 4 min read •

Elder Law estate-planning medicaid

Medicaid covers the cost of long-term nursing home care for nearly two-thirds of all residents, but to qualify, applicants must navigate complex asset transfer rules. Understanding the Medicaid look-back period is crucial to knowing how far back can a nursing home take your house.

Quick Summary

A nursing home cannot directly take your house while you are alive, but a state's Medicaid Estate Recovery Program can place a claim against your estate to recover long-term care costs after your death. This claim is influenced by a 'look-back period,' which for most states is five years.

Key Points

Five-Year Look-Back Period: When applying for Medicaid long-term care, states review financial transactions for the preceding 60 months for asset transfers made for less than fair market value.
Medicaid Estate Recovery Program (MERP): This program allows states to recover the costs of long-term care from the estates of deceased Medicaid recipients, which can include the home.
Nursing Homes Cannot Take Your House Directly: A nursing home itself has no authority to take your home, but state Medicaid agencies can place a lien on the property to recover costs.
Irrevocable Trusts: A Medicaid Asset Protection Trust (MAPT) is a tool that removes assets, including your home, from your ownership to protect them from estate recovery, but must be set up outside the look-back period.
Life Estates: This legal arrangement allows you to transfer a home to a beneficiary while retaining the right to live there for life, helping it bypass probate and estate recovery.
Spousal and Dependent Protections: A home is exempt from estate recovery as long as a surviving spouse, minor child, or blind/disabled child lives there.
Caregiver Child Exemption: An adult child who has lived with and cared for the Medicaid applicant for at least two years prior to admission may receive the home without penalty.
Crucial Need for Early Planning: Any strategy to protect your home requires careful planning well in advance of a Medicaid application due to the five-year look-back period.

Understanding the Medicaid Look-Back Period

In most U.S. states, the Medicaid look-back period is 60 months (five years) immediately preceding the date you apply for Medicaid long-term care. The purpose of this rule is to prevent applicants from giving away or selling assets for less than their fair market value to meet Medicaid's strict asset limits. Any disqualifying transfers made during this period will trigger a penalty period, during which the applicant is temporarily ineligible for Medicaid benefits.

How the Penalty Period is Calculated

The penalty period is not a fine, but a period of ineligibility. Its length is determined by dividing the total value of the uncompensated transfers by the average monthly cost of nursing home care in the applicant's state (known as the 'penalty divisor').

For example, if an applicant gifts $100,000 to their children within the look-back period and the state's average monthly nursing home cost is $8,000, the penalty would be 12.5 months ($100,000 / $8,000). During this time, the applicant would need to find another way to pay for their care, such as with their own funds.

The Role of the Medicaid Estate Recovery Program (MERP)

While the look-back period addresses asset transfers made before applying for Medicaid, the Medicaid Estate Recovery Program (MERP) comes into play after the recipient's death. This federal mandate requires states to seek reimbursement from the estates of deceased Medicaid recipients for costs paid for long-term care, such as nursing home services, home and community-based care, and related hospital and prescription drug expenses.

What is Considered Part of the Estate?

An estate, for the purpose of MERP, includes property, money, and other valuable items left to heirs. In many states, this can include assets that pass through probate, such as a home held solely in the recipient's name. Some states have expanded their definition of 'estate' to include non-probate assets, like those held in certain trusts, though rules vary.

Strategies for Protecting Your Home

For many families, the prospect of losing their home to estate recovery is a major concern. Fortunately, several legal strategies can help protect a residence, though most require early planning.

Asset Protection with Trusts

An irrevocable trust, also known as a Medicaid Asset Protection Trust (MAPT), is a sophisticated tool for sheltering assets. When a home is placed in an irrevocable trust, it is no longer considered the applicant's property. This means it is no longer a countable asset for Medicaid eligibility and is protected from MERP after death. However, transferring the home to this trust must be done well before the five-year look-back period to avoid a penalty. The drawback is that an irrevocable trust cannot be easily altered or terminated once created.

Using a Life Estate

A life estate is another option that allows you to transfer the property's title to a beneficiary (the 'remainderman') while you (the 'life tenant') retain the right to live there for the rest of your life. When you pass away, the property bypasses probate and transfers directly to the beneficiary, potentially protecting it from MERP. Like trusts, this strategy is also subject to the five-year look-back period, so early planning is essential.

Other Spousal and Caregiver Protections

Federal law includes protections for a healthy spouse (the 'community spouse') and other dependents living in the home. A state is prohibited from filing a claim against the house for reimbursement of Medicaid expenses if the spouse, a disabled or blind child, or a child under 21 resides in the home. The caregiver child exemption may also apply, allowing a home to be transferred to an adult child who lived with and cared for the parent for at least two years before their nursing home admission.

Comparing Home Protection Strategies

To help clarify the differences, here is a comparison of common home protection strategies:


Feature	Irrevocable Trust (MAPT)	Life Estate	Caregiver Child Exemption
Look-Back Period	5-year look-back applies; must be funded in advance.	5-year look-back applies; must be created in advance.	No penalty if conditions are met.
Protection	Protects from both asset limits and estate recovery.	Protects from estate recovery, but not asset limits during lifetime.	Protects the home from transfer penalty and MERP.
Flexibility	Less flexible; irrevocable nature restricts changes.	Less flexible; requires cooperation from remainderman for sale.	No flexibility; one-time transfer based on care provided.
Who Owns the Home	The trust owns the home.	Beneficiary owns the 'remainder interest' after death; you are the 'life tenant.'	The adult child owns the home after transfer.
Control	Trustee manages assets; you lose control of the principal.	You retain the right to live in the home and collect rent.	You give up ownership to the caregiver child.
Ideal for...	Early, comprehensive estate planning.	Protecting a home for an heir with advanced planning.	Transferring a home to a family caregiver.

Conclusion: The Importance of Proactive Planning

In short, while a nursing home cannot take your house outright, state Medicaid agencies can make a claim against your estate after your death to recover long-term care costs through the Medicaid Estate Recovery Program. The length of time that is 'looked back' depends on the five-year look-back period for asset transfers prior to a Medicaid application. The best way to protect your home is to be proactive and engage in careful, long-term estate planning. Strategies like creating an irrevocable trust or a life estate, or qualifying for a caregiver child exemption, can be powerful tools when implemented correctly and well in advance. Consulting with an experienced elder law attorney who understands the specific rules in your state is the most effective step to safeguard your home for your heirs and ensure peace of mind.

For more information on estate planning, visit the American Academy of Estate Planning Attorneys (https://www.aepa.com/).

Frequently Asked Questions

Gifting your house to your children is a common mistake. If you do this within the five-year Medicaid look-back period, it will trigger a penalty period of ineligibility for Medicaid benefits. For this to be an effective strategy, the transfer must occur well over five years before applying.

No. Federal law protects a healthy spouse (the community spouse) by prohibiting the state from forcing a sale or placing a lien on the home during their lifetime. The home is protected as long as the spouse continues to live in it.

The look-back period is a review of financial transactions from the past five years to determine eligibility for Medicaid. Estate recovery is the process where a state seeks to recoup the cost of Medicaid benefits from a recipient's estate after their death.

If you are in a crisis situation and need long-term care immediately, you will likely need to spend down your assets, including your house, to pay for care until your assets are low enough to qualify for Medicaid. An elder law attorney can help navigate potential on-the-fly strategies to protect a portion of your assets.

Yes. Beyond protections for a surviving spouse, the home is protected if a blind or permanently disabled child of any age, a child under 21, or in some cases, a caregiver child resides there. Some states also have an undue hardship waiver.

This depends on the specific terms of the trust. While some trusts allow the grantor to retain the income generated by the assets, the principal is managed by an independent trustee. It's crucial to work with an experienced elder law attorney to structure the trust correctly.

An undue hardship waiver may be granted in cases where estate recovery would cause significant hardship to the heirs. For example, if the home is of 'modest value' and is the primary residence of an heir, or if the asset is an income-producing asset like a family farm.

No. A revocable trust, which allows you to retain control over your assets, offers no protection from Medicaid. Because you still control the assets, they are considered countable for eligibility and can be subject to estate recovery.

References

Medical Disclaimer

This content is for informational purposes only and should not replace professional medical advice. Always consult a qualified healthcare provider regarding personal health decisions.