My 65-year-old husband is going into a $13K/month nursing home — will the state take my house and force me to sell in order to pay for it?

Medicaid, a federal health insurance benefit for low-income Americans, will cover services at most nursing homes (limited to medically necessary care). But, the beneficiary must give up most of their income, minus a monthly stipend. So how does that impact the beneficiary’s spouse? Can the state try to recoup its costs by seizing the marital home?

Say, for example, a woman’s 65-year-old husband is going into a nursing home, which costs $13,000 a month. While Medicaid will cover the nursing home payments, she’s worried that the state will seize her home and force her to sell it in order to recover those costs — leaving her out in the cold. Here’s what she needs to know.

How Medicaid estate recovery works

If you’re 55 or older when receiving Medicaid (or an individual of any age who is permanently institutionalized), states are required to “seek recovery of payments from the individual’s estate for nursing facility services, home and community-based services, and related hospital and prescription drug services,” according to Medicaid.gov.

While Medicaid will pay for nursing care, the state will attempt to recover its debt through estate recovery. If the Medicaid recipient passes away or isn’t expected to return home, Medicaid can place a lien on the home.

While the framework for Medicaid falls under federal law, each state applies those rules a bit differently. For example, in one state, a lien could be placed on the home while the beneficiary is still alive. In another, a lien wouldn’t be placed until the beneficiary has passed away. And some states don’t use liens.

How Medicaid estate recovery impacts spouses

In states that do execute liens, Medicare won’t seize the home if a living spouse, a child under the age of 21 or a blind or disabled child is still living there. Federal law will also provide an exception if the size of the Medicaid claim or estate is too small to be worth pursuing, or if estate recovery would cause undue hardship (this is where states differ in their application of the rules). If there’s no estate, or the beneficiary has no assets, then there’s nothing the state can recover.

Since the woman in the example above would be a “community spouse,” which refers to the wife or husband of a Medicaid beneficiary, she won’t be forced out onto the street, but a lien can be placed on her home. When her husband (the Medicaid beneficiary) passes away, her home will be protected, so long as she continues to live in that home.

The lien will remain on the home until it’s sold and the debt is paid back. In this case, if the woman passes away and her children inherit the house, they could continue to live in the house as minors, but once they reach adulthood (and for a period of time afterward) the state could then execute on the lien.

In certain cases, a child caregiver exemption could apply if an adult child was providing care to their parent for at least two years before they were admitted to a nursing home. The home could then be transferred to the child and wouldn’t be available to Medicaid for reimbursement.

Medicaid estate recovery can be complicated, so it’s worth reaching out to your Medicaid office, legal aid office or speaking with an elder law attorney in your state.