The question families ask first is rarely the question that matters. Everyone wants to know whether Medicaid will take the house. The better question is when — because the home is exempt during life, protected during a qualifying occupant's residency, and exposed after death in most states.
The short answer
Your primary residence is an exempt asset while you or your spouse lives in it. Federal rules say Medicaid cannot count the home toward the $2,000 (2026) applicant asset cap so long as one of four conditions holds: the applicant lives there, the community spouse lives there, a minor or disabled child lives there, or a sibling with an equity interest lived there for at least a year before the application. The home stays off the balance sheet. The applicant qualifies. The house remains.
Two caveats, though, already limit that protection. The home-equity limit caps the exemption at $730,000 (2026 federal floor) in most states and $1,097,000 (2026 federal ceiling) in states that elect the higher tier — California, Connecticut, Maryland, Massachusetts, New Jersey, and New York all use the ceiling. Equity above the limit disqualifies the applicant outright unless a spouse or dependent lives in the home, in which case the limit is waived. And the home's status during life says nothing about its status after death.
What changes at death
Medicaid Estate Recovery is the federal program that requires states to recover what Medicaid paid for long-term-care services — generally from the probate estate of the deceased recipient. The home is usually the single largest asset in that estate, which is why recovery and the house are so tightly linked.
States take three broad postures. Minimum-recovery states — California and Texas are the cleanest examples — pursue only the federally-required Tax Equity and Fiscal Responsibility Act (TEFRA) minimum against long-term-care services. Expanded-recovery states (Florida, Illinois, New York, most of the Midwest) recover for all Medicaid services rendered, not just long-term care. Aggressive-recovery states go further, sometimes pursuing non-probate transfers and jointly-held assets.
Even in expanded-recovery states, recovery is deferred while a surviving spouse lives, while a minor or disabled child lives, and — in most states — while a caregiver child who meets the two-year exception lives in the home. The family has time. What the family usually does not have is a plan.
What doesn't work
Transferring the home to a child inside the five-year lookback. Selling the home to a child below fair-market value. Adding a child to the deed as a joint tenant (treated as a partial gift). Putting the home in a revocable living trust (the home stays countable — revocable trusts are invisible to Medicaid). Drawing up a Medicaid Asset Protection Trust and forgetting to actually re-title the home into the trust.
Each of these moves feels protective. None of them survive caseworker review if the lookback catches them, and all of them leave the estate exposed if the protective occupant vacates or dies. The two approaches that hold up are a clean transfer outside the lookback window or a properly-executed caregiver-child exception with documented care history.