Every family that starts Medicaid planning eventually asks the same question. If Medicaid pays for Mom's nursing-home care, does the state take the house when she dies? The answer is yes, sometimes — and the precise sometimes depends on who lives in the house, which state the house sits in, and whether the estate ever passes through probate at all.
What the law requires
Federal law (42 USC § 1396p) requires every state to maintain a Medicaid Estate Recovery Program (MERP). The floor is set by the Tax Equity and Fiscal Responsibility Act of 1985 — long-term-care services, including nursing-home care, Home and Community-Based Services (HCBS), and related hospital and prescription costs, rendered to a Medicaid recipient age 55 or older. Every state must recover at least that much from the deceased recipient's estate. States are free to recover more.
The home is usually the largest asset at play. In 2026, the median US home value sits above the median estate's cash holdings, which means a family with a paid-off house and a modest bank balance sees recovery concentrate on the real estate. That is the policy working as designed — Medicaid is not a gift, and the recovery program is the back-end mechanism that keeps the program's long-term costs sustainable.
How state posture varies
States fall into three broad postures on recovery.
Minimum-recovery states pursue only the TEFRA-required floor. California and Texas are the two cleanest examples — California operates a limited-recovery statute enacted in 2017, and Texas declined to expand beyond the federal minimum. Families in these states typically see recovery only against long-term-care spending, and only against probate assets. A house that passes outside probate, through a transfer-on-death deed or a properly-executed living trust, may be fully outside reach.
Expanded-recovery states pursue all Medicaid services, not just long-term care. Florida, Illinois, New York, and most of the Midwest sit here. A recipient who had Medicaid-paid hospitalizations, prescriptions, and physician visits in addition to nursing-home care sees the entire medical bill follow the estate.
Aggressive-recovery states go further. Some pursue non-probate transfers — property that passed outside probate, jointly-held accounts, life-insurance proceeds payable to the estate. The posture varies year by year as states amend their statutes, which is why state-specific verification matters at application time.
Who is protected
Federal law defers recovery while a surviving spouse lives. A surviving spouse is not automatically exempt from eventual recovery, but the state cannot pursue the estate until that spouse dies. The deferral is absolute during the spouse's lifetime.
Recovery is also deferred while a minor child (under 21) lives and while a blind or disabled child of any age lives, regardless of where the child resides. Some states add a caregiver-child exception that defers or eliminates recovery for an adult child who lived in the home for two years or more immediately preceding the applicant's nursing-home admission and who provided documented care that delayed institutionalization.
The heir the state cannot touch is the disabled child. The heir the state already cannot touch during her lifetime is the surviving spouse. Every other heir — the able-bodied adult child, the grandchild, the sibling — is exposed to recovery unless an affirmative planning move moves the asset out of the estate.
What actually prevents recovery
The durable planning moves are not secret. They are just legally technical and state-specific.
A Medicaid Asset Protection Trust (MAPT) funded and seasoned outside the five-year lookback moves countable assets into irrevocable trust. The trust survives the recipient's death and is not a probate asset. In most states, trust-held assets are outside MERP reach. Timing is the variable that decides whether the trust works — a MAPT funded one year before application does not survive the lookback; a MAPT funded six years before does.
A life estate deed transfers the remainder interest in the home to heirs while preserving the applicant's right to live in the home for life. At death, the remainder interest vests automatically, and in many states the home passes outside probate. States vary on whether they treat the life estate as reachable.
A transfer-on-death deed (in the roughly half of states that recognize one) can push the home outside probate. Effectiveness depends on state posture.
What doesn't prevent recovery
A revocable living trust. Medicaid treats assets in a revocable trust as countable, and after death the trust does not shield the assets from MERP.
Adding a child to the deed as a joint tenant. This creates a partial gift inside the lookback and exposes the home to the child's creditors during the applicant's lifetime.
Writing a will that leaves the home to a child. Wills direct distribution through probate, which is exactly where MERP files its claim.