Nursing home care routinely runs past $100,000 a year, and Medicaid becomes the payer for millions of older Americans only after their income and savings are spent down to program limits. What often goes unmentioned at that point is the second half of the deal: federal law does not treat that spending as forgiven. States are required to try to recover what Medicaid paid from the person’s estate after death, and for anyone who used long-term care benefits at 55 or older, the family home sits squarely inside that claim. The rule is decades old and applies in every state, yet surveys keep finding that families learn about it only after a parent has already died.
The 1993 Law Behind the Claim
The requirement dates to the 1993 Omnibus Budget Reconciliation Act, which directed state Medicaid programs to recover certain benefit costs from a deceased enrollee’s estate through a process now known as estate recovery. Every state and the District of Columbia operates a program under that mandate, and none of them can opt out of the federal floor entirely.
The Administration for Community Living, the HHS agency that oversees federal long-term care policy, describes the mechanism directly: once a Medicaid recipient who received long-term care services dies, the state must recover the amount Medicaid spent on that care from the estate, and a state’s own probate law generally defines what the estate includes. Lawmakers built the requirement to promote what policy analysts call program integrity, on the theory that Medicaid should recoup part of what it spends before the remainder of an estate passes to heirs.
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Nursing Homes and Home Care Both Count
The federal floor is specific about which services trigger recovery. States must pursue the cost of nursing facility care and home- and community-based services, along with related hospital and prescription drug costs tied to that care, for enrollees who were 55 or older when they received it. States are also free to go further, and most do: a KFF survey of state Medicaid programs found 32 states recover the cost of all Medicaid-covered services, not just long-term care, from the estates of enrollees 55 and older, and 37 states apply recovery to at least some services beyond what federal law requires.
Recovery is not limited to people 55 and up. States may also pursue the estates of younger Medicaid enrollees if they were determined to be permanently institutionalized, according to the same survey, and 28 states reported doing exactly that. For enrollees covered through managed care rather than fee-for-service Medicaid, several states go further still and recover the monthly premiums paid to the managed-care plan rather than the cost of services actually used, which can pull in people who received comparatively little hands-on care.
Why the Family Home Is Exposed
The home becomes reachable largely because of how Medicaid’s own eligibility rules work. Long-term care applicants generally must show income and countable assets below strict limits, often near $2,000 in savings for an individual, but a home the person lives in is typically excluded from that asset count while they are alive. Most Medicare beneficiaries live on fixed incomes, with half reporting incomes below $36,000 a year and half holding savings under roughly $103,800, so a home is frequently the only asset of real value left once someone has spent down enough to qualify for long-term care coverage.
That leaves the house as one of the few assets left when the person dies, and probate estates in most states include real property such as a home along with other belongings owned at death. States may also place a lien on real property belonging to someone who is still alive but permanently institutionalized, ahead of any recovery after death.
The Exemptions That Can Stop Collection
Federal law carves out specific protections. An estate is exempt from recovery while a surviving spouse is alive, and states cannot take a home occupied by a surviving child under 21, a child who is blind or disabled, or a sibling with an equity interest in the property. Heirs can also request a hardship waiver, which federal guidance says should be granted when the estate is the sole income-producing asset of survivors, such as a family farm, when the home is of modest value, or under other compelling circumstances a state recognizes.
How often those waivers are actually granted varies enormously by state. KFF’s review of state survey data found hardship-waiver approval rates ranging from 29% in New York to 95% in Iowa, and only 15 states reported waiving recovery specifically for homes of modest value. Even that protection is inconsistent: only four states put a dollar figure on modest value, from West Virginia’s $50,000 threshold down to Mississippi and North Dakota’s $5,000, while other states define it as a share of the local median home price instead.
What States Actually Recover
Despite the reach of the rule, estate recovery raises comparatively little money relative to Medicaid’s overall size. States collected about $733 million nationwide in 2019, the most recent year with complete state-by-state figures, offsetting roughly 0.1% of the more than $600 billion Medicaid spent that year, per the KFF issue brief drawing on federal survey data. Collections are also concentrated: five states, Massachusetts, New York, Pennsylvania, Ohio, and Wisconsin, accounted for nearly 40% of everything recovered nationally, while the average amount recovered per estate ranged from roughly $5,000 in states like Missouri and Wisconsin to $30,000 or more in Alaska and Georgia.
The gap between how little the practice raises and how directly it can hit a single family’s home has drawn bipartisan attention in Congress. Separate bills cited in the KFF brief, including the Stop Unfair Medicaid Recoveries Act, have proposed eliminating estate recovery altogether, while a competing measure would bar states from recovering against a home transferred to a lower-income relative. Neither has been enacted, leaving the 1993 mandate as the operating rule in every state today.
What ends coverage most often
Not ineligibility, but a renewal packet returned late or missing one document.
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See the renewal document checklist in The SNAP & Medicaid Renewal Organizer.
Portions of this article were drafted with AI assistance and reviewed before it went live.
Warren Cohen is a finance writer based in Phoenix, Arizona, covering personal finance topics including credit, banking, and beginner investing. He earned his degree in business administration from Arizona State University and began his career working in consumer finance, where he gained direct experience with lending and credit systems. He now writes for personal finance websites and fintech platforms, focusing on clear, practical content that helps readers make informed financial decisions.
