Medicaid Home’s Exemption Rules and Exceptions by State

Introduction

For a senior to be eligible for long-term care Medicaid, one must be functionally eligible, as well as financially eligible. This includes a state-specific asset limit, which in most states, is only $2,000. Given it is such a low amount, what happens to one’s home? Is the home exempt from the asset limit? Does its value count unless certain requirements are met? What about when a senior moves to a nursing home? Will an exempt home become a countable asset? Can Medicaid take the home? Will it need to be sold?

Home Exemption Rules

One’s home, which could be a mobile home or houseboat, is generally exempt from Medicaid’s asset limit. A vacation home, however, is never exempt. Medicaid primary home exemption rules follow.

Automatic Home Exemption
A Medicaid applicant’s / beneficiary’s home is automatically exempt from Medicaid’s asset limit if one of the following relatives live in it: 1) their spouse 2) their child under 21 years old 3) their child of any age who is blind or permanently disabled.

Home Equity Interest Limits

With the Deficit Reduction Act (DRA) of 2005, a home equity interest limit became mandatory for unmarried applicants / beneficiaries of Medicaid nursing home care and long-term services and supports in the home and community. The federal government sets a minimum limit and a maximum limit, and states can choose to use the minimum limit, the maximum limit, or a figure in between the two. In 2025, the minimum home equity interest limit is $730,000 and the maximum limit is $1,097,000. If one is over the home equity interest limit in their state, their home is not exempt from Medicaid’s asset limit. To be clear, home equity interest is not only checked when one applies for long-term care Medicaid, it is also checked to ensure one is still under the limit at Medicaid redetermination. Persons over the home equity interest limit can potentially implement planning strategies to decrease their home equity.

One’s home equity value is based on its current market value minus any debts against it (i.e., mortgage). For instance, if one owns a home and its current market value is $800,000, but there is an existing mortgage for $450,000, the home equity value is $350,000. If one is the sole owner, their home equity interest is the home’s full equity value. So in this case, $350,000. If the home is co-owned, for instance say one owns 50% of their home and their sibling owns the other half, the applicant’s / beneficiary’s equity interest in the home is 50% of its equity value. So, the applicant’s / beneficiary’s equity interest is $175,000.

The home equity interest limit does not apply if one has a child under 21 years old, or any age and blind or permanently disabled, living in the home. Additionally, there is no home equity interest limit for Regular Medicaid.

Intent to Return

The rules for home exemption still apply for a Medicaid applicant / beneficiary who lives in a nursing home, but for unmarried nursing home residents with no child (under 21 years old, blind, or permanently disabled) living in the home, they must have an “Intent to Return”. In other words, if their health were to improve (even if very unlikely) and they were able to move back home, they would. How this intent needs to be expressed is based on the state. Some states have a state-specific Intent to Return form, others have a box to check on the Medicaid application, and still others require a signed written statement. Even if a state requires none of the above, it is recommended that one express their intent in writing and sign it. If a nursing home resident is unable to express their intent, a loved one may do so for them.

With an “Intent to Return” statement, one still needs to pay their home expenses, such as property taxes, insurance, and mortgage. If friends and family do not help cover these costs, maintaining the home isn’t feasible for long. This is partly because of Medicaid’s small asset limit (generally $2,000). However, what really limits one from covering these expenses is that nearly all of a Nursing Home Medicaid beneficiary’s income must go towards their cost of care. Essentially, they are limited to a Personal Needs Allowance of approximately $30 – $200 / month. However, with “Intent to Return”, a nursing home beneficiary may be able to keep a portion of their income as a Home Maintenance Allowance / Home Maintenance Deduction for up to six months to cover their home expenses.

Note: Some states, such as Virginia, only allow “Intent to Return” for a limited time (i.e., 6 months). If this is the case, and one hasn’t returned home within the allotted time frame, the home becomes a countable asset, which more likely than not, will cause one to be over Medicaid’s asset limit. If this happens, one will likely have to sell their home and “spend down” the proceeds on nursing home care until they reach Medicaid’s asset limit and can reapply.

Is the Home Exempt? Different Scenarios Explained

Single, live alone in the home

One’s home is exempt from Medicaid’s asset limit if they live in it and their home equity interest is under the state-specific home equity interest limit. In 2025, the home equity interest limit is generally $730,000 or $1,097,000. Home equity is determined by taking the home’s current market value and subtracting any debt against it. An individual’s equity interest is the amount of home equity owned by that person.

Single, moving to a nursing home

When one relocates to a nursing home, they should provide a written statement of “Intent to Return” home. This will allow one’s home to remain exempt under Medicaid rules as long as their home equity interest is under the state-specified value. Home equity is based on current market value, minus any debt against it. Equity interest is the amount of home equity owned by the individual. In 2025, the equity interest limit is generally either $730,000 or $1,097,000. If one lives in a state that limits the amount of time one can have “Intent to Return” and they exceed this, their home will become a countable asset if they have no child (under 21 years old, blind, or permanently disabled) living in their home. If the home becomes a countable asset, this will very likely make one ineligible for Medicaid. One would then have to sell their home and use the proceeds to pay for their nursing home care until they are financially eligible for Medicaid.

Single, moving from assisted living to a nursing home

If an individual left their home to move into an assisted living residence and then later moves into a nursing home, their home may no longer qualify as their primary residence and may be counted towards Medicaid’s asset limit. This is because when they moved into assisted living, it may be seen as a permanent move (rather than a temporary move). If one has a child under 21 years old, blind, or permanently disabled living in the home, the home will continue to remain exempt. In this situation, it is best to check with a state’s Medicaid agency to see how the home is treated.

Single, in nursing home with children in the home

The home is exempt, regardless of one’s home equity interest, if one has a grown child who is permanently disabled or blind living in it. If not, one must meet the home equity interest limit. Generally speaking, in 2025, the home equity interest limit is $730,000 or $1,097,000, depending on the state. Home equity is the home’s current market value minus any debt against it. Equity interest is the home equity amount in which the individual owns. Furthermore, since the senior lives in a nursing home, they need to have an Intent to Return, which means they plan to return home if possible. Often, this can be expressed via a written statement that they sign.

Married, one spouse moving to a nursing home

When one’s spouse moves into a Medicaid-funded nursing home, the spouse that remains at home is considered the community spouse, and as such, they are entitled to keep the home. Given the non-Medicaid spouse continues to live at home, there is no home equity interest limit and the Medicaid applicant does not have to express an Intent to Return home.

Married, one spouse living at home passed away

If the Medicaid recipient spouse lives in the nursing home and has no Intent to Return home, Medicaid will count the home towards Medicaid’s asset limit if the Medicaid recipient has no child (under aged 21, blind, or permanently disabled) living in the home. If the home is counted, its value will more likely than not, cause one to be over Medicaid’s asset limit. In this situation, the home can be sold and the proceeds “spent down” on nursing home costs until Medicaid’s asset limit is reached. The individual could then reapply for Medicaid. Even if the home was solely in the name of the spouse who lived at home (the community spouse), the institutionalized spouse could inherit the home via “intestate succession”. This is when a spouse dies without a valid will and the deceased’s assets are passed onto the living spouse. If this happens, the home will be counted as an asset and the institutionalized spouse will be disqualified for Medicaid until the home is sold and the proceeds “spent down” on care.

Can I Transfer my Home to a Family Member?

Yes, in some limited circumstances, the home can be transferred to a family member without jeopardizing one’s Medicaid eligibility. Medicaid, in all states, allows one to transfer their home to their spouse, child under 21 years old, or child of any age who is blind or permanently disabled. The home may also be transferred to one’s healthy adult child via the Caregiver Exemption, or one’s sibling, via the Sibling Exemption. However, it is imperative that all requirements of these exemptions be met or one could violate Medicaid’s Look-Back Rule and be penalized with a period of Medicaid ineligibility.

Can I Sell my House While on Medicaid?

Yes, one can sell their home while on Medicaid, but with the risk of losing Medicaid eligibility. Once one’s home has been sold, it is no longer an exempt (non-countable) asset. The proceeds from the sale will count towards Medicaid’s asset limit, which is generally $2,000. This, more likely than not, will put a Medicaid recipient over the asset limit and will result in disqualification until the extra assets (the assets over Medicaid’s limit) have been “spent down”. It is vital that one not gift assets, or in this case, money from the sale of the home, as it violates Medicaid’s Look-Back Rule. Violations result in a Penalty Period of Medicaid disqualification even after the “excess” assets are gone. While one can spend down the extra assets by paying for the cost of their long-term care, other options include purchasing an Irrevocable Funeral Trust and / or an Income Annuity.

More on selling one’s home and its impact on Medicaid eligibility.

Contact a Medicaid Planner for Assistance

In situations where one’s home is not exempt from Medicaid’s asset limit, such as when the home is over the home equity interest limit, a professional Medicaid Planner can be extremely helpful. They can assist in not only implementing Medicaid planning strategies to lower one’s equity interest, but also to protect one’s home from the Medicaid Estate Recovery Program. Find a Certified Medicaid Planner.