Can Medicaid Take the House After Paying for Hospice in a Nursing Home?

It can, but there are firm limits on when. If Medicaid paid for nursing home care for someone 55 or older, federal law requires the state to try to recover those costs from that person's estate after they die, and the house is often the largest part of that estate. The state cannot recover while a surviving spouse is alive, or if there is a surviving child under 21 or a blind or disabled child of any age. States must also waive recovery when it would cause undue hardship. Estate recovery applies only to what Medicaid paid. Medicare's payments for hospice care are not recovered.

Who estate recovery applies to

Federal law (42 U.S.C. 1396p) requires each state to seek repayment from the estate of a Medicaid enrollee who was 55 or older when they received:

• Nursing facility services
• Home and community-based services
• Related hospital and prescription drug services

States may also choose to recover for other services covered under their Medicaid plan, except Medicare cost-sharing paid for people in the Medicare Savings Programs. There is a second group, of any age: people the state has found, after notice and a chance for a hearing, to be permanently living in a nursing facility or other medical institution. For them, the state must seek recovery from the estate or from the sale of property under a lien, as described below.

Where hospice fits in

For most hospice patients, Medicare pays the hospice team, comfort medications and equipment. That is a Medicare payment, and estate recovery does not reach it. Medicaid enters the picture through the nursing home bill:

• Months of nursing home care that Medicaid paid before hospice are nursing facility services, a category every state must seek to recover for people 55 and older.
• After a resident with both Medicare and Medicaid elects hospice, Medicaid pays the room-and-board amount to the hospice, which passes it to the nursing home. How your state classifies that payment for recovery is a state question, so ask your state Medicaid agency.

If your family paid privately for the nursing home, there is no Medicaid payment to recover. For how the room bill works, see who pays the room when a parent in a nursing home goes on hospice.

When the state cannot recover

Situation	What federal law says
A surviving spouse	No recovery until after the spouse has died
A surviving child under 21	No recovery while that is the case
A surviving blind or disabled child of any age	No recovery
Recovery would cause undue hardship	States must have a process to waive it
Home under a lien, and a sibling or caregiving child still lives there	No recovery from the home while they live there, if they meet the conditions below

The last row covers two relatives. One is the enrollee's brother or sister who lived in the home for at least one year immediately before the enrollee was admitted to the facility. Unlike the lien rule below, this protection does not require the sibling to own a share of the home. The other is a son or daughter who lived there for at least two years before admission and gave care that kept the parent at home. Either one must have lived in the home continuously since the admission. Medicaid.gov notes that states must have procedures to waive recovery when it would cause undue hardship. Ask your state Medicaid agency how it decides hardship and how to apply.

What counts as the "estate"

At a minimum, the estate is everything that passes through probate under state law. States may choose a broader definition that also takes in assets the person had an interest in when they died. That can include property passed through joint ownership, a living trust, a life estate or similar arrangements. Because this varies so much, the same house can be recoverable in one state and outside the estate in another.

Liens while the person is still alive

A state may place a lien on a Medicaid enrollee's real property during their lifetime only in limited cases. For a nursing home resident, the state must first decide, after notice and an opportunity for a hearing, that the person cannot reasonably be expected to be discharged and return home. Even then, no lien is allowed on the home while any of these people lawfully live there:

• A spouse
• A child under 21, or a blind or disabled child
• A sibling who has an ownership share in the home and lived there for at least a year before the admission

Any such lien dissolves if the person is discharged and returns home. If a spouse is involved, read can a spouse keep the house when a partner is on hospice in a nursing home.

Frequently asked questions

Can the state take Mom's house while she is still on hospice?

No. Estate recovery happens after death. During life, the most a state can do is place a lien on the home of a permanently institutionalized resident, and only after notice and a chance for a hearing. If the house is sold while that lien is in place, the state can be repaid from the sale. A lien is not allowed while a spouse or certain children or siblings live there.

Does going on hospice add to what Medicaid can recover?

Hospice services paid by Medicare do not. Medicaid payments for the nursing home room can be part of a recovery claim, depending on how your state handles them. Ask the state Medicaid agency what it counts.

Is the family personally responsible for the debt?

Not from their own money. Federal law provides for recovery only from the deceased person's estate, or from property under a lien, not from relatives' own income or savings. In a state that uses the broader estate definition, a house or other property that passed to family outside probate, such as through joint ownership or a living trust, can still be part of the claim. Ask your state Medicaid agency or an elder law attorney how your state collects.

Can recovery be avoided by giving the house away now?

Be careful. Medicaid looks back 60 months at transfers made for less than fair market value, and a transfer can delay coverage. Some transfers of the home are exempt, such as transfers to a spouse. Get advice before moving anything.

Questions to ask the state Medicaid agency

• Does our state use the probate definition of an estate, or the broader one?
• Which Medicaid services does the state recover for beyond the federal minimum?
• How is room and board paid through a hospice treated for recovery?
• How do we apply for a hardship waiver, and what are the deadlines?

Your practical next step

If Medicaid is paying, or will pay, for a loved one's nursing home room on hospice, call the state Medicaid agency's estate recovery unit and ask the questions above while you have time to plan. A hospice social worker can help you find the right office; see how hospice social workers help families. For an elder law question, consult a licensed attorney in your state. When you are ready, compare hospices near you.