Common situation

When a parent on Medicaid dies

When a parent who received Medicaid (especially for long term care or nursing home services) dies, the state will typically attempt to recover those costs from the estate. This is called Medicaid Estate Recovery, and it is required by federal law. For families counting on inheriting the house, this can be a difficult surprise.

What is different about your situation

Medicare benefits do not get recovered. Medicaid long term care benefits do.

Estate recovery applies to anyone over 55 who received Medicaid long term care services, regardless of asset level at the time they qualified.

States can only recover from the probate estate in most circumstances. Assets that pass outside probate (joint property, transfer on death deeds, beneficiary designations, living trusts) are often beyond Medicaid's reach, though some states have expanded recovery to include these.

The most urgent things to do first

Notify Medicare and Medicaid of the death. Call 1-800-MEDICARE for Medicare. For Medicaid, contact the state agency that administered the benefits.
Do not sell or transfer the home until you understand the Medicaid claim. Selling first and distributing proceeds can create personal liability for the executor.
Request a notice of estate recovery from the state Medicaid office. They will send a statement of how much they are claiming.
Identify any hardship exemptions that may apply. Federal law requires states to delay or waive recovery if the home is occupied by a surviving spouse, a minor or disabled child, or a sibling who lived in the home for at least one year before the Medicaid recipient entered care.
Get an itemized list of charges. Sometimes the state's calculations include errors or duplicated charges.
Consult a probate attorney experienced in Medicaid recovery before paying anything or making distributions to heirs.

State by state notes

Some states pursue estate recovery aggressively, others rarely. California has very limited recovery. Some states allow installment payment plans or lien arrangements that let the family keep the home while paying over time.

Frequently asked questions

Will Medicaid take the house?

Possibly. If the house is the only major asset and there is no exempt occupant (spouse, minor or disabled child, qualifying sibling), the state may file a claim against the estate that effectively requires the house to be sold or a lien paid.

How much will Medicaid try to recover?

All Medicaid long term care benefits paid since age 55, including nursing home, in home long term care, and related hospital and prescription drug services.

Can I just keep the house quietly?

No. Transferring or concealing assets to avoid recovery is fraud and can create personal liability and even criminal exposure for the executor.

Is there any exemption for the family home?

Yes. If a surviving spouse, a child under 21 or disabled, or a sibling who lived in the home for at least one year before institutionalization still lives there, recovery is delayed or waived.

What about a living trust?

In most states, assets in a properly structured irrevocable trust are beyond estate recovery. A revocable living trust is generally considered part of the estate for recovery purposes in many states.