Can You Buy a House While on Medicaid?

Medicaid provides essential healthcare assistance to millions of Americans. For those receiving or considering Medicaid, understanding how asset ownership, particularly real estate, affects eligibility is important. This article clarifies how home ownership and the process of buying a home interact with Medicaid requirements.

Understanding Medicaid Asset Limits

Medicaid is a needs-based program with financial eligibility criteria, including asset limits. Assets are “countable” or “exempt.” Countable assets include cash, bank accounts, investments, and additional real estate, tallied against financial thresholds. For a single applicant, the countable asset limit is often around $2,000, but this varies by state and program. Some states, like California, are increasing or phasing out asset limits for certain groups.

A primary residence is generally an “exempt asset” and doesn’t count against Medicaid’s asset limits during a beneficiary’s lifetime. To qualify, it must be the applicant’s principal residence, often within the same state. Equity limits for this exemption typically range from $730,000 to $1,097,000 in 2025, varying by state. Some states, like California, may not enforce a maximum equity limit.

The primary residence remains exempt if the applicant, their spouse, or a minor, blind, or disabled child lives there. If the applicant moves to a nursing home, the home can still be exempt with a documented “intent to return home” or if a spouse or dependent child continues to reside there. Other common exempt assets include one automobile, household goods, personal effects, and certain prepaid funeral and burial funds. Life insurance policies below a certain face value, often around $1,500, may also be exempt.

Buying a Home While Receiving Medicaid

Buying a home while on Medicaid is generally allowed if the new property becomes the primary residence and qualifies as an exempt asset. The home must be the beneficiary’s principal residence. Converting a countable asset, like a savings account, into an exempt primary residence can be a valid strategy for maintaining Medicaid eligibility.

Medicaid agencies may review the source of funds for a new home purchase. If selling a previous exempt home, proceeds typically remain exempt if reinvested into another primary residence within a specific timeframe (e.g., a few months to a year). This allows seamless transitions without jeopardizing eligibility. Promptly report any significant financial changes or asset acquisitions, including a home purchase, to the state Medicaid agency.

Failing to report changes promptly could lead to complications or temporary loss of eligibility. The goal is to show funds are used for another exempt asset, not spent on non-exempt items or transferred in violation of Medicaid’s look-back period rules. Consulting a Medicaid planning professional can help ensure correct transaction structuring and reporting to avoid adverse impacts.

The Medicaid Estate Recovery Program

The Medicaid Estate Recovery Program (MERP) is a federal mandate for states to recover Medicaid costs from deceased beneficiaries’ estates. It typically applies to individuals aged 55 or older who received Medicaid benefits, or those who received long-term care services. MERP’s purpose is to recoup funds covering medical expenses, including hospital and prescription drug services.

While a primary residence is exempt during a beneficiary’s lifetime for eligibility, it can be subject to recovery after death. The state can place a lien or claim against the estate to recover Medicaid costs. Recovery may be deferred or exempt if a surviving spouse, a minor child (under 21), or a blind or disabled child of any age continues to live in the home.

States may grant hardship waivers if recovery causes undue hardship for heirs. Traditionally, “estate” for MERP included only probate assets, but states can expand this to include non-probate assets like jointly held property or living trusts, to the extent of the deceased beneficiary’s legal interest. Understanding these recovery provisions is important for homeowners on Medicaid, as it affects passing the home to heirs.

Navigating State-Specific Medicaid Rules

Federal guidelines provide a general framework for Medicaid, but states administer the program, leading to variations in rules and implementation. States have flexibility in asset limits, exemption scope, and Estate Recovery Program application. For example, home equity limits for primary residence exemptions vary significantly by state, from a federal minimum to a higher state-specific maximum.

The precise list of exempt assets and their value thresholds also vary by state. Some states have higher asset limits for general eligibility or specific programs than the federal baseline. For instance, some states are implementing or have implemented higher asset limits or even eliminated them for certain populations. These state-level differences highlight the need for localized information.

Individuals should consult their state’s official Medicaid agency website or contact them directly for accurate, up-to-date information. Due to the complexity and state-specific nature of these rules, personalized guidance from qualified professionals is highly recommended. Elder law attorneys or financial advisors specializing in Medicaid planning can provide tailored advice, helping individuals understand how their assets, including a home, fit within their state’s specific Medicaid regulations and assist with strategic planning.