Many families learn about Medicaid estate recovery only after a parent has died. A letter arrives from the state saying Medicaid paid for care and wants to be repaid from the estate. That is frightening when you are already grieving, especially if the main asset is the family home. The rules are federal, but each state decides how far to take them. This guide explains who is covered, what is protected, and what you can do.
Medicaid estate recovery is the process by which a state seeks repayment from a deceased enrollee's estate for Medicaid benefits it paid. Federal law requires states to pursue recovery for nursing home care, home and community-based services, and related hospital and drug costs for people who were 55 or older. States may not recover while a spouse is alive or if the person leaves a child under 21 or a blind or disabled child.
- The claim is against the estate, not against heirs personally.
- States decide how much of the estate they can reach, and the rules differ widely.
- Every state must offer an undue hardship waiver. Ask about it early.
What Is Medicaid Estate Recovery?
Medicaid pays for long-term care for people who have little income and few assets. Under federal law, the state can recover some of that money after the person dies, using whatever the person left behind. The federal Medicaid agency, CMS, says state Medicaid programs "must recover certain Medicaid benefits paid on behalf of a Medicaid enrollee."
The rule is found in 42 U.S.C. § 1396p(b). It is separate from Medicare, whose benefits are not subject to this program. If you are sorting out other bills, see medical bills after death and what happens to debt when someone dies.
Who and What It Applies To
| Question | Answer under federal law |
|---|---|
| Whose benefits can be recovered? | People of any age who were permanently institutionalized, and people who were 55 or older when they received benefits |
| What must states recover? | Nursing facility services, home and community-based services, and related hospital and prescription drug services for people 55 and older |
| What may states also recover? | All other Medicaid services for those enrollees, at the state's option |
| What is off limits? | Medicare cost-sharing paid for people in Medicare Savings Programs |
| Does it cover Medicare? | No. It applies to Medicaid only |
The practical result is that the biggest claims come from long nursing home stays, which can add up to a large share of what someone owned. The amount a state may claim is generally limited to what Medicaid actually paid, and it cannot exceed what is in the estate.
What Counts as the Estate
This is where states differ most. Federal law says "estate" must include everything in the person's probate estate. It also lets each state choose to include other assets the person owned or had an interest in at death, including property that passes to others through joint tenancy, tenancy in common, survivorship, a life estate, or a living trust (42 U.S.C. § 1396p(b)(4)).
| State approach | Example |
|---|---|
| Probate estate only | California limits recovery to assets in the individual's probate estate for deaths on or after January 1, 2017. It also limits the claim to nursing facility, home and community-based, and related hospital and prescription drug services |
| Expanded estate | Ohio defines the estate to include assets in which the person had any legal title or interest at death, including assets passing through joint tenancy, trusts, or survivorship |
In a probate-only state, a home held in a living trust or passing by transfer on death deed may be outside the claim. In an expanded-estate state, the same home may still be reachable. Do not assume that skipping probate also skips Medicaid. Check your state's Medicaid agency rules, because states change them. The California figures above come from a 2017 notice, so confirm current rules with the state. Our how to avoid probate guide explains how non-probate transfers work.
When the State Cannot Collect
Federal law protects certain survivors. Recovery can happen only after the death of the person's surviving spouse, and only when there is no surviving child who is under 21 or who is blind or permanently and totally disabled (42 U.S.C. § 1396p(b)(2)). CMS summarizes it this way: states may not recover from the estate of a deceased enrollee who is survived by a spouse, a child under 21, or a blind or disabled child of any age.
| If the person is survived by... | What it means for recovery |
|---|---|
| A spouse | Recovery waits until the spouse also dies |
| A child under 21 | Recovery is not allowed while the child qualifies |
| A blind or permanently and totally disabled child | Recovery is not allowed while the child qualifies |
| An adult child who cared for the parent at home | The home is protected while the child lives there, if the child lived there at least two years before the parent entered a facility and provided care that kept the parent at home |
| A sibling with an equity interest in the home | The home is protected while the sibling lives there, if the sibling lived there at least one year before the parent entered a facility |
The caregiver-child and sibling protections apply to the home, and the person usually has to show the facts, such as proof of residence and the care provided. If one of these describes your family, say so in writing to the state agency as soon as you can.
Liens While the Person Is Alive
Some states can also place a lien on a home while the owner is alive. Federal law allows this when the owner is in a nursing facility, must spend nearly all income on care, and cannot reasonably be expected to return home. A lien cannot be placed if the owner's spouse, a child under 21 or a blind or disabled child, or a sibling with an equity interest who has lived there at least a year is living in the home (42 U.S.C. § 1396p(a)). CMS says the state must remove the lien if the person is discharged and returns home.
A lien does not mean the house must be sold right away. It means the state's claim is recorded against the property, and it typically has to be dealt with when the house is sold or the estate is settled.
Hardship Waivers
Every state must have a process to waive recovery when it would cause an undue hardship, using criteria set by the federal government (42 U.S.C. § 1396p(b)(3)). States write the details, so the standards and deadlines differ.
Ohio's rule shows how it can work. It lists situations where hardship may exist, including:
- The estate is the sole income-producing asset of the survivor, such as a family farm.
- Without the estate, the survivor would become eligible for public assistance.
- Recovery would take away the survivor's necessary food, shelter, or clothing.
- The survivor is 65 or older, or disabled, and depends on the estate proceeds.
The same rule says hardship does not exist just because heirs will lose an expected inheritance, and it requires a request within 30 days of the claim notice. Other states set their own tests and time limits, so ask the state agency how to apply as soon as you receive a notice.
What to Do After a Death
- Find out whether Medicaid paid for care. Look for Medicaid cards, nursing home or in-home care paperwork, and letters from the state. Ask the state Medicaid agency whether an estate recovery claim exists.
- Check who survived the person. A spouse, a young child, or a disabled child may stop or delay recovery.
- Learn which assets the state can reach. Ask whether your state limits recovery to probate assets.
- Ask for an itemized claim. Request a breakdown of what Medicaid paid, and check that it covers only recoverable services.
- Ask about a hardship waiver. Get the application and deadline in writing.
- Hold off on distributing assets. Paying heirs or selling the home before the claim is resolved can cause problems for the executor. Get advice first.
- Talk to an attorney. A probate or elder law attorney can read your state's rules and negotiate where it is allowed.
If you are the executor, our guides on how to be an executor and how to settle an estate cover how claims are paid. Handling a Medicaid claim is usually extra legal work, as noted in our probate lawyer cost guide.
Planning Ahead
Families often try to protect a home before a parent needs care. This is a high-risk area. Medicaid reviews transfers made in the 60 months before an application, and giving away assets for less than fair market value can trigger a penalty period (42 U.S.C. § 1396p(c)). Our guide to estate planning for aging parents explains the look-back rule, and revocable vs. irrevocable trusts covers how Medicaid counts trust assets.
Before moving a house or savings, talk to an elder law attorney in your state. The right answer depends on your state's estate definition, the person's health, and who lives in the home. Planning done too late, or done wrong, can leave the family worse off than doing nothing.
Common Mistakes to Avoid
Assuming a living trust or deed avoids recovery
It may in a probate-only state and may not in an expanded-estate state. Check first.
Ignoring a notice because the deadline seems far off
Hardship waiver deadlines can be short. Call the agency right away.
Selling the home or paying heirs first
Resolve the claim before assets leave the estate, or get an attorney's advice.
Paying the claim from your own money
The claim is against the estate, and you are generally not personally responsible for it. Check with an attorney before paying anything yourself.
Not mentioning protected family members
A surviving spouse, a young child, a disabled child, or a caregiver child can change the outcome, but only if the agency knows.
Frequently Asked Questions
We reviewed this page against federal law, CMS guidance, and two state examples. Estate recovery rules differ by state and change over time, so confirm current rules with your state Medicaid agency. Consult a licensed elder law or probate attorney for advice specific to your situation.
- 42 U.S.C. § 1396p: Liens, adjustments and recoveries, and transfers of assets (Cornell LII)
- Medicaid.gov: Estate recovery (CMS)
- California DHCS: Changes to estate recovery effective January 1, 2017 (SB 833)
- Ohio Administrative Code 5160:1-2-07: Medicaid estate recovery
Page last reviewed: October 6, 2026