Can a Nursing Home Take Your House in Texas? What Families Need to Know

The Immediate Crisis: Medicare vs. Medicaid Timelines

When an elderly parent is discharged from a hospital into a skilled nursing facility, families often panic, fearing the family home is immediately exposed. It is critical to differentiate between short-term medical rehabilitation and long-term custodial care.

Why Your House is Not at Risk on Day 1

When entering a nursing facility following an acute medical event, care is almost universally billed to Medicare, not Medicaid. Medicare never places liens on homes, never demands asset spend-downs, and has no legal authority over real estate title.

The 20- to 100-Day Medicare Rehab Window

Under federal guidelines, Medicare Part A covers up to 100 days of skilled nursing care per benefit period:

• Days 1–20: Medicare pays 100% of approved costs.
• Days 21–100: The patient pays a daily coinsurance copay (frequently covered by secondary Medigap insurance).
• Day 101+: Medicare coverage ceases completely. Long-term care becomes private pay (out-of-pocket) or transfers to Texas Medicaid.

This 100-day window provides family members with a critical legal buffer to consult professionals, draft necessary deeds, and structure assets before Medicaid applications are submitted.

What Happens to Your Home While You Are Alive?

Under Texas law, your homestead is treated with extraordinary deference. Even if you reside in a nursing facility full-time, the state views your primary residence as an exempt asset, provided specific criteria are met.

How Texas Medicaid Treats Your Primary Residence

To retain asset exemption status while receiving long-term Medicaid assistance, an unmarried applicant must demonstrate an “Intent to Return Home.” On the Texas Medicaid application (Form H1200), indicating that the patient intends to return to the home—even if medically improbable—preserves the property’s exempt status.

Texas Medicaid Primary Residence Equity Limits

For a single applicant, Texas establishes a strict home equity cap. As of 2026, the homestead equity limit for an unmarried Medicaid applicant increases to $752,000. If your equity exceeds this limit, Medicaid will deny coverage until the excess equity is liquidated. However, there is an unlimited equity limit if the Medicaid recipient is married and the spouse remains in the home.

What Happens to Your Home After You Pass Away?

While the house is protected during life, it becomes exposed the moment the Medicaid recipient dies. This post-death mechanism is where the misconception that “the nursing home takes your house” originates.

The Texas Medicaid Estate Recovery Program (MERP)

Federal law requires states to establish an estate recovery program. In Texas, MERP files claims against the estates of deceased Medicaid recipients who were 55 or older when they received long-term care services.

Once notified of a beneficiary’s passing, MERP contractors send a Notice of Intent to File a Claim to the heirs, asserting an unsecured debt equal to every dollar Medicaid spent on long-term care.

The Critical Probate Limitation in Texas

Texas operates under a strict definition of “estate.” Unlike states that pursue “expanded recovery,” Texas MERP can only collect against assets that pass through the Texas Probate Court (Texas Estates Code § 22.012). If an asset passes to an heir outside of probate court, MERP is legally barred from touching it.

Legal Ways to Protect a Texas Home from Estate Recovery

1. The Texas Lady Bird Deed (Enhanced Life Estate Deed)

The single most powerful asset protection tool for a Texas homeowner is an Enhanced Life Estate Deed, commonly called a Lady Bird Deed.

• How it Works: You retain complete lifetime control over the house—you can sell it, refinance it, or revoke the deed without your heirs’ permission.
• The MERP Shield: Upon your death, legal title transfers immediately to your named beneficiaries without passing through probate. Because the home bypasses probate, MERP cannot file a claim against it.

2. The Child Caregiver Exemption

Under Texas Medicaid rules (MEPD I-3000), you may transfer your home title directly to an adult child without incurring the statutory 5-year look-back transfer penalty if:

• The child lived in the home with the parent for at least two consecutive years immediately prior to the parent entering the nursing home; and
• The child provided documented physical care that prevented or delayed institutionalization.

Hidden Threats: What Can Still Threaten the House?

The Reverse Mortgage “12-Month Clock”

If the nursing home resident holds a Home Equity Conversion Mortgage (HECM / Reverse Mortgage), the loan contract requires the borrower to occupy the residence as their primary home. If the resident is absent for 12 consecutive months due to medical care, the loan automatically defaults. The lender will call the note due, forcing a sale or foreclosure—independent of any Medicaid action.

The Vacant House Burden: Taxes and Upkeep

When a single parent enters a nursing home on Medicaid, their monthly income (Social Security, pensions) must be turned over to the facility as their “Applied Income” co-pay. Medicaid provides zero dollars for property taxes, homeowner’s insurance, or roof repairs. If family members cannot cover these expenses out-of-pocket, the home risks tax foreclosure by the county long before Medicaid gets involved.

When Selling an Inherited Texas Property Makes Sense

While shielding a home from MERP is ideal, practical realities often require heirs to liquidate the property post-death:

• Settling Estate Debts: If the home went through probate and MERP filed a valid claim without exemptions, the estate administrator must sell the home to satisfy the debt before distributing remaining equity.
• Dividing Assets Among Multiple Heirs: Inheriting a home across siblings often results in disputes over who pays delinquent property taxes or manages maintenance.
• Distressed Physical Condition: Homes owned by aging seniors often suffer years of deferred maintenance, making traditional MLS listings with mortgage-contingent buyers difficult.

In situations where repairs are unaffordable, probate deadlines are looming, or heirs require immediate liquidation to pay off estate obligations, opting for an as-is direct cash sale allows families to close quickly without financing hurdles, appraisal delays, or out-of-pocket repair costs.

Frequently Asked Questions