When the Home Is Exempt

The home is the one large asset that Long-Term Care Medicaid usually lets people keep. But the exemption has conditions. This guide explains exactly when the home is exempt, what counts as a “home,” and what happens when the conditions stop being met.

Figures change periodically. Double-check current amounts before relying on them.

The basic rule

Under the federal SSI rules that states follow, a person’s home is not counted as an asset when it is their principal place of residence. For Long-Term Care Medicaid, the home stays exempt when any of the following is true:

1. The applicant lives there.
2. The applicant intends to return. A person who has moved to a nursing home or hospital can keep the home exempt by stating that they intend to return, even if a return is unlikely. Some states set time limits or require a doctor’s opinion. See Intent to return home.
3. The applicant’s spouse lives there.
4. A dependent relative lives there. Many states protect the home when a dependent child, parent or other relative lives in it. The definition of “dependent relative” varies.

In addition, the applicant’s equity must be under the state’s home equity limit unless a spouse, a child under 21, or a blind or disabled child lives there. See “The equity limit” below.

What counts as a “home”

• A house, condominium or co-op apartment.
• A mobile home or manufactured home.
• A houseboat, in some states.
• The land the home sits on, and adjoining land (land that touches the home’s lot, not separated by land owned by someone else).
• Outbuildings on that land, such as a garage or barn.

Only one home can be exempt. A second home, vacation home or rental house generally counts, unless another exemption applies.

Ownership

The exemption applies to the applicant’s ownership interest, whether they own the home alone, with a spouse, or with others. If the applicant owns only a share, only that share is considered for the equity limit.

A home held in a revocable living trust is still treated as the applicant’s and can be exempt. A home in an irrevocable trust usually is not the applicant’s asset at all, but placing it there is a transfer reviewed under the look-back.

The equity limit

Since 2006, federal law has limited how much home equity a person can have and still qualify for long-term care, when no spouse or protected child lives in the home.

States choose a limit between the minimum and maximum. The limit does not apply if a spouse, a child under 21, or a blind or disabled child lives in the home. See Home equity limits by state.

Equity means the fair market value of the home minus any mortgages or loans against it, multiplied by the applicant’s ownership share.

Example

Linda owns her home alone. It is worth $900,000, with a $100,000 mortgage. Her equity is $800,000.

• In a state with a $752,000 limit, her equity is over the limit, and she would not qualify for long-term care unless she lowers her equity (for example, with a home equity loan or reverse mortgage) or a protected relative lives there.
• In a state with a $1,130,000 limit, she is under the limit.

When the exemption ends

The home can stop being exempt when:

• the applicant no longer intends to return and no spouse or dependent relative lives there;
• a state’s time limit on intent to return has passed (in states that use one);
• the home is sold (the money from the sale counts, unless used to buy another home soon);
• the home is rented out and no longer the applicant’s residence, in some states.

When the exemption ends, the home becomes a countable asset. Its equity value is counted toward the asset limit, which usually means the person is no longer eligible until it is sold or another solution is found. Some states give a period to sell.

Selling the home while on Medicaid

If an exempt home is sold, the money becomes countable unless it is used promptly to buy another home. A person on Medicaid who sells their home will usually lose eligibility until the money is spent down. See Selling the home.

Renting out the home

Some families rent the home while the parent is in a nursing home. Depending on the state:

• the home may stay exempt if the applicant still intends to return;
• the net rental income counts as income and usually increases the patient liability.

Rental income can also help pay for upkeep, taxes and insurance.

Spending on the home

Paying for repairs, improvements, the mortgage, property taxes and insurance on the exempt home is a normal, allowed use of money. It is not a gift. This makes the home exemption one of the main tools for legal spend-down.

The home and estate recovery

Being exempt during life does not protect the home after death. In most states, the home is part of the estate, and the state may seek estate recovery after the recipient dies. Recovery must wait while a surviving spouse, a child under 21, or a blind or disabled child is living.

Because the exemption and estate recovery work so differently, families often think about both at once. A Certified Medicaid Planner (CMP) can help explain the options in your state, and an attorney can prepare any deed.

Records to show the home is exempt

• The deed or title.
• A recent property tax bill or appraisal showing value.
• Mortgage statements.
• A signed statement of intent to return, if the applicant is in a nursing home.
• Proof that a spouse or relative lives there, if applicable.

Common questions

Can I keep my home if I go to a nursing home? Usually yes, if you intend to return or a spouse or dependent relative lives there, and your equity is under the limit.

Does the land around my house count? Adjoining land is usually part of the exempt home.

What if my home is worth more than the limit? It may be possible to lower equity with a loan, or the limit may not apply if a protected relative lives there.

The home exemption for married couples

When one spouse needs care and the other lives at home:

• the home is exempt regardless of its value;
• the equity limit does not apply;
• the home can be transferred to the spouse at home without penalty;
• after approval, many couples put the home in the spouse at home’s name alone, so the spouse can plan their own estate.

When the spouse at home later dies or moves out, the home’s status depends on who owns it at that point. See When both spouses need care.

A quick example of the exemption ending

Paul moved to a nursing home and signed a statement of intent to return. His home stayed exempt. Two years later, his family sold the home because no one could keep it up. The sale money, $150,000, became a countable asset. Paul was no longer eligible until the money was spent on his care and other allowed costs. If the family had planned ahead, they might have looked at other options before the sale.

Common questions

Does the exemption include land around the home? Generally yes. The home exclusion covers the house and the land it sits on, along with related buildings, such as a garage or shed.

What if the applicant owns a second home or vacation home? Only one home can be the principal residence. A second property is usually a countable asset unless another exclusion applies.

Does a home in another state count? The home exemption applies to the principal residence. If a person moves to a nursing home in another state and does not intend to return, the home may no longer be exempt.

What happens if the home is sold? The proceeds from the sale are generally a countable asset. Unless they are used to buy another exempt home within the time the state allows, or are spent on allowed items, they can push the person over the asset limit.

Keeping the exemption in place

A few practical steps can help:

• Keep the home insured and the property taxes current.
• Keep a written statement of intent to return in the file if the applicant is in a nursing home.
• Report changes, such as a sale or a spouse moving out, to the state on time.
• Before changing the deed, get advice from a Certified Medicaid Planner (CMP), since deed changes can be treated as gifts.

Related guides

• Your home and Medicaid
• Home equity limits by state
• Intent to return home
• Estate recovery, explained
• Exempt assets

Last updated for 2026. General information only, not legal or financial advice. Medicaid Answers is a free educational resource published by Medicaid Answers Foundation.