Will You Lose Medicaid If You Sell Your House? Rules, Lookback & Exceptions

Selling your home while on Medicaid — or inheriting a house — can trigger serious eligibility consequences if you don’t plan ahead. In many cases, the home you live in won’t count against Medicaid’s asset limit. But if you sell that home, the cash proceeds likely will.

Here’s what you need to know about how selling or transferring property can impact your Medicaid benefits — and how to protect them.

Disclaimer: Medicaid rules vary by state and are subject to change. This article is for informational purposes only and does not constitute legal or financial advice. Consult with a qualified elder law attorney or Medicaid planning specialist in your state before making decisions about property, inheritance, or eligibility.

Can I lose Medicaid if I sell my house?

Yes, you can lose your Medicaid benefits if the proceeds from selling your home exceed your state’s asset limit. Even if the house was considered exempt while you lived in it, the sale proceeds are treated as a countable asset.

“In Florida, you have 90 days to move the sale proceeds into a new exempt asset or spend them down,” explained Geoff Hoatson, an elder law attorney and the CEO of the Family First Firm. “If they’re still in your account on day 91, you lose the benefit.”

Most states allow short spend-down windows, but the timeline and asset limits vary — in some states, disqualification is immediate.

What happens if I sell my house while receiving Medicaid benefits?

Selling your home converts an exempt asset into a liquid one. When Medicaid reviews your finances and notices that your home has been sold, it may cancel your benefits and impose a period of ineligibility. The exact time limit will depend on the profit you made from the home sale, the state you live in, and your calculated medical expenses.

Say you’re on long-term care Medicaid and you sell your paid-off home for $400,000. That $400,000 is now a countable asset, which will far exceed any state’s limits to qualify for Medicaid. If medical expenses in your area are calculated at $100,000 per year, you will not be eligible to register for Medicaid for four years.

“With property values being so high right now, selling a home will almost always get someone kicked off Medicaid,” said estate planning attorney Jillian Hishaw, author of Don’t Bet the Farm on Medicaid. “They’ll be penalized for the number of years that money could pay for care.”

What is the Medicaid lookback period, and why does it matter?

The lookback period is a five-year window before your enrollment, during which Medicaid reviews your financial activity. This review includes gifts or transfers of property.

Giving away a house or selling it for below market value during the lookback period can trigger a transfer penalty.

“Let’s say you give away a house worth $300,000 and the state’s penalty divisor is $10,000,” Hoatson explained. “That means Medicaid won’t cover your care for 30 months — they expect whoever received the gift to cover it.”

What’s the difference between a countable asset and an exempt asset?

Income is evaluated separately from assets — but rental income from a second property could still count against Medicaid’s income limit.

What are the Medicaid asset limits in each state?

Medicaid asset limits for individuals receiving long-term care typically range from $2,000 to $3,000, which includes countable assets like bank accounts or proceeds from a home sale. The exact number will vary by state and program type. This means you cannot have more than the limit in countable assets.

Some states — including Florida — also impose home equity caps (e.g., $713,000 in 2025). In July 2024, this limit was $688,000, and it regularly increases to account for inflation. However, under the new One Big Beautiful Bill, that cap will freeze at $1 million in 2028, regardless of inflation.

“My family in Los Angeles owns a modest home worth over $1 million,” said Hishaw. “In a few years, they won’t qualify for Medicaid because of that.”

Will I lose Medicaid if I inherit a house?

It depends on the home’s value, how it’s used, and how it’s inherited.

If the home becomes your primary residence, you likely won’t lose benefits — provided your equity in the home is lower than your state’s equity cap. But if it’s a second property, sold for cash, or rented out, it could disqualify you.

“Inheriting a home that’s not your homestead can and probably will impact eligibility,” said Hoatson.
Hishaw added: “The best option is for the beneficiary to receive a life estate, so they can live in the house without actually owning it outright.”

Will I have to pay back Medicaid if I sell my house?

Medicaid usually doesn’t seek repayment while you’re alive — but it depends on the state.

“In Florida, they only seek repayment after death,” Hoatson said. “But once the home is sold, all bets are off. That money’s no longer protected.”In expanded recovery states, Medicaid can recover not only your home’s value, but also your bank accounts, car, or even jewelry after death.

Can Medicaid take my house after I die?

Yes — under the Medicaid Estate Recovery Program (MERP), states can recover costs paid on your behalf after you die. If your home is still in your name, a lien may be placed on it.

“Some states are limited to real estate only. Others can recover from just about everything,” said Hishaw.

Certain exceptions apply — for example, if a caretaker child lived in the home for at least two years and helped delay your nursing home admission.

Can I buy another house while on Medicaid?

Yes, in most states — as long as the new home becomes your primary residence.

“There’s no limitation against buying,” said Hoatson, an elder law attorney. “But most people on Medicaid can’t afford to do it.”

If you sell your home, one way you could avoid losing Medicaid is to use the sale proceeds to purchase a new home within the allowed spend-down window. But you must still meet all eligibility criteria afterward.

What’s a Lady Bird Deed or Beneficial Ownership Deed — and can it help?

These estate planning tools can help protect your home from Medicaid recovery or lookback penalties.

• Lady Bird Deed (available in a few states like FL, TX, MI): Transfers ownership upon death, bypassing probate
• Beneficial Ownership Deed: Used in Midwestern states like MO and WY to pre-plan property transfers
• Both options can help avoid triggering a penalty if executed at least 5 years before Medicaid application

How does Medicaid know if I sell or transfer a house?

They will find out.

“They have asset searches on steroids,” said Hoatson. “Even if clients forget about an old bank account, Medicaid will find it. And with semi-annual recertifications, they’ll spot if a property suddenly disappears.”

You’re required to fully disclose all assets during enrollment and renewals. Failure to report transfers can lead to retroactive disqualification or fraud investigation.

How can I protect my Medicaid benefits if I own a home?

✅ Talk to an elder law or Medicaid planning attorney

✅ Use allowable spend-down options (e.g., pay debt, make home improvements, prepay funeral expenses)

✅ Consider life estates, Lady Bird or beneficial deeds, or irrevocable trusts

✅ Plan at least 5 years in advance to avoid penalties

Final thoughts

Selling a home while on Medicaid is rarely simple — but with careful planning, you can avoid losing your benefits or leaving loved ones with a financial burden. Each state has its own rules and exemptions, so personalized advice is essential.

Consider talking to a Medicaid planner or elder law attorney before making any property moves.