Local Authority After a Medicaid recipient dies, the state can place a claim on the family home to recover what it paid for their care. By David Keller,  A paid-off home is the asset most older Americans intend to leave behind, the one piece of wealth that passes to the next generation. Yet for families who relied on Medicaid to cover the enormous cost of nursing-home or long-term care, that house can become the very thing the government comes after. Federal law requires states to try to recoup what Medicaid spent on a person’s care after that person dies, and the family home is often the largest asset in the estate. What Medicaid estate recovery is The program is called Medicaid Estate Recovery, and it is not optional for states. Under federal rules, every state must seek repayment from the estates of deceased Medicaid enrollees who were 55 or older when they received certain benefits, and from those who were permanently institutionalized. The costs subject to recovery center on long-term care: nursing facility services, home- and community-based services, and related hospital and prescription drug expenses. The reason this surprises families is a disconnect at the front end. To qualify for Medicaid long-term care, a person’s countable assets have to be very low, but the home is often exempt while they are alive. That exemption does not erase the debt. Once the recipient dies, the home loses its protected status and can be reached through the estate to satisfy the state’s claim. How a claim reaches the house After death, the state Medicaid agency files a claim against the estate for the amount it paid in long-term-care costs. When the home is sold, the state can collect all or part of the proceeds up to what it spent. In some situations a state may also place a lien on the home