Short answer: no, Medicaid can’t force the sale of your home while you’re alive. But after you pass away, New Jersey’s Medicaid Estate Recovery Program can file a claim against your estate to recover what it paid for your care, and your home is usually the biggest asset at stake.
Here’s what that means in practice, and four ways to plan around it.
Quick facts for 2026
- Home equity exemption: $1,130,000
- Monthly income cap for long-term care Medicaid: $2,982
- Countable asset limit for a single applicant: $2,000
- Look-back period for most transfers: 5 years (60 months)
Figures current as of 2026. New Jersey adjusts several of these amounts during the year, so always confirm the current number with an elder law attorney before making a decision.
Your Home Is Protected While You’re Alive
Your primary residence doesn’t count against you when you apply for Medicaid, as long as one of these is true:
- You intend to return home, even from a nursing facility
- Your spouse lives in the home
- A child under 21 lives in the home
- A blind or disabled child of any age lives in the home
There’s one more condition: your home equity can’t exceed $1,130,000. Above that, the home becomes a countable asset unless a spouse or protected family member lives there.
This means you can own a home and receive nursing home Medicaid benefits at the same time. Medicaid can’t foreclose on it, force a sale, or place a lien on it while these conditions hold.
What Happens After You Pass Away
New Jersey participates in the federal Medicaid Estate Recovery Program (MERP). Once a Medicaid recipient dies, the state is required to seek repayment for the care it paid for, primarily from assets that pass through the probate estate. With nursing home care in New Jersey running well into five figures a year, even a couple of years of coverage can add up to a real number. For many families, the home is the only asset left to recover it from.
This isn’t automatic foreclosure. The state files a claim against the estate, similar to how any creditor would. It doesn’t take the home the moment someone dies, but the claim can delay the estate and reduce what heirs actually inherit if there’s no plan in place.
Recovery is paused, not eliminated, when:
- A surviving spouse is alive
- A minor or disabled child lives in the home
- Heirs qualify for a hardship waiver
Can Medicaid Place a Lien While You’re Still Alive?
Yes, in a specific situation. If you’re in a long-term care facility, aren’t expected to return home, and no protected family member (spouse, minor child, disabled child) lives there, New Jersey Medicaid can place a lien on the property during your lifetime. It doesn’t force an immediate sale, but it attaches to the home and would need to be paid off from any sale proceeds. Planning ahead avoids this scenario entirely.
Four Ways to Protect Your Home from Medicaid Estate Recovery
1. Irrevocable Trust (Medicaid Asset Protection Trust)
You transfer the home into an irrevocable trust, name your children (or other beneficiaries) as the people who’ll eventually receive it, and keep the right to live there for life. Once five years pass, the home is fully outside Medicaid’s reach, both for eligibility and for estate recovery. It also typically gives your heirs a stepped-up tax basis, which can matter a lot if they sell later.
2. Life Estate Deed
You deed the home to your children while keeping a “life estate,” the legal right to live in and use the home for the rest of your life. Once five years pass from the date of the deed, the remainder interest your children hold is outside Medicaid’s reach, and the home skips probate entirely. The tradeoff: once it’s done, it’s hard to undo without your children’s agreement.
3. Caregiver Child Exception
If an adult child lived with you and provided care that kept you out of a nursing home for at least two years, transferring the home to that child can be exempt from Medicaid’s look-back penalty. This one requires careful documentation of the caregiving relationship and timeline, so it’s worth talking through with an elder law attorney before relying on it.
4. Spousal Transfer
Transfers between spouses are always exempt from Medicaid’s look-back rules. If one spouse enters a nursing facility, moving the home into the community spouse’s name removes estate recovery risk tied to the institutionalized spouse’s future estate. It doesn’t protect the home if the community spouse later needs Medicaid too, so this is often a first step, not a complete plan.
Every one of these strategies has tax and family implications worth walking through with an attorney before you act. What fits depends on your health, your family situation, and how much time you have to plan.
Frequently Asked Questions
Can Medicaid take your house in New Jersey?
Not while you’re alive. After death, Medicaid can seek reimbursement from your estate, including a claim on the home if it passes through probate. Recovery is delayed or waived if a surviving spouse, minor child, or disabled child lives in the home.
Can you get Medicaid if you own a home in New Jersey?
Yes. Your primary residence is generally excluded as a countable asset for Medicaid eligibility, up to an equity value limit of $1,130,000 in 2026. It may still become subject to estate recovery after your death.
What happens to a jointly owned home when one owner is on Medicaid?
If the home is owned jointly, especially as tenants by the entirety between spouses, it typically passes directly to the surviving spouse and avoids probate, which sidesteps immediate estate recovery. Medicaid can still pursue recovery after the surviving spouse’s death.
How can I protect my home from Medicaid estate recovery in New Jersey?
The main strategies are an irrevocable trust, a life estate deed, the caregiver child exception, or a spousal transfer, each with its own timeline and tradeoffs. Planning with an elder law attorney before a crisis hits gives you the most options.
Does Medicaid place a lien on your home while you’re still alive? It’s possible, but only if you’re in long-term care with no plan to return and no protected family member living in the home. The lien doesn’t force a sale, and it can often be avoided with planning ahead of time.
Disclaimer: This article is for informational purposes only and does not constitute legal advice. Consult with a qualified attorney for guidance on your specific situation.
About Benjamin D. Eckman, Esq.
Benjamin D. Eckman, Esq., is a New Jersey attorney focused on elder law and estate planning. With over 25 years of experience, he helps seniors and their families with wills, trusts, special needs trusts, powers of attorney, and Medicaid planning. He holds a law degree from Seton Hall University School of Law and is a member of the New Jersey State Bar Association, the Union County Bar Association, the Passaic County Bar Association, and the Bergen County Bar Association.
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