Yes, Medicaid can take your house in Indiana, but only after you die and only under specific conditions. The state’s estate recovery program treats everything Medicaid spent on your long-term care after age 55 as a debt your estate owes, and your home is usually the most valuable asset available to pay it. Several protections can shield the house, but each depends on who survives you, who lived with you, and how you held title.
When Indiana Can Reach the Home
While you are alive and living in your home, the residence is generally exempt from Medicaid’s eligibility calculation. That protection ends at death. The Family and Social Services Administration (FSSA) runs the recovery program under Indiana Code 12-15-9, and federal law requires every state to seek reimbursement for nursing facility care, home and community-based services, and related hospital and prescription drug costs paid for recipients age 55 and older.1Centers for Medicare & Medicaid Services. Estate Recovery The total Medicaid spent after you turned 55 becomes a preferred claim against your estate, paid ahead of most other debts and before heirs receive anything.2Indiana General Assembly. Indiana Code 12-15-9-1 – Amount of Claim; Preference
If the estate does not have enough cash to satisfy the claim, the state can require the sale of the home.
Family Members Whose Survival Blocks Recovery
The FSSA cannot pursue any estate assets, including the home, as long as the deceased recipient is survived by any of the following:
- A surviving spouse. Recovery is completely blocked for as long as the spouse is alive.
- A child under 21. The state must wait until the youngest surviving child turns 21.
- A blind or permanently disabled child of any age. Recovery is blocked indefinitely while such a child survives.
These protections cover the entire estate, not just the home.3Family and Social Services Administration. Medicaid Estate Recovery Only when none of these situations exist does the state gain standing to file a claim against the property.4Office of the Law Revision Counsel. 42 USC 1396p – Liens, Adjustments and Recoveries, and Transfers of Assets
Sibling and Caregiver Child Exceptions
Two further exceptions can keep the home in the family even after the protections above no longer apply. Both come from federal law and apply specifically to the residence.
The sibling exception protects a brother or sister who lived in the home for at least one year immediately before the Medicaid recipient entered the nursing facility. The sibling must also hold an equity interest in the property.4Office of the Law Revision Counsel. 42 USC 1396p – Liens, Adjustments and Recoveries, and Transfers of Assets A sibling who moved in after institutionalization or who has no ownership stake does not qualify.
The caregiver child exception applies to a son or daughter who lived in the parent’s home for at least two years before the parent entered a nursing facility and who provided enough hands-on care during that period to delay the parent’s need for institutional placement.4Office of the Law Revision Counsel. 42 USC 1396p – Liens, Adjustments and Recoveries, and Transfers of Assets The qualifying child must still be lawfully residing in the home continuously from the date of institutionalization through the time of recovery. Proving either exception requires documentation submitted to the FSSA: typically medical records showing the care provided, evidence of continuous residence, and proof of a sibling’s ownership interest.
TEFRA Liens While You Are Still Alive
Indiana does not always wait until death to secure its interest in your home. Under the Tax Equity and Fiscal Responsibility Act (TEFRA), the state can place a lien on your property during your lifetime if you are a nursing facility resident and a medical determination concludes you are not reasonably expected to return home.5Legal Information Institute. 405 Indiana Administrative Code 2-10-3 – Criteria for Instituting a TEFRA Lien
Before placing a lien, the state must notify you and give you an opportunity for a hearing. The notice must explain what a lien means and make clear that it does not strip you of ownership.6eCFR. 42 CFR 433.36 – Liens and Recoveries Once recorded with the county recorder, the lien prevents the property from being sold or refinanced without addressing the Medicaid debt.
A TEFRA lien cannot be placed while any of the following people lawfully reside in the home: a spouse, a child under 21, a blind or disabled child of any age, or a sibling with an equity interest.1Centers for Medicare & Medicaid Services. Estate Recovery And if you are eventually discharged from the facility and return home, federal law requires the state to dissolve the lien entirely.4Office of the Law Revision Counsel. 42 USC 1396p – Liens, Adjustments and Recoveries, and Transfers of Assets
Why Avoiding Probate Does Not Save the House
Many Indiana families assume that a joint deed, a transfer-on-death designation, or a revocable trust places the home beyond the state’s reach. That assumption is wrong. Indiana’s definition of “estate” for recovery purposes extends well past probate and reaches:
- Real estate conveyed to a survivor through joint tenancy with right of survivorship, if the joint tenancy was created after June 30, 2002.
- Any real or personal property conveyed outside of probate, including payable-on-death and transfer-on-death accounts.
- Property transferred into a revocable trust after May 1, 2002.
- Payments due under an annuity contract purchased after May 1, 2005, with the recipient’s assets.
These categories appear in Indiana Code 12-15-9-0.5.7Indiana General Assembly. Indiana Code Title 12 – 12-15-9-0.5 One meaningful gap exists: real property held as a life estate is not subject to recovery.3Family and Social Services Administration. Medicaid Estate Recovery That distinction matters for families deciding how to hold title, though any transfer strategy must also survive the five-year look-back.
The Five-Year Look-Back on Transfers
Signing the house over to your children before applying for Medicaid does not automatically protect it. When you apply for long-term care coverage, Indiana reviews the previous 60 months of financial transactions to identify gifts, below-market sales, or transfers that reduced your countable wealth.8Centers for Medicare & Medicaid Services. Transfer of Assets in the Medicaid Program – Important Facts for State Policymakers
A transfer within that window triggers a penalty period during which Medicaid will not pay for nursing facility care. The length is calculated by dividing the value of the transferred assets by the average monthly private-pay nursing home cost. Give away a home worth $200,000 against a monthly divisor of roughly $6,900, and the penalty runs about 29 months of ineligibility. During that stretch, you pay the full cost of care yourself.
Some transfers are exempt. Moving assets to a spouse or to a disabled child does not trigger a penalty. Transfers to a qualifying sibling or caregiver child, when properly structured, can also be exempt. A casual gift of the home to an adult child five years before applying, by contrast, falls squarely into the penalty zone if the timing is off.
The Undue Hardship Waiver
Indiana offers an undue hardship waiver that can reduce or eliminate the state’s claim, and families overlook it more often than any other protection. The standard is narrow. The FSSA will consider a waiver only if enforcing the claim would cause a beneficiary of the estate to become eligible for public assistance programs such as Medicaid, Supplemental Security Income, or food assistance, or would keep someone already receiving those benefits dependent on them.9Legal Information Institute. 405 Indiana Administrative Code 2-8-2 – Undue Hardship Due to Medicaid Estate Recovery
The FSSA must notify the estate’s personal representative of the right to apply. Applications require identifying information, an explanation of the hardship, and documentation proving a qualifying condition.9Legal Information Institute. 405 Indiana Administrative Code 2-8-2 – Undue Hardship Due to Medicaid Estate Recovery The waiver is not permanent. The state suspends its claim while the hardship continues, and if the heir’s financial situation improves, collection can resume. Worth pursuing whenever an heir’s income sits anywhere near public-assistance thresholds.
Home Equity and Qualifying in the First Place
Before recovery is even on the table, the value of your home can decide whether you qualify for Medicaid-funded long-term care. For 2026, Indiana applies a home equity limit of $752,000.10Centers for Medicare & Medicaid Services. January 2026 SSI and Spousal Impoverishment Standards If your equity exceeds that amount and no spouse, child under 21, or blind or disabled child lives in the home, you are ineligible for nursing facility coverage until the equity drops below the threshold.
Families with high-value homes can face a bind: too much equity to qualify for Medicaid, but not enough liquid savings to pay privately for years of nursing care. Consulting an Indiana elder law attorney well before care is needed is the most reliable way to evaluate whether a life estate, an irrevocable trust, or another planning tool fits your situation and can survive the look-back window.