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Medicaid's 5-Year Look-Back: What Happens to the House When a Parent Needs a Nursing Home

A key on a key ring in a front door lock, with a sticky note reading “60 months?”.
Photo by Jaye Haych on Unsplash

A common family plan: put the house in the kids' names now, so a nursing home can never touch it. A deed gets signed, and everyone feels better. Then it backfires. When someone applies for Medicaid to cover a nursing home, the state reviews every gift from the previous 60 months, and a house given away inside that window counts at full market value. A few transfers are treated very differently.

See the five transfers the law allows

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By Margaret Linwood · Updated Sep 29, 2026 · Reviewed against Medicaid.gov, CMS, 42 U.S.C. 1396p, 42 CFR 483.15, IRS, KFF, CANHR

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The timing makes it worse. The penalty doesn't start when the deed is signed. It starts only once the parent is in the nursing home, has applied and would qualify except for the gift, and by then the savings are usually gone. The house belongs to the children at that point, and no law makes them give it back.

Keeping the house isn't simple either. After a Medicaid recipient dies, the state has to try to recover what it spent on their care from the estate. For most people, the house is the only thing of value left in it.

See the tax bill nobody mentions

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Five moves that look safe and aren't

Plenty of families try to shield a house with steps that cause trouble of their own. These are worth ruling out before anyone signs anything.

  1. Adding a child's name to the title. It's a gift of part of the house. It also puts the home in reach of that child's creditors and divorce.
  2. Counting on the gift tax exclusion. You can give $19,000 per person in 2026 without filing a gift tax return. That's a tax rule, and Medicaid ignores it.
  3. Selling the house to a child for $1. States look at market value, not the price on the deed.
  4. Giving now instead of leaving it later. A gift carries over the parent's cost basis, roughly what the parent paid. An inherited house generally gets a basis reset to market value, so the children's tax bill on a sale can be very different.
  5. Using another state's advice. The divisor, the treatment of life estates and the reach of estate recovery all differ from state to state.

Those are the moves to skip. The article goes on to the home transfers the law does allow, the tax angle in full and the tools an elder law attorney builds around them.

See how the penalty is figured

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