Can Medicaid Take Your House in Texas? Home Protection Strategies

Your parent needs nursing home care, and the first fear isn't the paperwork — it's the house. The family home where they raised you, the one asset that survived every other financial hit. Can Texas Medicaid really take it?

The short answer: not while your parent is alive. But after death, the state can and does come for it — unless you take specific legal steps to move the home outside of probate.

During Your Parent's Lifetime: The Home Is Protected

Texas treats the primary residence as an exempt asset for Medicaid eligibility, provided two conditions are met:

1. Your parent's equity in the home is under $752,000 (the 2026 Texas homestead limit). This cap is waived entirely if a spouse, minor child, or disabled child lives in the home.
2. Your parent signs an "intent to return" statement on the Medicaid application (Form H1200) — even if a return is medically unlikely.

As long as those conditions hold, the home's value doesn't count toward the $2,000 countable asset limit. Your parent can qualify for Medicaid and keep the house on the books.

After Death: The MERP Claim

This is where families get blindsided. The Medicaid Estate Recovery Program (MERP) gives Texas the legal right to file a claim against the deceased recipient's estate to recover every dollar spent on their long-term care after age 55. If your parent received five years of nursing home coverage at $6,600 a month, the state's claim could exceed $396,000.

Here's the critical legal detail: MERP in Texas can only reach assets that pass through probate. If the home goes through probate — meaning it transfers to heirs through a will or intestacy — the state files its claim, and the family must either pay or sell.

If the home transfers outside of probate, it generally stays outside MERP; a TODD still has the two-year unsecured-claims issue described below.

Two Deeds That Bypass Probate

Lady Bird Deed (Enhanced Life Estate Deed)

This is the gold standard for Texas home protection. A Lady Bird Deed transfers the home to designated beneficiaries upon your parent's death while preserving full ownership during their lifetime. Your parent can still sell the home, refinance it, rent it out, or revoke the deed entirely — no beneficiary consent needed.

Because the transfer happens automatically at death and outside of probate, MERP has no legal mechanism to claim it. A Lady Bird Deed can even be signed by an agent acting under a valid Statutory Durable Power of Attorney, which matters if your parent's cognitive capacity is declining.

Transfer on Death Deed (TODD)

Governed by Chapter 114 of the Texas Estates Code, a TODD also passes property outside probate. But it has two significant disadvantages in an eldercare crisis:

• It cannot be signed by an agent under a Power of Attorney — only the property owner can execute it
• The property remains subject to the deceased's unsecured creditor claims for two years after death, complicating any sale or refinance during that window

For most families, the Lady Bird Deed is the stronger choice.

When MERP Cannot File at All

The state is legally barred from pursuing estate recovery if any of the following exist at the time of death:

• A surviving spouse is still alive
• A surviving child under age 21
• A child of any age who is blind or permanently disabled
• An unmarried adult child who lived in the home full-time for at least one year immediately before the recipient's death
• The probate estate is worth $10,000 or less
• Total lifetime Medicaid costs were $3,000 or less

If your parent has a surviving spouse, MERP is barred while that spouse is alive. But planning stops feeling urgent — and that's when families get caught. Once the surviving spouse also passes without a Lady Bird Deed in place, the state's claim against the estate includes care costs for both spouses.

The Lookback Risk: Don't Just Give the House Away

Some families try the obvious move — transfer the house to the kids before applying for Medicaid. Texas audits all financial transactions across a 60-month lookback period. Transferring the home for less than fair market value triggers a penalty period during which Medicaid refuses to pay for care.

The penalty is calculated by dividing the transferred value by the daily penalty divisor of $262.37. A home worth $250,000 given away within the lookback window creates a penalty of roughly 953 days — over two and a half years of uncovered nursing home costs.

A Lady Bird Deed avoids this entirely because it's not a completed gift during your parent's lifetime. They retain full control and can cancel it at any time, so the state does not treat it as a transfer.

Undue Hardship Waivers

If the family home does end up in probate and MERP files a claim, Texas allows heirs to request an undue hardship waiver. The hardship criteria include a home valued under $100,000 when the heirs' combined family income is below 300% of the federal poverty level, or a family business, farm, or ranch that supported an heir's livelihood. Submit the MERP questionnaire and any hardship application with supporting documents within 60 days of the Notice of Intent; late hardship applications may not be reviewed.

This is a last resort, not a strategy. The waiver process is discretionary and the documentation burden is heavy.

What to Do Right Now

If your parent is heading toward Medicaid — or already on it — and the family home is titled in their name alone, ask a Texas elder-law attorney whether a Lady Bird Deed is appropriate before cognitive capacity becomes an issue. Drafting and recording fees vary, and the deed's legal effect depends on the family's facts; the Texas Medicaid Long-Term Care & Asset Protection Guide explains the sequence and issues to discuss.

The home protection strategies, MERP exceptions, and Lady Bird Deed instructions are all covered step by step in the guide's estate recovery chapter.

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