It is the first question almost every family asks when a parent needs long-term care: will we lose the house? The honest answer comes in two parts — what happens while your parent is alive, and what happens after.
While your parent is living
For Medicaid eligibility, Texas generally does not count the home as an asset if:
- your parent lives there, or intends to return home; or
- a spouse or dependent relative lives there;
- and the equity is under the limit ($752,000 in 2026).
So in most cases, owning a home does not stop someone from qualifying for nursing home Medicaid, and the state does not take the house while the Medicaid recipient is alive. See our full Texas Medicaid guide.
After death: the Medicaid Estate Recovery Program
Federal law requires every state to seek repayment of certain long-term care costs from the estates of Medicaid recipients. In Texas this is the Medicaid Estate Recovery Program (MERP). It applies to people who were 55 or older and received long-term services and supports.
Two points matter most:
- MERP recovers from the probate estate. Texas limits recovery to property that passes through probate. Assets that pass directly to a named person — life insurance, retirement accounts, payable-on-death accounts, and real estate passing by a properly recorded transfer-on-death or enhanced life estate deed — are generally outside its reach.
- MERP cannot collect more than the estate is worth, and it does not come after heirs' own money.
When the state will not pursue the house
Texas Health and Human Services will not pursue recovery while the Medicaid recipient leaves:
- a surviving spouse;
- a child under 21;
- a child of any age who is blind or permanently disabled under Social Security rules; or
- an unmarried adult child who lived in the home full time for at least a year before the death.
Small estates and small claims below the state's cost-effectiveness thresholds are also not pursued.
Hardship waivers
Heirs can ask the state to waive its claim for undue hardship — for example, where the property was a family farm, ranch or business that is the heirs' main source of income, where heirs would need public assistance if the claim went forward, or for a modest-value homestead inherited by lower-income family members. Deductions for the costs of maintaining the home can also reduce a claim.
When the state sends a Notice of Intent to file a claim, the family generally has 60 days to request a hardship waiver or deductions and submit documentation. Texas revised several estate recovery rules and dollar thresholds in 2026, so check the current figures — but do not let that notice sit.
Planning tools that keep the house out of reach
- Transfer-on-death deed
- You keep full ownership; the house passes to your beneficiary at death outside probate. See our transfer-on-death deed guide.
- Enhanced life estate (“Lady Bird”) deed
- Similar result, with the owner keeping the right to sell or mortgage without the beneficiaries' consent.
- Irrevocable trust
- Can protect the home but is subject to the five-year look-back. It must be planned well ahead.
- Hardship and exemption planning
- Documenting a caregiver child's residence or a family business can matter a great deal later.
What not to do
Do not simply deed the house to your children. It is a transfer during the look-back that can create a Medicaid penalty; it exposes the house to your children's creditors and divorces; it can cost the homestead property tax exemption; and your children lose the “step-up” in tax basis they would have received at your death, which can mean a large capital gains bill when they sell.
Common questions
Does a will protect the house from Medicaid?
No. Property passing under a will goes through probate, which is exactly what estate recovery can reach.
Can the state put a lien on the house while Mom is alive?
Texas does not generally pursue recovery against the home during the recipient's lifetime. The issue arises after death.
Is it too late if Dad is already on Medicaid?
Often not. A transfer-on-death deed signed by a person on Medicaid who still has capacity can still change the outcome. Talk to an elder law attorney promptly.
This guide is general information about Texas law as of September 2026, not legal advice for your situation. Laws and dollar figures change, and small facts change outcomes. Reading it does not create an attorney-client relationship. Grover C. Peters III is responsible for this content.