Yes, Medicaid can take your house in Indiana, but only under specific conditions and with several important exceptions. The state’s Family and Social Services Administration (FSSA) can pursue your home after you die to recover what Medicaid paid for your long-term care after age 55, and in some cases it can place a lien on the property while you are still alive. Whether the state actually reaches the home depends on who survives you, how title is held, and whether you qualify for one of the protections built into federal and Indiana law.
When the State Cannot Touch Your Home
Recovery is completely blocked, no matter how much Medicaid spent, as long as any of these people survive you:
- A surviving spouse, 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.1Family and Social Services Administration. Medicaid Estate Recovery
These protections cover the entire estate, not just the residence.2Office of the Law Revision Counsel. 42 USC 1396p – Liens, Adjustments and Recoveries, and Transfers of Assets Only when none of these family situations applies can the FSSA file a claim.
Sibling and Caregiver Child Exceptions
Two more exceptions can preserve the home even after the spouse and minor-child protections no longer apply.
The sibling exception protects a brother or sister who lived in the home for at least one year immediately before you entered the nursing facility and who holds an equity interest in the property.2Office of the Law Revision Counsel. 42 USC 1396p – Liens, Adjustments and Recoveries, and Transfers of Assets A sibling who moved in later or who has no ownership stake does not qualify.
The caregiver child exception covers a son or daughter who lived in the parent’s home for at least two years before the parent was institutionalized and who provided care that actually delayed the parent’s move into a facility during that period.2Office of the Law Revision Counsel. 42 USC 1396p – Liens, Adjustments and Recoveries, and Transfers of Assets The child must have lived continuously in the home from the date of institutionalization through the time recovery would occur. Both exceptions require documentation submitted to the FSSA: medical records showing the care provided, proof of continuous residence, and, for a sibling, evidence of the ownership interest.
Liens While You Are Still Alive
Indiana does not always wait until death. Under the Tax Equity and Fiscal Responsibility Act (TEFRA), the state can record a lien against your home while you are a nursing facility resident if a medical determination concludes you are not reasonably expected to return.3Legal Information Institute. 405 Indiana Administrative Code 2-10-3 – Criteria for Instituting a TEFRA Lien
Before the lien is placed, the state must notify you and give you a chance for a hearing. The notice must explain that a lien does not strip you of ownership.4eCFR. 42 CFR 433.36 – Liens and Recoveries Once recorded with the county, the lien prevents a sale or refinance without settling the Medicaid debt.
A TEFRA lien cannot be placed while a spouse, a child under 21, a blind or disabled child of any age, or a sibling with an equity interest lawfully resides in the home.5Centers for Medicare & Medicaid Services. Estate Recovery And if you are discharged and return home, federal law requires the state to dissolve the lien.2Office of the Law Revision Counsel. 42 USC 1396p – Liens, Adjustments and Recoveries, and Transfers of Assets
Avoiding Probate Does Not Protect the House
Many families assume a joint deed, a transfer-on-death designation, or a revocable trust will keep the house out of Medicaid’s reach. In Indiana, that assumption is wrong. State law defines “estate” for recovery purposes to include property that passes outside of probate:
- Real estate transferred 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 through a non-probate transfer, including payable-on-death and transfer-on-death accounts.
- Property placed in a revocable trust after May 1, 2002.
- Annuity payments due under a contract purchased after May 1, 2005, with the recipient’s assets.6Indiana General Assembly. Indiana Code Title 12 – 12-15-9-0.5
One notable gap: real property held as a life estate is not subject to recovery.1Family and Social Services Administration. Medicaid Estate Recovery That distinction matters when families evaluate how to hold title, but any transfer strategy also has to clear the look-back rule.
The Five-Year Look-Back on Gifting the Home
Signing the house over to a child 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 for gifts, below-market sales, and other transfers that reduced your countable wealth.7Centers for Medicare & Medicaid Services. Transfer of Assets in the Medicaid Program – Important Facts for State Policymakers
If the state finds a disqualifying transfer, it imposes a penalty period during which Medicaid will not pay for nursing care. The length is calculated by dividing the value of what you gave away by the average monthly private-pay cost of a nursing home. Give away a $200,000 house when the monthly divisor is roughly $6,900, and you face about 29 months of ineligibility. You pay privately during that stretch.
Certain transfers are exempt. Moving assets to a spouse or to a disabled child does not trigger a penalty, and transfers that fit the sibling or caregiver child exceptions can also be exempt when properly structured. A casual gift of the home to an adult child within five years of applying is the scenario that most often backfires.
The Undue Hardship Waiver
Indiana offers an undue hardship waiver that can reduce or eliminate the state’s claim, but the standard is narrow. The FSSA will consider a waiver only if enforcing recovery would push a beneficiary of the estate onto public assistance such as Medicaid, Supplemental Security Income, or food assistance, or would keep someone already receiving those benefits dependent on them.8Legal 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. The application requires identifying information, an explanation of the hardship, and documentation proving that a qualifying condition exists.8Legal 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 an heir’s financial situation improves, collection can resume. Even so, it is the one safety valve families most often overlook, and it is worth pursuing whenever an heir’s income sits anywhere near public-assistance thresholds.
How and When the State Files Its Claim
The FSSA monitors Indiana probate courts and identifies estates opened for deceased Medicaid recipients. The state currently has 120 days from the date of death to file its claim, and it does not need to wait for probate to open before the clock starts.1Family and Social Services Administration. Medicaid Estate Recovery
Once the claim is filed, the personal representative or executor receives notice and a limited window to contest the amount or invoke one of the protections above. If the estate lacks enough cash to pay, the state can require the sale of the home. The state’s claim is a preferred claim under Indiana Code 12-15-9, meaning it gets paid ahead of most other debts and before heirs receive anything.9Indiana General Assembly. Indiana Code 12-15-9-1 – Amount of Claim; Preference The only obligations that outrank it are funeral expenses capped at $350, final medical costs authorized by the FSSA, and court-approved administrative and attorney fees. Whatever remains after the state is paid passes to heirs under the will or intestacy rules.
Home Equity Can Block Eligibility Before Recovery Ever Starts
The value of your home can matter before death even enters the picture. For 2026, Indiana applies a home equity limit of $752,000 for nursing facility coverage.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 cannot qualify for coverage until the equity drops below the limit.
Families with high-value homes sometimes hit a double bind: too much equity to qualify, but not enough cash to pay privately for years of care. Talking with an elder law attorney before you need care is the most reliable way to weigh the options — a life estate, an irrevocable trust, or another arrangement — against Indiana’s specific recovery rules and the five-year look-back window.