She’s Been in the Nursing Home for Three Years and the House Is Still Exempt, Because on One Line of the Application She Wrote That She Intends to Come Home

If a parent is on Medicaid in a nursing home, one line on the application does most of the work in protecting the house. It is the box where the applicant states intent to return home. Check it, and the primary residence is generally excluded from countable resources for Medicaid long-term care eligibility, even if the resident has been institutionalized for years.

Most families never read this rule, which is why a house can sit in a parent’s name through three years of nursing home care without disqualifying them.

One Line, One Legal Effect

Federal Medicaid rules treat the home as an excluded resource for an institutionalized single applicant so long as the applicant intends to return to it. The standard is the applicant’s subjective intent, not a doctor’s forecast about whether return is realistic. A resident with advanced dementia who will almost certainly never leave can still satisfy the standard if the application states intent to return. Some states require reaffirming that intent at renewal, but the mechanism is the same.

Where the Rule Actually Lives

The home exclusion sits in the Medicaid statute, and its treatment for institutionalized applicants tracks the Social Security Administration’s home exclusion guidance in POMS SI 01130.100, which state Medicaid agencies incorporate through their own manuals. The equity cap that limits the exclusion comes from the Deficit Reduction Act of 2005, codified at 42 U.S.C. 1396p(f). Ask your state Medicaid agency for the relevant manual section, as every state publishes one.

Who This Covers, and Who It Does Not

The intent-to-return mechanism matters most for an unmarried applicant. If a community spouse still lives in the home, the residence is protected on a different basis. If the applicant’s home equity exceeds the state’s cap, the exclusion fails regardless of intent, and that equity becomes countable, which can defeat eligibility outright.

States set their own equity cap within a federal floor and ceiling that adjusts annually. For 2026, that range runs from $752,000 at the floor to $1,130,000 at the ceiling, with most states using the lower figure. California applies no cap in practice, though published sources disagree on enforcement. One important change is coming: a federal law signed in 2025 freezes the national ceiling at $1,000,000 beginning January 1, 2028, with no inflation adjustment ever built in. That frozen cap will eventually affect even high-limit states, and families with appreciated real estate should verify their state’s current limit before relying on any older figure.

How the Declaration Actually Gets Made

1. On the Medicaid long-term care application, locate the item asking whether the applicant intends to return home. Answer yes if that reflects the applicant’s intent. If the applicant cannot communicate, an authorized representative or agent under a durable power of attorney typically signs.
2. Attach a short signed statement of intent to return if the form allows. Keep a copy.
3. Verify the state’s home equity limit with the state Medicaid agency, and confirm the property’s current equity is below it.
4. Calendar the redetermination date. If the state requires reaffirming intent at renewal, missing it can make the home a countable resource.
5. Keep the home insured, taxed, and maintained. A Medicaid resident’s income is generally applied to the cost of care after a small personal needs allowance, and rental income is generally countable, which can raise the patient’s required contribution.

What Families Miss

The declaration preserves eligibility during life but does nothing about estate recovery after death. Federal law at 42 U.S.C. 1396p(b) requires states to seek recovery from the estates of Medicaid recipients who received long-term care services at age 55 or older. The home is typically the principal asset recovered, so a family that kept the house exempt through years of care can still lose it to a state claim once the resident dies.

Recovery does carry exemptions. States generally cannot recover while a surviving spouse is alive, while a child under 21 survives, or while a blind or disabled child of any age survives. States also cannot force a sale while a sibling with an equity interest who lived in the home for at least one year before institutionalization remains there, or while an adult caregiver child who lived in the home for at least two years and whose care demonstrably delayed institutionalization remains there. Some states limit recovery to the probate estate, and a hardship waiver exists but is narrow and locally defined.

On the legislative front, the Stop Unfair Medicaid Recoveries Act was reintroduced in the House in January 2026. The bill would repeal the federal mandate that states operate estate recovery programs, but it has not passed, and estate recovery rules remain in effect as of late 2026.

The intent-to-return declaration is a powerful tool, but keeping the house from estate recovery requires separate planning. An elder law attorney licensed in the applicable state is the right resource for that work.

Editor’s note: This article was updated to include the current 2026 federal home equity floor ($752,000) and ceiling ($1,130,000), the effect of the Budget Reconciliation Act of 2025 freezing the national Medicaid home equity cap at $1,000,000 starting January 1, 2028, and the reintroduction of the Stop Unfair Medicaid Recoveries Act in the House in January 2026.

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