Are you worried that the government might “take the house” if your parent ever needs nursing home care? A listener named Eileen is facing this exact question, and her son-in-law thinks a trust is the answer. But is it?
In this episode, Jill unpacks how Medicaid works, what a Medicaid Asset Protection Trust actually does, and why good estate planning starts with the person at the center, not just the property.
This episode is a must-listen if you’ve ever panicked about Medicaid’s five-year lookback or felt pressure to “act fast” without knowing what you're really signing up for.
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The Death Readiness Podcast
Episode: 20
Title: What You Need to Know About Medicaid and Protecting Your Mom’s House
Host: Jill Mastroianni (Solo)
Published: July 22, 2025
Jill Mastroianni: (0.00)
Are you worried the government might take your parents’ house if they ever need nursing home care?
Maybe someone mentioned a “five-year lookback,” and now you’re feeling like you need to act fast—or wish you had, five years ago.
That’s the dilemma facing a listener named Eileen. She’s 73, lives alone in upstate New York, and owns her home. Her son-in-law thinks she should put her house in a trust to “protect it from the government” in case she ever ends up needing nursing home care—and needing Medicaid to pay for it.
Eileen’s open to the idea, but she’s unsure whether it’s truly necessary—or whether it could backfire.
In this episode, I walk through what her son-in-law is suggesting, how Medicaid really works when it comes to long-term care, and why putting your house in a trust might help in some cases—and might be problematic in others.
(00:55) Welcome to the Death Readiness Podcast. This is not your dad’s estate planning podcast. I’m Jill Mastroianni, former estate attorney, current realist, and your guide to wills, trusts, probate and the conversations no one wants to have. If your Google search history includes, “Do I need a trust?” “What exactly is probate?” and “Am I supposed to do something with mom’s Will?” you’re in the right place.
I’m recording this episode from my dad’s house in the Adirondacks. This morning my daughter swam a mile across the lake while I kayaked beside her. Later, we hit the trails with our three dogs. This place—these woods and waters—are my happy place.
My dad is 78 and lives here year-round. Years ago, I could’ve suggested that he put his house in a trust to “protect” it in case he ever needed nursing home care. But I didn’t. And I stand by that decision.
If he had put his house in a trust, I might’ve ended up as the trustee and a beneficiary. That kind of trust could have protected my future interest in the house and the land around it.
But would it have helped my dad? I don’t think so.
(02:13) And that’s the question I always come back to in estate planning:
Does this plan actually serve the person at the center of it?
Because good planning isn’t just about protecting assets for someone else down the line—it’s about making sure you’re okay first.
It’s the same reason they tell you on an airplane to put on your own oxygen mask before helping others. If you’re not stable—if you don’t have the care, comfort, and options you need—how can you help anyone else?
That’s the lens I use with every family I work with. Start with the person whose future is at stake.
(02:46) Before we get into Eileen’s question, let’s start with a quick definition of Medicaid—because this gets confusing fast.
And just to clarify up front: I’m talking about Medicaid, not Medicare.
Medicare is the federal program for people over age 65. Medicaid is different.
Medicaid is a joint federal and state program that helps cover medical costs for people with limited income and resources.
The federal government sets broad rules, but each state runs its own Medicaid program—so eligibility requirements and benefits can vary quite a bit depending on where you live.
Medicaid offers a key benefit that Medicare doesn’t—long-term nursing home care.
Now that we know what Medicaid is, let’s get to the heart of Eileen’s question:
(03:34) Eileen’s son-in-law is worried that the government will take her house if she ever ends up in a nursing home.
I imagine that his concern goes something like this:
Let’s unpack the thought process behind that.
First, how likely is it that Eileen will need nursing home care?
According to a 2019 Research Brief from the Department of Health and Human Services, which I’ll link to in the show notes, it is estimated that 75% of women over age 65 will need long-term help with two or more activities of daily living or suffer from severe cognitive impairment.
And if this is your first time hearing the term activities of daily living, they’re the basic activities we do to stay safe and healthy—things like eating, dressing, using the bathroom, taking care of personal hygiene, and moving from place to place.
Now, out of that 75% of women over age 65 with long-term care needs, about 34% are expected to need nursing home care specifically.
(04:56) So yes, Eileen might need help one day—but not necessarily in a nursing home. She might need in-home care, or assisted living, or just help from family. And, the type of care she needs might not be covered by Medicaid.
If you want to dig deeper into different types of care and how to talk about them with your loved ones, I’ll link to Episode 10 in the show notes: How to Start the Senior Care Conversation.
So, let’s say Eileen does end up needing nursing home care. How much are we talking?
In upstate New York, where Eileen lives, the average cost of nursing home care in 2025 is about $14,000 a month.
As a reminder, Medicare does NOT cover long-term stays in a nursing home.
Medicaid might—but only if you qualify both medically and financially.
(05:50) Let’s talk about financial eligibility for Medicaid.
In most states, including New York, there are strict income and resource limits to qualify for Medicaid. For someone like Eileen—a single individual—the 2025 income limit is $21,597 a year.
And, once approved for a Medicaid-funded nursing home care, the Medicaid recipient is required to contribute the majority of their income towards their care costs. This is known as a monthly patient liability.
But, New York allows Medicaid recipients to keep certain assets without counting them against the eligibility limit. These are called “exempt” or “non-countable” assets.
So, Eileen could qualify for Medicaid and still keep:
(06:52) So now we know that Eileen can still qualify for Medicaid even if she owns her home—as long her equity in it is less than $1 million.
So… does that mean the government can just take her house?
Not exactly.
If Eileen ends up in a nursing home and uses Medicaid to pay for her care, New York State can place a lien on her home. That means after she dies, the state could require her estate to pay back what Medicaid spent on her behalf. This process is called Medicaid Estate Recovery.
And I think this is what Eileen’s son-in-law is worried about.
To avoid that potential Medicaid Estate Recovery, sometimes called Medicaid payback,, he’s suggesting that Eileen transfer her home into something called a Medicaid Asset Protection Trust. We’ll talk more about what that is in a minute.
(07:48) But first—let me give you a real-world example of how a Medicaid lien actually works.
When I bought my house in Nashville back in 2013, there was a Medicaid lien on the property. The previous owner had received long-term nursing home care through Medicaid. Tennessee’s version of Medicaid is called TennCare and TennCare was owed money.
When I bought the house, part of the sale proceeds went directly to TennCare, just like paying off a mortgage.
However, timing became an issue for me. I had locked in a great interest rate, but the attorney handling the estate was dragging her feet on getting the Medicaid payback number. So I took matters into my own hands—I called the head of TennCare, explained the situation, and asked if he could get me the number quickly.
He was happy to help. TennCare got paid, I got the house, and the closing went through on time.
(08:45) Now, let’s talk about Medicaid Asset Protection Trusts.
Last week on Tuesday Triage, we talked about revocable trusts—the kind you can change or revoke. I’ll link to that episode in the show notes if you want to check it out.
But a Medicaid Asset Protection Trust is very different.
This type of trust is irrevocable, which means that once you set it up and transfer assets into it, you generally can’t undo it or make changes.
Let’s break down how this would work for someone like Eileen:
(09:55) Now, let’s walk through a timeline.
Let’s say that Eileen transfers her home into a Medicaid Asset Protection Trust on August 1, 2025.
About a year later, her health declines, and she applies for Medicaid on August 1, 2026.
As part of the review of Eileen’s application, Medicaid will conduct a five-year lookback.
Medicaid will review all financial transactions from the past five years to see if Eileen gave away any assets—because giving something away means she’s no longer using that asset to pay for her care.
In this case, Medicaid would see that Eileen gave away her house—by transferring it to the trust—within that five-year window.
If Eileen otherwise qualifies for Medicaid—meaning she meets the financial and medical criteria—this transfer will trigger a penalty period.
The penalty period is a time period during which Eileen will remain ineligible for Medicaid’s services.
(10:58) So, if Eileen does transfer her house into a Medicaid Asset Protection Trust and applies for Medicaid within five years of making that transfer, how long would her penalty period be?
The length of the penalty is based on the value of the gift—in this case, Eileen’s house—divided by Medicaid’s monthly regional rate for nursing home care in her area.
As of January 1, 2025, the monthly rate for Eileen’s region in upstate New York is $13,916.
Let’s say her house was worth $500,000 when she transferred it to the trust.
We divide $500,000 by $13,916. The answer is 36.
That means Eileen would be ineligible for long-term care Medicaid for 36 months—or three full years.
That’s a serious problem. Eileen would need to come up with nearly $14,000 a month for three years to pay for care before Medicaid would step in.
(12:08) Now maybe Eileen’s daughter and son-in-law had anticipated this foreseeable problem. Maybe her son-in-law—who’s also the trustee—promised that if it came down to it, he’d sell the house and give Eileen the money to cover the gap.
But remember: Eileen isn’t the beneficiary of the trust. Her daughter is. So even if the son-in-law wanted to help, the money wouldn’t legally belong to Eileen.
And what if life gets messy?
Maybe Eileen moves in with her daughter and son-in-law as her health declines. Then her daughter and son-in-law lose their jobs. They’re struggling to pay the mortgage and keep their child in college.
They decide—maybe even with Eileen’s blessing—to sell the house. And they use the money to stay afloat.
The government didn’t take Eileen’s house. But now she’s being penalized by Medicaid… and she’s received no benefit from the house at all.
(13:07) I’m not saying this kind of planning never works. There are situations where Medicaid Asset Protection Trusts are a smart strategy.
But they come with real risks and real trade-offs.
In addition to risking a Medicaid penalty period, what if Eileen needs some care, but not enough to qualify for Medicaid? What if she wants to sell her house and downsize? Or use the equity in her house to pay for in-home help? If her house is in a trust and she’s not the beneficiary, she can’t. She gave up that control.
And what if Eileen does need nursing home care but the facility she wants doesn’t accept Medicaid?
In this hypothetical scenario, the strategy of Eileen transferring her home into a Medicaid Asset Protection Trust protected the house for her daughter, but it tied Eileen’s hands when she needs flexibility most.
(14:02) There’s no one-size-fits-all answer here. Medicaid eligibility and long-term care planning are complicated. Way more complicated than one Tuesday Triage episode can cover.
Medicaid Asset Protection Trusts can be useful in the right situations but they can also backfire. And, laws change. Will Medicaid 10 years from now be the same Medicaid we know today? Will the eligibility rules be the same? We don’t know.
For Eileen and anyone who is considering giving up control of their house or other financial assets in order to potentially qualify for Medicaid at a future time, make sure to consider all of the pros and cons with a trusted attorney.
(14:47) Because here’s what I would tell my clients:
Put your needs first.
Sometimes, the best legacy you can leave is knowing you were taken care of—with dignity, comfort, and options.
If you found this episode helpful, I’d love for you to share it with someone you think could benefit from it.
If you have a question you’d like me to answer on a future Tuesday Triage episode, whether related to today’s episode or something totally different, send me an email at jill@deathreadiness.com or visit deathreadiness.com/TuesdayTriage. I’d love to hear from you.
(15:31) This is Death Readiness, real, messy and yours to own. I’m Jill Mastroianni and I’m here to help you sort through it, especially when you don’t know where to start.
Hi, I'm April, Jill's daughter. Thanks for listening to The Death Readiness Podcast.
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The Death Readiness Podcast is for educational and entertainment purposes only.
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