The Primary Residence Strategy in Medicaid Planning: How Your Home Can Help Protect Assets

When it comes to qualifying for Medicaid, many people are surprised to learn that your home—often your most valuable asset—can be protected.

Medicaid has strict limits on countable resources. In most cases, individuals applying for long-term care benefits must have less than $2,000 in countable assets. However, under federal and Texas law, your primary residence is not counted as part of that $2,000 limit—as long as it meets certain criteria.

Let’s explore how this primary residence strategy works, what the rules are, and how families can use it to preserve wealth while ensuring access to care.

How Much Equity Is Protected?

As of 2018, the equity in your primary residence is protected up to $572,000 for Medicaid eligibility in Texas (note: this number adjusts over time for inflation). This means:

✅ You can own a home with up to that amount in equity and still qualify for Medicaid, ❌ But if the equity is over the cap, it may be considered a countable resource, affecting eligibility.

Example: If your home is worth $650,000 and you have no mortgage, you may need to reduce the equity to qualify—such as by taking out a reverse mortgage or using part of the equity to pay for care.

Why Does Medicaid Protect the Home?

The federal government and states like Texas allow homes to be excluded for several reasons:

1. To allow the individual to return home if their health improves or care arrangements change.

2. To reflect American cultural values—a home is more than a financial asset; it’s a place of family and identity.
   

But here’s the catch: while the home is protected during the applicant’s lifetime, it’s not necessarily protected after they pass away.

Beware: The Medicaid Estate Recovery Program (MERP)

Texas operates a Medicaid Estate Recovery Program (MERP), which allows the state to seek reimbursement from the estate of a deceased Medicaid recipient for the cost of their care.

And yes—the home is often the main target for estate recovery.

So, while the primary residence is exempt for eligibility purposes, it is not exempt from estate recovery unless certain actions are taken ahead of time.

Smart Ways to Use the Primary Residence Strategy

If you're preparing for long-term care, here’s how to use your home strategically:

✅ Keep Your Home—Don’t Sell It Prematurely

Selling your home could turn a protected asset into a countable resource, disqualifying you from Medicaid until those funds are spent down.

✅ Invest in Home Improvements

Use extra cash to:

• Pay down the mortgage

• Replace the roof or HVAC

• Remodel for accessibility (ramps, walk-in showers, etc.)
  

These upgrades both preserve asset value and make the home more livable—while keeping that money safe from Medicaid’s resource limits.

✅ Buy a Home If You Don’t Own One

In some cases, it may make sense to purchase a new home—but only if the applicant intends to live there. Intent is key. Buying a house just to shelter money without moving in could be considered Medicaid fraud.

✅ Live With Family? Consider a Shared Home Arrangement

If you live with a child or other family member, buying into their home or making improvements (such as adding a suite or accessibility features) can be a legitimate strategy—if structured carefully.

Important: Plan for the Long Term

Even if your home is protected now, the Medicaid Estate Recovery Program could still seek reimbursement from it after your death. That’s why it’s essential to plan ahead using:

• Life estates

• Lady Bird deeds

• Irrevocable trusts

• Other strategies that your elder law attorney can tailor to your situation

Final Thoughts: The Home as a Financial Shield

Your home isn’t just a roof over your head—it’s one of your most powerful tools in Medicaid planning. By understanding how to use your primary residence strategically, you can preserve wealth, maintain eligibility, and create peace of mind for your family.

📞 Need help navigating your Medicaid planning options? At WG Law we help families protect what matters most. Contact us today to discuss how your home can play a role in your long-term care plan.