How to Protect Your Home from Medicaid in Maryland
For many Maryland families, a home is more than an asset, it’s a legacy. It’s where memories are made, holidays are celebrated, and generations gather. Unfortunately, without careful planning, that same home can be at risk if you or your spouse ever need long-term care paid for by Medicaid.
At Holt Legacy Law, we regularly help clients protect their homes and preserve family wealth through proactive estate and Medicaid planning. Here’s what you should know.
Understanding How Medicaid Works in Maryland
Medicaid is a government program that helps pay for long-term nursing home care, but it’s designed for people with limited assets. To qualify, you generally must have no more than $2,500 in countable assets (though a spouse still living at home may keep more).
Your primary residence is usually not counted while you are living in it, but things change once you move into a nursing facility. After your death, Maryland Medicaid can attempt to recover the cost of care from your estate, including the value of your home. This process is known as Medicaid Estate Recovery.
That means even if your home wasn’t sold during your lifetime, your loved ones may still need to sell it after your death to repay Medicaid, unless you’ve planned ahead.
Why Your Home Could Be at Risk
Many people believe their home is “safe” simply because it’s in their name or their spouse’s name. Unfortunately, that’s not always true. Here’s how it can go wrong:
Medicaid Estate Recovery: After your death, the state may file a claim against your estate to recover benefits paid for your care.
Lien Placement: In some cases, Maryland can place a lien on your home while you are still alive if you are permanently institutionalized.
Ownership Confusion: If the home is owned jointly or placed in a revocable trust, it may still be considered part of your estate for Medicaid purposes. These types of ownership cannot save the home from potential sale.
Legal Strategies to Protect Your Home
The good news is that there are legitimate, legal ways to protect your home from Medicaid recovery. The right approach depends on your age, health, family situation, and goals.
1. Create an Irrevocable Medicaid Asset Protection Trust (MAPT)
One of the most effective strategies is transferring your home into an Irrevocable Medicaid Asset Protection Trust.
This type of trust removes your home from your personal ownership while allowing you to continue living in it. After five years, the home is fully protected from Medicaid recovery under Maryland’s five-year lookback rule.
The trust can be written to ensure:
You keep the right to live in your home for life
Your children inherit the property smoothly after your death
The home remains safe from creditors and Medicaid recovery
2. Transfer Ownership with a Life Estate Deed
A life estate deed allows you to keep the right to live in your home while naming your heirs as the “remaindermen” who automatically inherit the property upon your death.
In Maryland, this can be a useful planning tool because it avoids probate, limits Medicaid’s ability to recover the home, and still qualifies you for certain tax benefits.
However, because it involves a transfer of ownership, timing and structure are critical because transferring too close to needing care can trigger Medicaid penalties.
3. Consider Spousal Protections
If you’re married, Medicaid spousal protection rules may allow your spouse to keep the home even if you need nursing care. But without a plan in place, Medicaid can still recover costs after the second spouse’s death. Using a trust or other planning tool ensures the home passes directly to your heirs instead.
4. Use a Lady Bird Deed (Enhanced Life Estate Deed)
A Lady Bird Deed is a more flexible alternative to a traditional life estate deed. It allows you to keep full control during your lifetime (you can sell or refinance the property) but automatically transfers ownership upon death while avoiding probate and protecting the home from Medicaid estate recovery.
While not as common as in some other states, this option can sometimes be used strategically in Maryland with careful drafting.
Timing Matters: The Five-Year Lookback Rule
Medicaid reviews all transfers made within five years before you apply for benefits. If you give away or transfer your home during that period, you may face a penalty period of ineligibility.
That’s why early planning is essential. The sooner you take steps to protect your home, the more options you’ll have and the more securely your family’s legacy can be preserved.
The Importance of Working with a Maryland Estate Planning Attorney
Medicaid rules are complex, and the wrong move can accidentally disqualify you from benefits or expose your home to recovery. At Holt Legacy Law, we help clients:
Create trusts that comply with Maryland law
Transfer real estate safely without losing eligibility
Coordinate estate, tax, and Medicaid strategies for long-term protection
You’ve worked hard for your home, so don’t let it slip away due to lack of planning.
Final Thoughts
Protecting your home from Medicaid is about more than money. It’s about ensuring your life’s work benefits your loved ones, not the state.
If you’re a Maryland homeowner over 55, it’s not too early to start planning. The best time to act is while you’re healthy and have the most options.
If you’d like to discuss ways to protect your home, feel free to book a free consultation.
Prefer to speak with someone directly? Call us at (410) 864-6395. We’re happy to help.
