Will Medicaid take my parent's house in Texas?

It is one of the first fears families have when a parent needs nursing home care in Texas: are we going to lose the house? The short answer is reassuring. While your parent is alive, their home is almost always safe. The real question is what happens after they die, and that part you can plan for.

This guide explains how it actually works, in plain English. It is educational information, not legal advice. Protecting a home is a job for a licensed Texas elder law attorney, and the tools below need to be set up correctly to work. If you want the full workbook version, our Texas Care Funding Playbook covers every step.

While your parent is alive, the home is usually exempt

To qualify for Texas Medicaid, an applicant can keep only $2,000 in countable assets. The home does not count. It is an exempt asset, which means your parent can own their house and still qualify for Medicaid to pay for their care.

There are two things worth knowing. First, for an unmarried applicant, the home is exempt as long as their equity in it is at or below $752,000, the limit that took effect on January 1, 2026. Second, that equity cap does not apply at all if a spouse, a child under 21, or a blind or disabled child lives in the home. A married applicant whose husband or wife still lives in the house is never forced to sell it to qualify.

So during your parent's lifetime, Medicaid does not take the house. Where families get caught off guard is what comes next.

The real risk is estate recovery, after death

When someone who received Medicaid long-term care dies, federal law requires states to try to recover what they spent. Texas runs this through its Medicaid Estate Recovery Program. This is the part people mean when they worry about losing the house, and it is where careful planning matters.

Two facts about Texas make this very manageable.

Texas recovery is probate only. The state can file a claim only against assets that pass through probate, the court process for distributing what someone owned in their own name at death. Anything that passes outside probate is generally beyond the program's reach. That includes payable-on-death bank accounts, life insurance with a named beneficiary, retirement accounts with beneficiaries, and property transferred by a Lady Bird deed or a transfer-on-death deed. Texas has not adopted the broader form of recovery that some other states use.

There are strong exceptions. Texas will not file a claim at all if any of these is true: there is a surviving spouse, in which case recovery is barred while that spouse is alive; there is a surviving child under 21, or a child of any age who is blind or permanently disabled; an unmarried adult child lived in the parent's home continuously for at least a year before the parent died, which protects that home; or the estate is small enough that recovery does not apply. There is also a hardship waiver families can request.

The tool that ties it together: a Lady Bird deed

Texas is one of the few states that allows an enhanced life estate deed, which almost everyone calls a Lady Bird deed. It is the single most useful tool for keeping a home out of estate recovery.

Here is how it works. Your parent signs a deed that keeps them in complete control of the home for the rest of their life. They can live in it, rent it, sell it, borrow against it, or change their mind entirely, all without anyone's permission. When they die, the home passes automatically to the person they named, outside of probate. Because Texas recovery reaches only probate assets, a properly drafted Lady Bird deed generally keeps the home safe.

The words "properly drafted" matter. This is not a form to download and fill in at the kitchen table. A small mistake can undo the protection or create a tax problem. An elder law attorney does this routinely, and the cost is small next to the value of a home.

What not to do

The most common and most expensive mistake families make is quietly signing the house over to the children to get it out of reach. It feels logical. It usually backfires.

Giving the home away is a gift, and Medicaid looks back five years at gifts. A transfer inside that window can create a penalty period, a stretch of time during which Medicaid will not pay for care, calculated by dividing the value given away by $262.37 per day. On a house, that can mean many months of ineligibility, during which someone has to pay the nursing home privately. Outright gifts can also create capital gains tax problems for your children that a Lady Bird deed avoids. If you are anywhere inside the five years, talk to an attorney before you move anything.

What to do this week

1. Do not transfer the house yet. A well-meaning transfer can cause the exact penalty you are trying to avoid. Get advice first.
2. Talk to a Texas elder law attorney about a Lady Bird deed and your parent's specific situation. This is the decision that most needs a professional.
3. Gather the ownership records. The deed, the mortgage statement, and the property tax record. You will need them.
4. Understand the whole picture. Protecting the home is one piece. See how the income and asset rules fit together in our guide on how to pay for a nursing home in Texas, and check the safety record of the homes you are considering on our Texas nursing home report cards.

The house is not lost. With the right deed and a little planning, most Texas families keep the home and still get help paying for care. What you should not do is guess, or act on a rumor, or sign anything over in a panic. Understand how the rules work first, then make your move with an attorney who does this every day.