15 Dec HOME SWEET HOME – EQUITY LIMIT INCREASED FOR 2026
As of January 1, 2026, the homestead equity limit for a Medicaid applicant who is not married and who either applies for the nursing home Medicaid program or “waiver” home care Medicaid program will increase to $752,000 ($730,000 in year 2025). Thus, if the home equity (the difference between the appraised value and any debts owed secured by the home) limit is less than that, it is a non-countable resource in determining Medicaid eligibility (which is means-tested) as long as the applicant lived there before applying and signs an intent to return home. As a result, the vast majority of Texans who have a home and apply for one of those Medicaid programs will not have their home count as a resource. The home is a structure in which a person lives (including mobile homes, houseboats and motor homes) and all adjacent land (including other buildings on the land). All land adjacent to the home includes any land separated by roads, rivers or streams. Land is adjacent as long as it is not separated by intervening property owned by another person. There is an unlimited equity limit if the Medicaid recipient is married (so even a home with an equity of $1,000,000 would not count as a resource if married). In some cases where the home equity exceeds the limit (if the applicant is single), an applicant may decrease the equity limit by borrowing funds and then purchasing a non-countable resource or paying other debt.
However, although the home is usually a non-countable resource, the government has a right to make a claim against the home (commonly referred to as “estate recovery”) after the death of the Medicaid recipient to the extent Medicaid benefits were advanced if the home passes by will or intestacy (no will). A successful claim for Medicaid estate recovery is avoided if (1) the Medicaid recipient is survived by his or her spouse; (2) the Medicaid recipient is survived by his or her child who is under 21; (3) the Medicaid recipient’s child is blind or disabled under Social Security requirements; (4) the Medicaid recipient has an unmarried adult child who has lives full time in the home for at least 1-year prior to the death of the Medicaid recipient; (5) there is a demonstrative hardship for the beneficiaries; (6) the decedent was an American Indian, Alaska Native, or had retained government reparation payment at the time of death; or (7) the cost of selling the property is more than the property is worth.
There are also options such as enhanced life estate deeds (also known as ladybird deeds) and transfer on death deeds, which are exceptions to the transfer penalty rules and can avoid a successful claim by the state for Medicaid benefits advanced after the death of the Medicaid recipient. Also, if the homestead is deeded (not by ladybird deed or transfer on death deed) into a revocable living trust, it will count as a resource. It should also be noted that an agent under a power of attorney cannot create at transfer on death deed, but the agent could create a ladybird deed if there is proper language in the power of attorney.
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