Medicaid is a joint federal and state program that provides healthcare assistance to individuals with low income, including long-term care services. The time when these long-term services are needed may be the least discussed and most consequential transition in personal finance, and plenty of otherwise careful investors walk into it with no real plan. 

Federal law requires states to seek repayment from the estates of recipients who were 55 or older when they received nursing facility services. That recovery can happen only after the death of the individual's surviving spouse. Some states go further. They can adopt a broader definition of "estate" that includes some assets which, under ordinary probate rules, would fall outside it.  

Medicaid does have a look-back period, typically five years (60 months) prior to the nursing home application date, to review financial transactions and ensure Medicaid applicants have not transferred or given away assets for less than fair market value so that they might qualify for Medicaid coverage. 

The Medicaid look‑back period is a financial review window used to prevent applicants from giving away assets to qualify for long‑term care Medicaid. It applies to Nursing Home Medicaid and most Home and Community‑Based Services (HCBS) waivers, but not to standard Aged, Blind, and Disabled (ABD) Medicaid. 

In Maryland's community property system, protecting assets from Medicaid's look‑back requires early, coordinated, and legally structured planning—often using irrevocable trusts, spousal protections, exempt asset conversions, and compliant annuities—while ensuring both spouses' shares are considered and documented properly. 

When one spouse enters a nursing home, federal Medicaid law lets assets move between spouses without a look-back penalty. The house can transfer to the healthy spouse's name on the day of admission. If that spouse rewrites their will to exclude the spouse in a nursing home, the transfer keeps the home out of that estate, where the state would later try to recover what Medicaid paid for nursing home care. 

Medicaid normally reviews every gift or below-value transfer made in the 60 months before a nursing home application, and each can trigger a penalty period. Transfers to a spouse are not subject to that rule. A husband who needs nursing home care can deed his share of their house to his wife with no penalty. Once the home belongs only to her, it is no longer part of his estate when he dies and Medicaid targets his estate to recover costs. 

  • Spouses can transfer a home on nursing home admission day with zero Medicaid look-back penalty under 42 U.S.C. §1396p(c)(2)(B)(i). 
  • If the spouse not in the nursing home dies first and the spouse in a nursing home inherits the house, it re-enters that estate and wipes out the Medicaid eligibility. 
  • A trust may not protect assets from the Medicaid payback, depending on the access and timing of the trust.  
  • Legally married couples are the ones protected when one spouse needs Medicaid-covered nursing home care. Unmarried partners have no spousal exemption, and deeding a home to a partner, adult child, or friend within the review window can trigger a penalty. 

It is vital to have professional advice well BEFORE a spouse needs to apply for Medicaid to pay for nursing home fees. The deed, the will, the trust wording, and the elective share analysis all depend on state law. That's why couples usually have a Medicaid planning lawyer licensed in their state draft these documents before or right at nursing home admission.