When Assisted Living Is the Way Forward: Protecting a Home for the Community Spouse

What happens when one spouse moves into assisted living, and the other spouse stays in the couple’s home?

The official word used to describe the spouse living at home is community spouse. That’s the spouse who lives “in the community” while the other enters assisted living.

The spouse in assisted living may need to tap into Medicaid. A couple might want to know if all (or how much) of their assets need to be spent on assisted living before Medicaid will provide financial support for long-term care.

Here, we take a look at preserving the ability of the community spouse to keep the home, and related scenarios.

The Frequently Asked Questions

People ask:

Q. Can Medicaid reach my assets?

A. Some assets, yes. But you have “non-countable” property too, which they won’t claim. There are extra protections for the title to your home. When the community spouse is living there, the home doesn’t “count” as an asset that could be claimed as payment for Medicaid eligibility for the spouse in assisted living. 

Q. What if the spouse who continues to live in the home (the “community spouse”) happens to die first?

A. Depending on how the title is vested, the one in the assisted living situation might now become the sole deed holder.

The passing of the community spouse indicates there’s no longer a spouse who needs the home; the home is now “counted” and Medicaid can lay a claim to it. Typically, in this case, the home is sold, with proceeds tapped to cover medical costs.

Q. Could the one going into assisted living simply deed the home to the spouse who’ll live in it?

A. Because they are spouses, the one going into assisted living could quitclaim or otherwise transfer their share of ownership of the home to the one who will reside there. That way, the one in assisted living won’t become the sole deed holder. That prevents the home’s suddenly being countable for Medicaid. To avert unexpected effects, deeds should not be transferred for the purpose of estate planning without a consultation with a lawyer.

Q. What if the spouse who continues to live in the home (the “community spouse”) at some point needs to move to assisted living?  

A. With some exceptions, the home then becomes countable. Usually it will be sold to generate proceeds to pay the costs of care. It’s important to keep this in mind. You might have assumed the home’s resident is always protected, but reality does get more complex than that.

Q. What if the spouse who continues to live in the home (the “community spouse”) runs out of money?

Medicaid law does make allowances for protecting some shared assets in this situation. State law differs on how much of the shared assets the community spouse may keep. The rest has to be spent down if the state doesn’t allow the community spouse to keep it all. This is only one rule within Medicaid law that protects spousal assets in some situations.

What All Readers Must Know

Rules involving what Medicaid may and may not reach are complicated, and can change. While we outline general scenarios, no two people have exactly the same set of circumstances. So, the answers to your particular questions could vary.

Also, there is an interplay between wills, trusts, and Medicaid. Therefore, there are considerations to take into account beyond the scope of this brief introduction. This article is not legal advice, but every senior should have legal guidance when it’s time for estate planning. The lawyer to see is an elder law specialist, or a wills, estates, and trusts lawyer. These professionals know your state’s laws, asset protection strategies, and the laws and rules surrounding Medicaid. Some elder law firms walk clients through the Medicaid process. Many firms offer free first-time consultations. 

Key Takeaways for Community Spouses

• The home is usually protected when a community spouse continues to live there, even if the other spouse needs Medicaid for assisted living or long-term care.
• Ownership matters. How the deed is titled can determine whether the home stays protected if one spouse passes away.
• Transfers between spouses are generally allowed, but transferring property for Medicaid or estate planning purposes can have unintended consequences if done incorrectly.
• Protection is not permanent. If the community spouse later enters assisted living or passes away, the home may become a countable asset.
• Medicaid rules are state-specific and complex. What applies in one state may not apply in another.

Bottom line: Planning ahead can help preserve housing stability for the community spouse—but timing, title, and state law all matter.

Common Mistakes to Avoid

• Transferring the home too early or for the wrong reason. Deeding property without understanding Medicaid’s look-back rules or estate implications can create new problems instead of solving existing ones.
• Assuming the home is always protected. The home is generally protected while a community spouse lives there—but that protection can end if circumstances change.
• Ignoring how the deed is titled. Joint tenancy, tenancy by the entirety, and sole ownership can each produce very different outcomes when one spouse passes away.
• Failing to plan for “what if” scenarios. If the community spouse later needs assisted living or runs out of funds, the home may become countable.
• Relying on informal advice. Medicaid and elder law rules vary by state. Advice from friends, online forums, or outdated sources may not apply to your situation.
• Using deeds as a substitute for estate planning. Property transfers affect taxes, inheritance rights, and Medicaid eligibility and should not be done without professional guidance.

Reminder: Medicaid planning is not one-size-fits-all. A short consultation with an elder law attorney can prevent costly mistakes.

Important State Law Notice

Medicaid eligibility rules, asset limits, and spousal protections vary by state and may change over time. This article discusses general principles, not state-specific legal advice. Before transferring property, changing a deed, or applying for Medicaid, consult a qualified elder law attorney or estate planning professional familiar with your state’s Medicaid rules. Actions taken without guidance may affect eligibility or trigger penalties.