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Medicaid and Your Parent's Home in Alabama

Alabama Medicaid usually does not take a home while the owner is living and eligible, but selling, gifting or retitling the house can affect eligibility, and liens and estate recovery can apply. Talk to an elder-law attorney before you act.

Reviewed October 31, 2026 by George Lensch, broker, Wyze Realty. General information about Alabama, not legal, tax or financial advice.

The cost of long-term care is one of the biggest worries families face. It is natural to ask, "Will Medicaid take Mom's house?" The honest answer is: usually not while she is living and eligible, but the house matters a great deal in how eligibility is figured, what happens when it is sold, and what happens after death. Here is how Alabama Medicaid's rules generally treat the home, as of October 2026.

The 2026 Numbers

How the Home Is Treated While Your Parent Is Living

Under Ala. Admin. Code r. 560-X-25-.06, the home is excluded as a resource when it is the principal place of residence. When your parent is away, for example in a nursing home, the home can stay excluded if your parent or their representative signs a statement giving the reason for the absence and the intent to return. The home also stays excluded while a spouse or a dependent relative lives there. A jointly owned home may be excluded if selling would cause the co-owner undue hardship.

The equity limit still applies. If your parent's equity in the home is above the limit, they may be ineligible for long-term care services unless a spouse, a child under 21, or a blind or disabled child lives there.

If your parent owns other real estate, such as a lot or a second house, it may be excluded while a bona fide effort to sell continues, such as listing with a real estate agent. The rule says the property must be listed as of the first moment of the month, a gap of more than seven days voids the exclusion, and the applicant must agree to repay the Agency from the sale (r. 560-X-25-.06). Ask your attorney or caseworker before relying on this.

What Happens When the House Is Sold

When an excluded home is sold, the house turns into cash, and cash generally counts toward the $2,000 resource limit. Exactly when proceeds are counted depends on the first-of-the-month rule and your parent's situation, so confirm with the Medicaid caseworker or your attorney before the closing date. A few things families often do not expect:

• Any Medicaid lien is usually paid at closing. If a lien is on the house, the closing attorney will see it in the title search, and it comes due on sale.
• Giving proceeds away is a transfer. Gifts to children or grandchildren within the look-back can cause a penalty.
• Buying into a child's home can be a transfer. Putting proceeds toward a family member's house without a matching ownership share can be treated as an uncompensated transfer.
• Planning matters. An elder-law attorney may suggest legitimate ways to use proceeds for your parent's care. That is their job, not ours.

Want to understand what the house might sell for before you meet the attorney? Call (256) 808-6861 or schedule a confidential call. There is no cost and no obligation.

A net sheet gives you and the attorney a realistic number to plan around. Use the calculator below and include any Medicaid lien amount as a lien if you know it.

The 60-Month Look-Back and Transfer Penalties

For a person applying for nursing home Medicaid, Alabama looks back 60 months from the first day of the month of the initial application (r. 560-X-25-.09). Transfers of assets for less than fair market value during that period are presumed to have been made to qualify for Medicaid. The rule says a "subjective statement of intent or ignorance" is not enough to rebut that presumption. In plain English, saying "we did not know" will not undo the penalty.

The penalty is a period of ineligibility. It is figured by dividing the uncompensated value transferred by the average monthly private-pay cost of nursing facility care in Alabama, a figure set by Medicaid. The penalty generally starts at the later of the month of transfer or the month your parent is otherwise eligible and receiving institutional care. That timing is why a gift can hurt most when care is most needed. Ask the attorney or Medicaid for the current figure used in the calculation.

Exempt Home Transfers

Alabama's rule lists home transfers that do not cause a penalty. The home may be transferred to:

• A spouse.
• A child under 21, or a child who is blind or permanently and totally disabled.
• A sibling who has an equity interest in the home and lived there for at least one year before your parent's admission.
• A child who lived in the home at least two years before admission and provided care that allowed your parent to stay home rather than in a facility.

These exceptions depend on facts and proof. Do not assume one applies without an attorney's review. If assets are returned, the penalty may be cured, but the returned assets can then count as excess resources.

Liens on the Home

Under Ala. Admin. Code r. 560-X-33-.06, for a permanently institutionalized recipient, the Alabama Medicaid Agency "will place a lien and may foreclose upon real property." The lien comes due when the property is sold or transferred, or on the recipient's death. No lien may be imposed while any of these people lives in the home:

• A spouse.
• A child under 21, or a blind or disabled child.
• A sibling with an equity interest who lived there at least one year before admission.

Estate Recovery After Death

Federal law requires Alabama Medicaid to recover costs it paid from the estates of certain deceased recipients. Under r. 560-X-33-.05, recovery applies to recipients who were 55 or older when they received assistance, and to permanently institutionalized recipients of any age. Recovery is deferred until after the death of a surviving spouse, and while there is a surviving child under 21 or a blind or disabled child.

Alabama law (Act 2019-489) requires a personal representative or small-estate filer to notify Alabama Medicaid. Heirs may apply for an undue hardship waiver in limited cases, such as when the property is an heir's sole income-producing asset; each heir applies separately. Ask your attorney about deadlines.

Alabama Medicaid contacts (as of October 2026): Estate Notice Office (334) 242-4097 or (334) 242-4098; Estate Recovery Unit (334) 242-5727.

If your parent has already passed, see our inherited house guide and inherited house taxes.

Taxes Are a Separate Question

Medicaid planning and income tax planning can pull in different directions. Selling during life may let your parent use the home sale exclusion under 26 U.S.C. 121, including the rule that counts time in a licensed care facility as use if your parent lived in the home at least one of the last five years. Holding the home until death can give heirs a stepped-up basis (IRC 1014), but the house may face estate recovery. Gifting the home during life generally gives the child a carryover basis (IRC 1015). Bring a CPA into the conversation along with the elder-law attorney.

Questions to Bring to the Elder-Law Attorney

• Is the house currently excluded, and what do we need to sign to keep it excluded?
• Is my parent likely to be considered permanently institutionalized, and could a lien be placed?
• If we sell, what happens to the proceeds, and when are they counted?
• Have any gifts or transfers happened in the last 60 months that we need to disclose?
• Does any exempt transfer apply to our family, such as a caregiver child or a sibling co-owner?
• Does my parent's spouse living at home change the plan?
• Should we sell now, rent, or keep the house, considering Medicaid and taxes together?
• How does estate recovery affect the house after death, and does any deferral apply?

For help finding an attorney, Legal Services Alabama's Elder HelpLine (1-866-456-3959) serves qualifying adults 60 and older, the Alabama State Bar Lawyer Referral Service (1-800-392-5660) can refer you to a private attorney, and NAELA lists elder-law attorneys at naela.org. The TARCOG Area Agency on Aging (256-830-0818) can help with Medicaid waiver questions and local services.

Where Wyze Realty Fits

We do not give Medicaid advice. What we can do is give you and your attorney a realistic value and a written net sheet, keep a property listed continuously if your attorney says that matters, time a closing around the plan your attorney recommends, and coordinate with the closing attorney on any lien payoff.

Need a value estimate for the attorney meeting? Call (256) 808-6861 or schedule a confidential call. There is no cost and no obligation.

Common Questions

Does Medicaid take your house in Alabama?

Not while your parent is living and eligible in most cases, because the home can be excluded. But Medicaid may place a lien on the home of a permanently institutionalized recipient, and it must seek estate recovery after death in many cases. Talk to an elder-law attorney.

What is the Medicaid look-back period in Alabama?

60 months before the month of the initial application for nursing home Medicaid. Transfers for less than fair market value during that time are presumed to be made to qualify and can cause a penalty.

Can my parent give me the house to avoid Medicaid?

A gift within the 60-month look-back can cause a penalty unless an exception applies, such as a transfer to a spouse, a disabled child, a qualifying sibling, or a caregiver child who lived there at least two years. Talk to an elder-law attorney before any deed is signed.

Will selling the house affect Medicaid eligibility?

Usually yes. The excluded home becomes cash, and cash counts toward the $2,000 resource limit (as of October 2026). Ask your attorney before you list and before you choose a closing date.

Can the house stay excluded if my parent is in a nursing home?

It can, if your parent or their representative signs a statement giving the reason for the absence and the intent to return, or if a spouse or dependent relative lives there. Equity limits still apply.

What is Medicaid estate recovery?

After a recipient dies, Alabama Medicaid must seek repayment from the estate of recipients 55 and older or permanently institutionalized recipients. It is deferred while a spouse or a minor or disabled child survives.

Can Medicaid put a lien on my parent's house?

For permanently institutionalized recipients, yes. The lien is due on sale, transfer or death. No lien may be imposed while a spouse, a minor or disabled child, or a qualifying sibling lives in the home.

How much home equity can my parent have and still qualify?

Alabama uses the federal home equity limit. The 2026 federal minimum is $752,000. Confirm the figure that applies with Alabama Medicaid or your attorney.

Who do I notify about estate recovery?

A personal representative or small-estate filer must notify Alabama Medicaid. The Estate Notice Office is (334) 242-4097 or (334) 242-4098 (as of October 2026).

Talk It Through, Confidentially

Big decisions are easier with someone in your corner. Whether you are ready to sell, still deciding, or just need to understand your options, call or schedule a time to talk. The first conversation is free, private and comes with no obligation. If what you really need is an attorney, a CPA or a housing counselor, we will tell you that and point you in the right direction.

Schedule a Confidential Call Call or Text (256) 808-6861

Sources

• Alabama Medicaid: Medicaid Income Limits 2026
• Alabama Medicaid: Nursing Home Medicaid
• Ala. Admin. Code r. 560-X-25-.06 (resources, home exclusion)
• Ala. Admin. Code r. 560-X-25-.09 (transfers of assets, look-back)
• Ala. Admin. Code ch. 560-X-33 (estate recovery and liens)
• Alabama Medicaid: Estate Recovery
• CMS Informational Bulletin, Dec. 9, 2025 (2026 home equity limits)
• 26 U.S.C. 121 (exclusion of gain from sale of principal residence)
• IRS Publication 551, Basis of Assets
• Legal Services Alabama: Elder Law
• Alabama State Bar: Get Legal Help
• National Academy of Elder Law Attorneys: Find a Lawyer
• Alabama Department of Senior Services (AAA list)

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Wyze Realty LLC, Huntsville, Alabama. Information on this page is general and educational, is not legal, tax, financial or credit advice, and may not reflect the most current law. Consult an Alabama attorney, CPA or HUD-approved housing counselor about your situation. All real estate services are provided in accordance with the Fair Housing Act.