Will Medicaid Take the Family Farm? Protecting Assets for Long-Term Care in Jennings County

Nursing home care is expensive, and it's a real fear for many families around here: if a parent needs long-term care, does the state take the farm? The house? Everything that's supposed to pass down to the kids?

The honest answer is it's not automatic. But planning matters. Medicaid has specific rules about what counts against you, what may be protected, and how far back the state can look at your finances. Waiting until care is already needed is usually the hardest time to begin planning.

What Medicaid Actually Pays For

Medicare, the program most people know, generally doesn't pay for long-term custodial care in a nursing home. That's where Medicaid comes in.

Indiana's Medicaid program can cover long-term nursing home care. But a person must qualify under both financial and medical rules. That's why early planning can make a difference for a family home, farm, or other property.

How Medicaid Eligibility Works

To qualify for long-term care Medicaid, the spouse who needs nursing home care generally must have no more than $2,000 in countable, non-exempt assets. Countable assets may include cash, bank accounts, investments, and other property that doesn't fall under an exemption.

The exact figure can change. Confirm the current amount with your local Division of Family Resources office or an attorney before relying on it.

Certain assets don't count toward that limit. This is why planning focuses on how assets are owned and structured, not only on how much a family has.

Medicaid also looks at assets as of a certain snapshot date. In simple terms, the timing of a plan matters.

The Five-Year Look-Back Period

This is the part that catches many families off guard. Indiana Medicaid looks back five years from the date of an application for long-term care coverage.

The state reviews transfers made for less than fair value. Gifting the family farm to your children for $1 is one example. If Medicaid finds a transfer like that during the five-year look-back period, it may impose a penalty period.

A penalty period is a stretch of time when Medicaid won't pay for covered long-term care, even though the asset has already been given away. The length of the penalty depends on the value of the transfer and other rules.

In Indiana, the penalty is calculated by dividing the value of the transfer by a monthly divisor, which is approximately $7,651 for 2026. That gives you the number of months Medicaid won't pay. A transfer of $76,510 produces a penalty period of roughly ten months.

That's why last-minute planning after a health crisis often doesn't work well. The tools that may protect assets need time to take effect. A transfer should never be made without understanding the Medicaid rules first.

What Counts as an Exempt Asset

Some assets don't count against the Medicaid resource limit, although each exemption has its own rules:

• Your primary home may be exempt up to a $752,000 equity limit in 2026. The equity limit doesn't apply if your spouse, a child under 21, or a blind or disabled child of any age lawfully lives in the home.
• One vehicle is generally exempt when it meets Medicaid's rules.
• Personal belongings and ordinary household goods are generally exempt.
• Certain prepaid burial or funeral arrangements may be exempt.

One point to be clear about: only the principal residence can qualify for the home exemption, and that exemption generally reaches the homesite and the land immediately around it. Farm ground beyond that isn't exempt. Neither is a second home, a rental, or most other real estate. Those are countable assets, and a workable plan usually has to address them directly, through spend-down, another lawful option, or a properly structured transfer made early enough to matter.

These rules can be more detailed than they appear, and a second property, farm ground, retirement account, life insurance policy, or trust each receives different treatment.

Protections for a Spouse at Home

If one spouse needs nursing home care and the other spouse stays at home, Indiana law provides protections for the spouse in the community. These rules help prevent the spouse at home from being left without enough assets or income for basic living expenses.

General 2026 figures include:

• The spouse at home may keep at least $32,532 and up to one-half of the couple's non-exempt assets, with a maximum of $162,660.
• The spouse at home may keep at least $2,705 per month in income (that floor took effect July 1, 2026). If shelter and utility costs are high, the spouse may request a fair hearing to raise that allowance, up to a maximum of $4,067 per month in 2026.
• The spouse in the nursing home generally keeps $52 per month for personal needs.
• Transfers made directly between spouses generally don't trigger the five-year transfer penalty.

These are general figures for 2026. They can change, and the amount allowed in a specific case depends on the family's facts, assets, income, and expenses.

Why Estate Recovery Makes This More Than a "While You're Alive" Question

After a Medicaid recipient passes away, the state generally has the right to seek repayment from the estate for certain long-term care costs Medicaid paid.

In Indiana, "estate" means more than what passes through probate. Under Ind. Code 12-15-9-0.5, it also includes real property that passed to a survivor through joint tenancy with right of survivorship created after June 30, 2002, property transferred through a nonprobate transfer, and certain annuities purchased with the recipient's own assets. A Transfer on Death deed is a nonprobate transfer. So a TOD deed doesn't put the property out of reach. It changes who receives the property, not necessarily whether the state can make a claim against it.

The statute does exclude one arrangement common among married couples: a survivorship interest in real estate held as tenants by the entireties. How a farm is titled therefore matters to the estate recovery analysis, just as it does during life.

That's why how assets pass at death matters, and why planning for a farm or a home has to account for the Medicaid rules during life and the estate recovery rules afterward. No single document solves every Medicaid concern.

I've covered Transfer on Death deeds in more detail here. I also discuss trusts and other planning choices in this estate planning guide.

New as of July 1, 2026: when the state pursues a claim against assets outside the probate estate, it must begin that claim within nine months of the person's death. That deadline doesn't apply to assets that were never reported to the county Division of Family Resources, one more reason a full and accurate report at the time of application matters.

Common Planning Tools

• An irrevocable Medicaid asset protection trust may help in some situations. This is different from a standard revocable living trust. A revocable trust generally doesn't protect assets from Medicaid spend-down because you still control the property. An irrevocable trust, set up correctly and early enough, may provide different options.
• A caregiver agreement can provide a clear way to pay a family caregiver. A formal, paid agreement must be prepared and followed correctly so the payment isn't treated as a disqualifying gift.
• A durable power of attorney is often part of this planning too. Someone needs legal authority to apply for Medicaid, manage spend-down, and sign documents on a parent's behalf once they can no longer act for themselves. I've written more about how a power of attorney compares to guardianship in Indiana.
• Timing affects the options available. The farther a family plans ahead of a possible need for care, the more tools may be available.

A Local Perspective for Jennings County Families

I'm a small-town lawyer who works with families throughout Jennings County, including North Vernon, Vernon, Butlerville, Scipio, Hayden, and Commiskey. Many families are trying to protect a family home or farm while also planning for a parent's long-term care.

This is one of those areas where an early conversation can give you more choices. It doesn't mean that every family needs a trust or that every farm can be protected in the same way. It means you can look at the facts before a crisis forces rushed decisions.

If you're facing a possible nursing home stay for a parent or spouse and don't know where to start, call (812) 979-0107 or visit chrisdoranlaw.com. Meetings are by appointment only. I also travel to nearby areas such as Columbus, Seymour, and Versailles when needed. Any travel fees are discussed in advance.

This article provides general information about Indiana Medicaid rules. It's not legal advice. Every situation depends on its own facts, assets, income, and family circumstances.