What nursing homes are legally allowed to take
A nursing home can take money from your bank accounts, your Social Security check, your pension, and your income from work — but only up to the amount you actually owe them. They cannot take your house, your car, or your personal belongings unless you have signed a document agreeing to use them as collateral. Most nursing homes do not ask for collateral; they bill you directly or work with Medicaid.
The rules about what a nursing home can take depend partly on whether you are paying with your own money, Medicaid, or Medicare. If you are on Medicaid, the home cannot take anything beyond what Medicaid pays plus your personal needs allowance — a small monthly amount you keep for yourself. If you are paying privately, the home can pursue collection through the courts, which may lead to wage garnishment or bank levies, but only after they have sued you and won a judgment.
A nursing home cannot take Social Security income that is protected under federal law, with one exception: if you owe the facility money and a court has ordered garnishment, Social Security can be garnished up to a certain amount. This is rare and requires a legal judgment first.
Key Takeaways
- Nursing homes can take money from your income and bank accounts to pay bills you owe, but only through legal collection methods or by agreement.
- Your house and car are generally protected unless you have signed a document pledging them as collateral for the debt.
- If you are on Medicaid, the nursing home can only take what Medicaid pays plus a small personal needs allowance you are permitted to keep.
- Social Security income has strong legal protection against collection, though a court judgment can override this protection in limited circumstances.
- A nursing home must follow state debt collection laws and cannot straightforward take money without your permission or a court order.
How nursing homes bill you and collect payment
Most nursing homes send you a monthly bill for the portion of care that is not covered by insurance or Medicaid. If you do not pay, the home will typically send reminder notices and may contact you by phone. After 30 to 90 days of non-payment, many homes will refer the debt to a collection agency or file a lawsuit against you in small claims or civil court.
Once a nursing home has a court judgment against you, they can ask the court to order wage garnishment — money taken directly from your paycheck — or a bank levy, which freezes your bank account and takes money from it. These steps require a separate court order; the nursing home cannot straightforward take the money on their own.
If you are receiving Medicaid, the process is different. Medicaid pays the nursing home a set daily rate. You are responsible for paying any difference between what Medicaid covers and what the home charges, but only if you have income or assets. The home cannot demand payment from you if Medicaid is covering your care and you have no income to pay the difference.
What happens to your personal needs allowance
If you are on Medicaid and living in a nursing home, you are allowed to keep a small amount of money each month for personal expenses — things like toiletries, clothing, a phone, or gifts. This is called your personal needs allowance, and the amount varies by state but typically ranges from $30 to $100 per month.
The nursing home cannot take this money from you. It is yours to spend as you wish. However, if you have income beyond this allowance — such as a pension or Social Security — the home can ask you to use that income to help pay for your care. Medicaid will direct you to contribute any income above the personal needs allowance toward your nursing home bill.
If you have a spouse living outside the nursing home, different rules explore. Your spouse may be allowed to keep more of the household income and assets to support themselves, even if you are on Medicaid. These are called spousal protections, and they vary significantly by state.
When a nursing home can ask you to sign over assets
Some nursing homes ask residents or their families to sign documents pledging a house, car, or other valuable property as security for payment. This is called a lien or security agreement. You are never required to sign such a document, and many states have laws limiting when nursing homes can ask for one.
If you do sign a lien, the nursing home gains a legal claim against that property. If you do not pay your bill, the home can force the sale of the property to recover what you owe. Before you sign anything, understand exactly what you are agreeing to and consider talking to a lawyer or your state's long-term care ombudsman — a free advocate for nursing home residents.
Some states prohibit nursing homes from requiring a lien as a condition of admission. Others allow it only under specific circumstances. Check your state's nursing home regulations or contact your state health department to learn what is permitted in your area.
How Medicaid protects your assets
If you are on Medicaid, certain assets are protected and cannot be taken to pay a nursing home bill. Your primary home is usually protected as long as you or your spouse still lives there or intends to return home. Your car is typically protected up to a certain value. Household goods, personal items, and a small amount of cash are also protected.
However, Medicaid has strict limits on how much money and property you can own and still receive benefits. If you have too many assets, you will not be found financially needy enough to may have access to for Medicaid. Once you are on Medicaid, the program protects what you have, but you cannot accumulate large amounts of new money without losing your benefits.
If you are concerned about protecting assets before entering a nursing home, speak with an elder law attorney. There are legal ways to plan ahead, though the rules are complex and vary by state. Do not try to hide assets or give them away to family members without understanding the consequences — Medicaid has a five-year lookback period and can penalize you for transfers made to avoid paying for care.
What to do if a nursing home is taking money improperly
If you believe a nursing home is taking money from you illegally — such as taking your personal needs allowance, charging you for services not provided, or taking money without your permission — you have several options. First, ask the nursing home's billing department or administrator for an explanation in writing. Many billing disputes are resolved this way.
If the home does not respond or you disagree with their answer, contact your state's long-term care ombudsman. This is a free service that investigates complaints about nursing homes and can pressure the facility to correct billing errors. You can find your state ombudsman by calling the Eldercare Locator at 1-800-677-1116 or visiting the National Long-Term Care Ombudsman Resource Center website.
You can also file a complaint with your state's health department or nursing home licensing board. If the home has violated state law, the agency can impose fines or other penalties. If you have been harmed financially, you may have grounds to sue the nursing home in civil court, though you may want to consult a lawyer first to understand your options.
Understanding the difference between private pay and Medicaid
If you are paying for nursing home care with your own money — called private pay — the home can pursue collection more aggressively. They can sue you, obtain a judgment, and use wage garnishment or bank levies. However, they still must follow your state's debt collection laws and cannot harass you or use illegal tactics.
If you are on Medicaid, the nursing home's payment is largely determined by the state. You contribute what you can afford, and Medicaid covers the rest. The home cannot demand more money from you than you are legally required to pay, and they cannot threaten to discharge you straightforward because you cannot pay the difference between Medicaid's rate and their charges.
Some people start as private pay and later transition to Medicaid when their money runs out. When this happens, the nursing home must accept Medicaid as payment for your ongoing care. They cannot demand that you pay off past private-pay bills before accepting Medicaid, though they may pursue collection of the old debt separately.
Frequently Asked Questions
Can a nursing home take my house if I cannot pay?
Not without a court order and usually not at all. Your primary home is protected under Medicaid and is difficult to seize through debt collection. However, if you sign a lien document pledging your house as collateral, the nursing home can force its sale to recover unpaid bills. Never sign such a document without understanding the consequences.
What if I owe the nursing home money and I am on Social Security?
Social Security is protected from most collection efforts by federal law. A nursing home cannot garnish your Social Security check directly. However, if they obtain a court judgment and meet specific legal requirements, they may be able to garnish a portion of your benefits. This is uncommon and requires a separate legal process.
Can a nursing home discharge me if I cannot pay?
Nursing homes cannot discharge you straightforward because you cannot pay if you are on Medicaid and the home is accepting Medicaid residents. However, they can discharge you for non-payment if you are a private-pay resident and have not paid your bill after receiving proper notice. State law requires the home to give you advance notice and a chance to arrange payment.
What is a personal needs allowance and can the home take it?
A personal needs allowance is a small monthly amount — typically $30 to $100 — that Medicaid residents can keep for personal expenses. The nursing home cannot take this money from you. It is protected and belongs to you to spend as you choose.
How do I know if a nursing home's bill is correct?
Ask the nursing home for an itemized bill showing what you are being charged for. Review it carefully and ask questions about any charges you do not understand. If you believe there is an error, contact the billing department in writing and request a correction. If the home does not respond, contact your state's long-term care ombudsman for help.