How to Avoid TEFRA Liens

How to Avoid TEFRA Liens
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Medicaid costs for seniors that require round the clock care can run into the thousands every month. Because of this, the government reserves the right to place a lien on any property that a senior citizen owns if that individual is covered by Medicaid and living within a long-term care facility. The ability to assign these liens was made possible by the Tax Equity and Fiscal Responsibility Act. Thus, they are commonly known as “TEFRA” liens. If a property has a TEFRA lien, the government may collect a portion of the equity in the property when it is sold or transferred to offset the cost of medical care. If you are a senior citizen covered by Medicaid, there are actions you can take to avoid having a TEFRA lien placed against your property.

Seek your long-term care on an outpatient basis or hire a permanent caregiver to assist you at home. As long as you are living within your home, a TEFRA lien cannot be placed against the property.

Evaluate whether your spouse will be seeking long-term care outside the home along with you. Even if your spouse’s name is not on the mortgage deed, having her live within the home while you seek a new permanent residence to ensure the best possible medical care will prevent the government from seeking a TEFRA lien against the property.

Allow a friend or relative with a child under the age of 21 or a permanently disabled child to move into your home. The government will not place a TEFRA lien against your home if it is the primary residence of a young or disabled child.

Permit any siblings who have provided care for you for the past year and currently reside in your home to continue living there after you move into a permanent care facility. This will prevent a TEFRA lien from being levied by the government.

Check with your doctor to find out if your health is expected to improve. If your health condition will improve and you will be able to move back home in the future, you do not meet the federal definition of “permanently institutionalized” that is required for a TEFRA lien to be placed on your property.


  • If your doctor expects your health to improve in the future, ask him to sign a document stating this fact. Before a TEFRA lien can be placed on a piece of property, the government must hold a hearing and you are permitted to attend. Providing the document as evidence that you are not expected to be permanently institutionalized can help you avoid a TEFRA lien.

    Not all states permit TEFRA liens to be used to recover Medicaid costs.


  • You cannot avoid a TEFRA lien by transferring ownership of your property to another individual.