First, it seems that you're confusing Medicare with Medicaid in your question. It's Medicaid (not Medicare) that would cover her nursing home bills and could seek repayment out of the value of her house after she dies. But if the loan was already made and secured by the house's equity before your mother goes on Medicaid, then the loan must be repaid out of the value of the house before Medicaid is entitled to recoup the payments it made to the nursing home on behalf of your mother. So, the most the state could be entitled to receive is $80,000. The exact amount it would be entitled to would depend on how much Medicaid had paid the nursing home for your mother's care. If her Medicaid-paid nursing home bills exceed $80,000, Medicaid cannot go against assets of other family members. It is limited to the equity in her house, after her existing loan and final expenses are paid.