No, the home is not allowed to be taken and is not counted against them. They are allowed one car and a home. They as most all Americans need a good estate plan in place long before you ever enter into the nursing home.
Medicaid/care will take any and/or all of her SS retirement to pay for the nursing home care. This will not affect the husband in anyway. If the home is in his name only then he needs to go ahead and deed it over (quit deed) and have him listed as a "life rights" estate. This will allow the house to be out of his name but at this point it does not matter due to time laws. But this will help him in the future should he go into a nursing home.
The house is in both of their names but the other assets are separated as far as finances. He will not lose the house. The spouse is allowed to retain it so tell him not to worry. They are after her assets and the bank accounts will now go to the state or either Medicaid or Medicare since no planning was done.
He needs to get a power of attorney drawn up to allow this person to sign should the need arise. Actually a durable power of attorney would be better.
But to answer the question. They can not take the house away from him. No problem that her name is on the deed with him but he needs to remove her at some point. The house will fall to him alone anyway at her death should it occur. And for the accounts then yes, if not planned ahead of time these can be seized to pay for her health care needs. But the husband is fine. Just do what is suggested with the house. He needs to deed it over to another family member with life time rights to himself. Get the POA or DPOA and go from there to cover himself.
Here is the quit claim deed form that he will need to use to transfer the home out of his name and his wifes.
http://www.formsguru.com/forms/legal-forms/quitdeed.html
file it with the Clerks office in the town he lives in.
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