Your reasoning is illogical. Nothing is guaranteed, and technically speaking there is always some remote possibility that the government will seize any of your assets. That being said, your 401k is much better protected from creditors than other investments or bank accounts. Short of stockpiling unreported gold doubloons under your bed, your 401k is probably the most protected asset you can have. Additionally, when you consider company matches it is the only investment that is tax deferred and gives you an immediate 100% return. Seriously, it's the bet deal ever!

As for Medicaid recovering costs, yes, this is real. That being said, Medicaid is for people who are too poor to have any other options. Really, as a society we shouldn't have to support these people if they have tons of assets stored away. Medicare, for elderly people who have paid into the system, has similar rules mostly with nursing home stays. That being said, if you need a permanent placement in a nursing home and have no other way to pay for it, you really don't have much need for your existing home. This is all the more reason to get supplemental insurance. The system is far from perfect, but that's not the point of this - it's about 401k. And if we get into a situation where the government confiscated your 401k, you have much bigger issues because they have probably already confiscated all your other assets.