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Medicaid Estate Recovery

Wills & Estate Planning

This article provides information about dealing with and preparing for Medicaid Estate Recovery.

Through the Medicaid Estate Recovery Program, the state can recover the cost of long-term care after someone has died. But there are exceptions.

I received a notice of intent to recover Medicaid payments from my deceased mother’s property. Is this legal?

Yes. The Texas Department of Aging and Disability Services (DADS) can make a claim for reimbursement for certain Medicaid benefits for recipients who were 55 years or older at the time of death. Through the MERP program, DADS will send a Notice of Intent to File a Claim within 30 days of the date MERP learns of the death. The Notice will include a program overview, questionnaire, and waiver request form that must be returned within 60 days of the date on the Notice.

What kinds of Medicaid services are subject to MERP?

The MERP program can recover the cost of long-term care provided through a nursing home; state supported living center; Medicaid 1915c waiver programs such as Deaf Blind with Multiple Disabilities, Home and Community-based Services, Texas Home Living Program, STAR+PLUS; and Community Attendant Services. MERP also includes hospital care and prescription drugs received under these services. Primary Home Care (PHC) services are not subject to MERP.

What is considered an “estate”?

For purposes of MERP, “estate” includes all real and personal property subject to probate. Real property may include a home and other real estate. Personal property may include cars, cash, and other personal property.

An estate does NOT include assets that pass directly to a beneficiary, like insurance policy proceeds, retirement accounts, pensions, deferred compensation plans, mutual funds, and bank accounts paid on death or with right of survivorship.

Are there any exceptions to MERP?

Yes. MERP does NOT apply where there is:

  • a surviving spouse, or a surviving child under 21 years of age;
  • a surviving child of any age who is blind or has a disability;
  • an unmarried adult child residing continuously in the Medicaid recipient’s homestead for at least one year before the recipient’s death; or
  • a surviving child of any age who is blind or visually impaired and is totally disabled as defined by Social Security requirements.

Additionally, MERP does NOT apply where:

  • the value of the estate is $10,000 or less;
  • the recoverable amount of Medicaid is $3,000 or less;
  • the cost of selling the property would be equal to or greater than the property's value.

Can I ask MERP to waive the claim?

Yes. If collection would result in an undue hardship, you can apply for a hardship waiver. A hardship waiver might be granted if:

  • the property is a homestead, and gross family income of heir(s) is below 300% of the federal poverty level;
  • it would cause the heirs of the deceased Medicaid recipient to lose their primary source of income (at least 50% of income);
  • it would cause the deceased’s heirs to be eligible for public or Medicaid benefits, or would render the heirs ineligible for benefits they already receive;
  • the property subject to the claim produces at least 50% of the heir(s)’ livelihood.
  • the deceased person received Medicaid benefits because he or she was a victim of a crime; or
  • “Other compelling reasons” to grant a waiver, as determined by DADS.

How do I ask for a waiver?

Complete the Application for Hardship Waiver (Form 5006 or 5006- S. Return it to DADS with supporting documents within 60 days from the date of the Notice of Intent to File a Claim.

Get more information.

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