Texas Medicaid Estate Recovery for Long-Term Care Costs

Some individuals qualify for Medicaid when they need long-term care, like a nursing home or home health care, even if they have assets they could use to pay for it. But if Medicaid pays for your nursing home care in Texas, the state may try to collect reimbursement from your estate after your death.

That's because federal law requires state Medicaid agencies to recover the costs of long-term care services they provide for certain Medicaid recipients. (42 U.S.C. § 1396p(b).) States have the option to recover other Medicaid costs too, but not all do.

Understanding which assets are subject to the Texas Medicaid Estate Recovery Program (MERP) and how it works can help you make informed estate planning decisions, and prepare your family for what to expect after your death.

Do Texas MERP Rules Apply to You and Your Estate?

Your estate might be subject to recovery in Texas if you received Medicaid benefits after age 55 to pay for:

• nursing home services
• an intermediate care facility for individuals with an intellectual disability or related condition (ICF/IID)
• Certain Medicaid waiver programs, including:
• Home and Community-Based Services (HCS)
• Community Attendant Services (CAS)
• Community-Based Alternatives (CBA)
• Community Living Assistance and Support Services (CLASS)
• Consolidated Waiver Program (CWP)
• Deaf-Blind with Multiple Disabilities (DBMD)
• Integrated Care Management (ICM)
• STAR+PLUS (long-term care services)
• Texas Home Living (TxHmL), or
• related hospital and prescription drug services.

Texas MERP won't try to recover funds from your estate if you have a surviving spouse or child (under age 18, blind, or disabled). The state also won't pursue Medicaid estate recovery if your unmarried adult child has lived in your home for at least a year before your death. (1 Tex. Admin. Code § 373.205.)

Also, Texas won't try to recover costs for Medicaid long-term care services for which you first applied before March 1, 2005. (1 Tex. Admin. Code § 373.103.)

(Read about other exceptions and special exemptions below in "Which Estates Are Exempt from MERP in Texas?")

How Does Medicaid Estate Recovery Work in Texas?

When you applied for Medicaid and long-term services and support, you received a state notice explaining MERP in Texas. When you pass away, the state will send a different notice to your estate representative or family members to let them know the state might file a recovery claim.

The notice will request information about your estate so the state can decide whether it will file a claim. It will also provide information about your family's options, including requesting a waiver of the costs owed by the estate.

The state MERP must file its recovery claim under the applicable provisions of the Texas probate rules, within 70 days after receiving notice of your death.

When Does Texas Medicaid Take Your Assets?

Some state Medicaid recovery programs place liens on houses owned by Medicaid beneficiaries. Texas MERP doesn't use liens. Instead, the state will file a probate claim after you die and try to collect repayment from the assets left in your "probate estate."

Your estate is everything you own when you die. It can include cash and property, such as:

• contents of bank accounts
• real estate (including your home)
• investments (like stocks and bonds)
• business interests (like a sole proprietorship or partnership)
• personal property (like furniture and clothing), and
• retirement accounts (like IRAs).

But not everything in your estate will be subject to Medicaid recovery in Texas. Texas will only try to collect property that has to go through the probate process (this property is called your probate estate). For instance, the state won't try to collect any portion of a life insurance policy with a named beneficiary. Texas MERP also exempts any bank or investment accounts with transfer-on-death (TOD) beneficiaries.

Which Estates Are Exempt from MERP in Texas?

Texas Medicaid won't file an estate recovery claim if your estate isn't worth enough to make it cost-effective. (1 Tex. Admin. Code § 373.215.) Your estate will be exempt if any of the following are true:

• your estate has a value of $10,000 or less
• you received $3,000 or less in recoverable Medicaid benefits (after age 55), or
• it would cost more than your property is worth to sell it.

Texas law also allows estate assets to be fully or partially exempt from Medicaid estate recovery under certain other circumstances.

Texas MERP's Undue Hardship Exception

The MERP won't try to recover Medicaid benefits from your estate if it would cause an undue hardship for your heir(s).

If you have multiple heirs and not all of them qualify for a hardship waiver, only the portion of your estate belonging to the qualifying heir(s) will be exempt from Medicaid estate recovery.

Your heir(s) must request an undue hardship waiver within 60 days of the date on the state's Notice of Intent to File a Claim. The Texas MERP will then decide on the hardship waiver request within 40 days after receiving all necessary documentation. (1 Tex. Admin. Code § 373.209.)

Simply being unable to receive an expected inheritance doesn't count as an undue hardship under Texas law. Any hardship created by estate planning or transferring assets against Medicaid rules to prevent estate recovery also doesn't count.

Other Assets Exempt From Estate Recovery in Texas

Under federal law, certain assets and resources belonging to American Indians and Alaska Natives are exempt from estate recovery. (42 U.S.C. § 1396p(b)(3)(B).) Texas law also exempts such assets from Medicaid estate recovery, along with government reparation payments made to individuals in certain special populations. (1 Tex. Admin. Code § 373.207.)

Will Texas Medicaid Ever Reduce the Amount Recovered?

No matter how much Medicaid spends for your long-term care after age 55, the state of Texas won't try to recover more than your estate is worth. So, your family won't have to repay the state using their own funds.

Your heirs can request that the Medicaid Estate Recovery Program reduce its claim on your estate by requesting certain deductions for items they paid for. They can ask for deductions for necessary and reasonable home expenses they paid for you or your house, such as:

• property taxes
• utility bills
• insurance
• repairs, or
• maintenance (like lawn care).

Your family members can also request deductions if they paid for care, like hiring a personal attendant, that helped you stay in your home and delayed your move into a nursing home. (1 Tex. Admin. Code § 373.213.)

To qualify for a reduction in the recovery amount, your family will need to submit a written request within 60 days of receiving the Notice of Intent to File a Claim from the state. They'll need to include all required documentation (including receipts) and send it to MERP, Home Maintenance/Costs of Care Request, P.O. Box 13247, Austin, Texas 78711.

Where Can You Learn More About Medicaid Estate Recovery in Texas?

You can learn more about the Medicaid Estate Recovery Program in Texas online at HHS.Texas.gov. Or contact the state MERP office by sending an email to [email protected].

For inquiries about a specific case, contact Health Management Systems, Inc. (HMS), the contracted administrator for the Texas Medicaid Estate Recovery Program. Call 800-641-9356 or send email to [email protected].