What Is the Texas Medicaid Estate Recovery Program?
The Texas Medicaid Estate Recovery Program (MERP) is a state initiative that seeks to recover costs paid by Medicaid for long-term care services provided to individuals aged 55 or older. After a Medicaid recipient passes away, the Texas Health and Human Services Commission (HHSC) may file a claim against their estate to recoup these expenses.
MERP applies to Medicaid benefits for services like nursing home care, certain hospital and prescription drug services, and home and community-based services. The program only affects care received after March 1, 2005, and only for services received after the recipient turned 55.
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What “Estate” Means for Texas MERP
For MERP purposes, your “estate” includes property that passes through probate after your death. In Texas, this typically includes:
- Real property (homes, land) that doesn’t have a transfer mechanism in place
- Bank accounts without designated beneficiaries
- Vehicles titled solely in the deceased’s name
- Personal belongings without designated heirs
Importantly, MERP can only recover from assets that go through probate. This distinction is crucial because it means that non-probate transfers—assets that pass to new owners without court involvement—are generally protected from MERP claims.
The family home is often the most valuable asset at risk. Without proper planning, MERP may force the sale of a home to satisfy the claim, potentially disrupting family plans to keep the property.
MERP Exemptions and Deferrals in Texas
Texas law provides several important exemptions that can prevent MERP from making a claim against an estate. Recovery will not be sought when:
Family Exemptions
- There is a surviving spouse (no matter how long after the Medicaid recipient dies)
- There is a child under 21 years of age
- There is a child of any age who is blind or permanently disabled under Social Security criteria
- There is an unmarried adult child who lived in the Medicaid recipient’s home for at least one year before their death
Financial Exemptions
- The value of the estate is $10,000 or less
- The Medicaid costs were $3,000 or less
- Cost of selling the property would exceed the property’s value
- Recovery would cause an undue hardship for heirs (requires application)
Understanding these exemptions is essential for Texas families. If any of these situations apply, you should notify HHSC when they send a MERP claim notice. Our attorneys can help you determine which exemptions might apply to your situation and properly document your case.
Effective Tools to Avoid Medicaid Estate Recovery in Texas
Lady Bird Deed (Enhanced Life Estate Deed)
- Allows property to transfer automatically at death
- Keeps the right to use and live in the property during lifetime
- Maintains right to sell or mortgage the property
- Avoids probate, keeping property safe from MERP
- No gift tax implications
Potential Limitations
- Must be properly drafted to be effective
- Should be recorded with county clerk
- May have title insurance implications
- Not recognized in all states (but valid in Texas)
Transfer on Death Deed (TODD)
- Transfers property at death without probate
- Retains complete control during lifetime
- Can be revoked or changed at any time
- Simple to create and record
- Avoids MERP claims against the property
Potential Limitations
- Must follow specific Texas statutory requirements
- Must be recorded before death to be effective
- May not work for all types of property ownership
- Relatively new in Texas law (since 2015)
Other Effective Planning Tools
Beneficiary Designations
Adding payable-on-death (POD) or transfer-on-death (TOD) designations to bank accounts, investments, and other assets allows them to transfer outside of probate, protecting them from MERP claims.
Irrevocable Trusts
When properly structured and funded at least five years before applying for Medicaid, these trusts can protect assets from both Medicaid eligibility requirements and estate recovery.
Qualified Income Trusts
While Miller Trusts help with Medicaid eligibility, they do NOT protect assets from estate recovery. Additional planning is needed to protect assets.
Need Help Implementing These Tools?
Our attorneys have helped thousands of Texas families protect their assets from Medicaid recovery since 2006.
Personal Experience from Attorney Christopher Migliaccio
I worked with a family whose mother needed nursing home care through Medicaid. They were devastated to learn their family home of 40 years might be lost to estate recovery. We implemented a Lady Bird Deed that allowed mom to keep control of her home while she was alive, but ensured it would pass directly to her children upon her passing—completely avoiding probate and MERP claims.
When she passed three years later, the property transferred seamlessly to her children without any Medicaid recovery claim. The family saved their cherished home and over $120,000 in potential recovery claims. This kind of planning brings families true peace of mind during difficult times.
Timing Matters: When to Start Planning
When it comes to Medicaid planning and avoiding estate recovery, timing is crucial. While some strategies can be implemented even after someone begins receiving Medicaid benefits, others require advance planning:
| Planning Timeline | Available Strategies | Effectiveness |
| 5+ years before Medicaid | All strategies available (irrevocable trusts, asset transfers, Lady Bird Deeds, TODDs) | Maximum protection possible |
| While on Medicaid | Lady Bird Deeds, TODDs, beneficiary designations | Good protection from estate recovery |
| After death (MERP claim received) | Exemption verification, hardship waivers, claim negotiations | Limited protection options |
Remember that Texas HHSC rules can change, and what works today might not work tomorrow. This is why consulting with attorneys who stay current with Texas Medicaid regulations is essential for effective planning.
Important Note: A Qualified Income Trust (Miller Trust) is used for Medicaid eligibility when income exceeds limits. It does NOT protect assets from estate recovery. Don’t confuse eligibility planning with estate recovery planning—they require different strategies.
Frequently Asked Questions About Avoiding MERP in Texas
Can Texas take my house after I die if I received Medicaid?
Yes, Texas can potentially claim your house after death if you received Medicaid for long-term care after age 55, unless you’ve implemented proper planning strategies or qualify for an exemption. The house is often the primary target of MERP claims because it’s typically the most valuable asset remaining.
How long does Texas have to file a MERP claim?
Texas must file a MERP claim within four months after receiving notice of the Medicaid recipient’s death, or before the estate is closed, whichever is sooner. This makes it important for families to understand their options before proceeding with probate.
Will transferring my home to my children protect it from MERP?
Simply transferring your home to children during your lifetime can create significant problems, including gift tax issues, potential capital gains tax increases, and Medicaid ineligibility due to the five-year lookback period. Tools like Lady Bird Deeds and TODDs often provide better protection without these drawbacks.
Does a will protect my assets from Medicaid recovery?
No, a will does not protect assets from MERP claims. In fact, assets that pass through a will must go through probate, making them accessible to MERP claims. Non-probate transfer methods are generally more effective for avoiding estate recovery.
Your Path Forward: Protecting Your Texas Legacy
Navigating Medicaid estate recovery in Texas requires understanding both the rules and the exceptions. With proper planning, you can protect your hard-earned assets and ensure they pass to your loved ones as you intend. Since 2006, our attorneys have helped thousands of Texas families implement effective strategies to avoid Medicaid estate recovery while ensuring proper care for their loved ones.
Remember that Texas HHSC rules can change, and what works today might need adjustment tomorrow. This is why working with attorneys who focus on Estate Planning in Texas and stay current with regulations is essential for your peace of mind.
We’re here to help you understand your options and create a personalized plan that protects what matters most to you and your family.
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