When a loved one needs long-term care through Medicaid, many Texas families wonder what will happen to their home and other assets after they pass away. The Texas Medicaid Estate Recovery Program (MERP) allows the state to recover costs from a deceased person’s estate for Medicaid-covered long-term care services.
With nearly 20 years of experience helping Texas families, we understand how stressful this process can feel. Our team focuses on protecting your assets while ensuring full compliance with Texas law.
We’re here to guide you through your options and help you take the right steps to safeguard your family’s future.
What Is the Texas Medicaid Estate Recovery Program?
The Texas Medicaid Estate Recovery Program (MERP) is a state medicaid program designed to recover the cost of long-term care services paid by Medicaid for individuals aged 55 or older. For the deceased Medicaid recipient, the Texas Health and Human Services Commission (HHSC) may file a claim against recipient’s estate to recover long-term care costs covered by Medicaid.
MERP applies to Medicaid-covered services such as nursing home care, hospital and prescription drug costs, and home or community-based care. It only applies to care received after March 1, 2005, and after the recipient turned 55.
In short, MERP allows the state to seek reimbursement or reclaim funds spent on long-term care—but only within specific limits and under defined conditions.
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What “Estate” Means for Texas MERP
For MERP purposes, your “estate” includes property that passes through probate after the decedent’s 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.
Without proper planning, MERP may force the sale of a home to satisfy the claim, potentially disrupting family plans or even affecting a family business tied to the property.
MERP Exemptions and Deferrals in Texas
Texas state laws provide several important exemptions that can prevent MERP from making an estate recovery 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 medicaid application)
Understanding these exemptions is essential for Texas families. If any of these situations apply, your power of attorney or estate representative 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.
Questions about exemptions? Call our law firm at (888) 584-9614 for the best legal advice.
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 your bank and retirement accounts helps them pass directly to your chosen beneficiaries. These assets transfer outside of probate, which usually protects them from MERP claims after your death.
Irrevocable Trusts
When set up and funded at least five years before applying for Medicaid, these trusts can protect your assets. They help shield property from both Medicaid eligibility rules and estate recovery after your passing.
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 member whose mother required nursing facility care in a nursing facility through Medicaid. They were devastated to learn their family home of 40 years might be lost to estate recovery for nursing facility care costs. 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 for nursing facility care. 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. Some Medicaid waivers specifically support delayed institutionalization by providing government assistance to family caregivers, helping postpone or avoid the need for institutional care:
| 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. Federal law shapes Texas Medicaid estate recovery policies, so consulting an elder law attorney is essential for up-to-date guidance and 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
Can Texas take my house after I die if I received Medicaid?
Yes, Texas can claim your house after your death if you received Medicaid for long-term care after turning 55. However, this only happens when no proper planning or qualifying exemption is in place. The home is often the main focus of Medicaid Estate Recovery Program (MERP) claims because it’s usually the most valuable asset left in the estate. Still, the state can’t recover more than it actually spent on your care. Some costs can reduce the recovery amount. For example, documented expenses for maintaining or improving the home—like healthcare costs, home care, or essential repairs—may be deducted from the claim. To qualify, these expenses must be reasonable, necessary, and supported by receipts or records. Proper documentation and early planning can make a major difference in protecting your home and your legacy.
How long does Texas have to file a MERP claim?
In Texas, the state must file a Medicaid Estate Recovery Program (MERP) claim within four months of receiving notice of the Medicaid recipient’s death. It can also be filed before the estate is closed, whichever comes first. The recovery process starts only after the Medicaid recipient passes away. Once notified, the state reviews the case and begins the timeline for filing its claim. Acting within this window is crucial, as missing the deadline can prevent the state from recovering costs. The estate recovery must be pursued before the estate is closed or within four months of notice received by the estate administrator. The process begins with the state sending a notice to the heirs informing them of the intent to file a claim after the death of a Medicaid recipient.
Will transferring my home to my children protect it from MERP?
Transferring your home to your children during your lifetime might seem like an easy solution—but it can cause serious problems. This move can trigger gift taxes and increase potential capital gains taxes. It can even make you ineligible for Medicaid because of the five-year lookback rule. Instead, tools like Lady Bird Deeds and Transfer on Death Deeds (TODDs) offer safer options. These methods let you keep control of your home while still passing it to your heirs later. In Texas, a Lady Bird Deed allows your property to transfer directly to your chosen heirs without going through probate. Even better, it protects the home from Medicaid estate recovery after your death.
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.
Have more questions? Call (888) 584-9614
Your Path Forward: Protecting Your Texas Legacy
Understanding Medicaid estate recovery in Texas can feel overwhelming. The rules are detailed, and the exceptions often confuse families. But with the right planning, you can protect your assets and make sure they go to the people you love.
Since 2006, our attorneys have guided thousands of Texas families through this process. We help them plan ahead, avoid Medicaid estate recovery when possible, and ensure their loved ones still receive the care they need.
Keep in mind that Medicaid and Texas Health and Human Services (HHSC) rules can change. What works today might not work next year. That’s why working with experienced Texas estate planning attorneys is so important. They stay current with every rule update—so you can stay confident your plan still protects your family.
Elder law attorneys play a key role here. They understand the complex Medicaid recovery process and know how to safeguard assets like the family home. Every state is different, too. For example, West Virginia follows different Medicaid recovery policies than Texas. So it’s critical to work with an attorney who knows Texas law inside and out.
We’re here to help you understand your options, protect your property, and create a plan that gives you peace of mind. Together, we’ll make sure your legacy stays where it belongs—with your family.
Take the First Step Toward Protecting Your Assets
Schedule your free consultation with our experienced Texas estate planning attorneys today. If you’re interested in learning more about what to expect in Texas family law court, we also provide resources to help guide you through the process. Call us at (888) 584-9614 or contact us online to get started today!
