Medicaid is a crucial government program providing healthcare to individuals with limited financial resources. It offers vital services, including long-term care, enabling people to remain in their homes or, when necessary, transition to nursing facilities. To offset the costs of these long-term services, states are mandated to implement a Medicaid Estate Recovery Program (MERP). In Texas, if you received Medicaid long-term services and supports, the state may seek reimbursement from your estate after your passing, but only up to the amount they paid for your care. The Texas Health and Human Services (HHS) oversees this program.
Delving into MERP
Who is Affected by MERP?
MERP primarily impacts individuals who receive long-term care services and supports after the age of 55, and only if they initially applied for these services after March 1, 2005. If your application preceded this date, MERP will not apply to you. It’s important to note that being on an interest list before March 1, 2005, but submitting the formal application afterward, subjects you to MERP regulations.
MERP covers a range of services and programs, including:
- Nursing facility care (nursing homes)
- Intermediate Care Facility for Individuals with an Intellectual Disability or Related Condition (ICF/IID)
- Various Medicaid waiver programs:
- 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)
- Home and Community-based Services (HCS)
- Integrated Care Management (ICM)
- STAR+PLUS (long-term care services)
- Texas Home Living (TxHmL)
MERP also factors in the costs of certain hospital and prescription drug services. However, Primary Home Care (PHC) is exempt from MERP. If you’re uncertain about MERP’s applicability to your specific services, consult your Health and Human Services case manager. Medicaid managed care enrollees should reach out to their health plan service coordinator for clarification.
How Does MERP Function?
Upon applying for Medicaid and long-term services and supports, individuals receive a notification outlining MERP. Following their death, the state informs the estate representative or heirs of its intention to file a claim, requesting information to determine whether a MERP claim is warranted.
Defining an Estate
An estate encompasses a person’s assets, such as money, property, and valuables, bequeathed to family members or heirs upon their death. However, MERP doesn’t apply to all property.
The state typically won’t pursue the following types of property:
- Life insurance policies with designated beneficiaries.
- Bank accounts with payable-on-death designations.
Scenarios Where the State Waives Recovery
The state refrains from seeking reimbursement in several situations:
- When a spouse is still living.
- When there’s a child under 21 years old.
- When there’s a child of any age who is blind or permanently and totally disabled according to Social Security criteria.
- When the estate’s value is $10,000 or less.
- When the total Medicaid costs are $3,000 or less.
- When an unmarried adult child resided full-time in the Medicaid recipient’s home for at least one year before their death.
- When the cost of selling the property exceeds its worth.
Additionally, the state may waive recovery if it poses an undue hardship on the heirs.
Understanding Undue Hardship
The state may recognize hardship in scenarios such as:
- When the estate property served as a family business, farm, or ranch for at least 12 months before the Medicaid recipient’s death and constitutes the heirs’ primary income source.
- When the heirs would require government financial assistance if the state pursued a MERP claim.
- When the heirs would lose government financial assistance if the state didn’t file a MERP claim.
- When the deceased individual received services due to being a crime victim.
- Other circumstances that could constitute a hardship.
A specific hardship provision applies to the home. If the homestead’s value is below $100,000, and the heirs’ family income falls under a certain limit, the state may not seek reimbursement.
Image alt: Illustration of a scale representing estate assets balanced against potential debts and Medicaid claims.
The state requires the heirs to formally request a hardship waiver and provide supporting documentation. Outstanding debts on the estate, such as funeral costs, legal fees, or a home mortgage, are settled before any MERP claim.
Potential Reductions in the Amount Owed
The state may reduce the MERP claim if you or someone else incurred expenses to maintain your home while you resided in a qualified facility. Similarly, costs associated with care that helped you remain at home longer before entering a nursing facility, provided on or after your Medicaid eligibility date, can also be deducted.
Heirs must provide receipts and payment records as evidence of expenses related to home maintenance or care services when requesting deductions from the MERP claim. The state may permit deductions for necessary and reasonable expenses, including:
- Home maintenance expenses, such as property taxes, utility bills, insurance, home repairs, and lawn care, for recipients receiving Medicaid-covered services in a nursing facility.
- Direct payments for care costs, including personal attendant care, that enabled the deceased Medicaid recipient to remain at home and delay institutionalization.
Consequences of Asset Transfers
Transferring assets without receiving fair compensation, declining income, or reducing potential income before entering a nursing home can lead to:
- Penalties for failing to pay for nursing facility or ICF/IID services when financially capable.
- A determination of ineligibility for waiver program services or state-supported living center services.
The state can review financial activity up to 60 months prior to your application for nursing home, ICF/IID, or waiver services to identify instances of income reduction or asset transfer.
Important Note: HHSC and its staff cannot provide legal advice or recommend specific actions. Consult with an attorney of your choosing for legal guidance or estate planning assistance. Contact your local Area Agency on Aging for additional resources.
Additional Information on Medicaid Estate Recovery
Email HHSC Medicaid estate recovery
HHSC contracts with Health Management Systems, Inc. (HMS) for MERP administration. For case-specific information, call HMS toll-free at 800-641-9356 or send an email.
Upon receiving a clearance letter from HMS, estate representatives of deceased Medicaid recipients should contact Texas Medicaid & Healthcare Partnership (TMHP) Third Party Resources Line at 800-846-7307 and select the option for injury, accident, or informational claim. TMHP determines if other outstanding Medicaid claims exist against the estate recoverable through other assets and if HHS is the residual beneficiary. Examples of potentially payable assets include trusts, annuities, torts (injury lawsuits, settlements, or awards), and non-Medicaid insurance coverage.
If you have a problem or complaint, first discuss it with the MERP program. If the issue remains unresolved, contact the HHS Office of the Ombudsman at 877-787-8999 or make an online submission.
MERP Rules, Statutes & Forms
Rules and Statutes
Forms
Navigating Medicaid Estate Recovery: What is the Home Money Guide Perspective?
Image alt: Senior woman reviewing financial documents at her home, representing financial planning and estate considerations.
The “What Is The Home Money Guide” perspective emphasizes understanding and planning for the financial implications of long-term care and Medicaid. MERP is a critical aspect of this planning. It’s essential to understand the program’s rules, exemptions, and hardship provisions to protect your assets and ensure your loved ones are not unduly burdened. By familiarizing yourself with these guidelines and seeking professional advice when needed, you can navigate the complexities of Medicaid estate recovery with greater confidence.
