I often speak to caregiver groups about the complexities of planning for long-term care. One thing I hear from the staff of these groups are tales of people refusing to apply for Medicaid because they “don’t want to sign their lives away to the state.” What they are referring to is the Medicaid Estate Recovery Program or MERP. MERP is a program in which the state can request reimbursement for expenses paid for Medicaid services from a person’s estate after they have died. Families should not fear MERP. There are a number of exemptions and waivers, as well as planning tools that can help minimize the impact of MERP on an estate.
Each state with a Medicaid program must also have a Medicaid Estate Recovery Program, and like the Medicaid program, the estate recovery program is administered by the state and is different in each state. In Texas, Medicaid Estate Recovery should not be the deciding factor in whether to apply for Medicaid so that you or a loved one gets the necessary medical help.
For starters, only a person’s probate estate is currently subject to MERP. What this means is that any property that passes directly to a beneficiary outside the probate process is not subject to MERP. For instance, accounts that have beneficiary designations like retirement accounts and life insurance policies would not be subject to MERP. For more information on probate and the role of an executor, please read my previous articles here and here.
Further, a person’s estate is automatically exempt from MERP under the following conditions:
- Surviving spouse
- Surviving child or children under 21 years of age
- Surviving child of any age who is blind or disabled as defined by 42 U.S.C. §1382c
- Unmarried adult child residing continuously in the decedent’s homestead for at least one year prior to the time of the Medicaid recipient’s death
In addition to exemptions, there are also hardship waivers that a family may qualify for:
- Estate is a family business, farm, or ranch for at least 12 months before the person on Medicaid dies, and is the main source of income for the heirs
- Heirs would need financial help from the government if the state filed a MERP claim to get money back
- Heirs could discontinue government assistance if there is no MERP claim
- The person who died received services because he or she was a crime victim
- Other circumstances creating a hardship
There are many options available for people who could be negatively impacted by MERP. If this is a concern for you or your family, either because a loved one is currently receiving Medicaid or because you have already received a letter of intent from the Medicaid office, it is important to call someone familiar with MERP in Texas to walk you through your options and help you find a solution.