Will The State Take My Home After My Death If I Receive Medicaid?

You may have read a news article or heard from a friend that “Medicaid will take your home” after your death. Unless careful planning is done, the answer to the question above is yes, the state can and will file a claim against your estate after you die, and that includes your home.

Medicaid is jointly funded by states and the federal government and is administered in Texas by the Health and Human Services Commission. Medicaid provides a range of health and long-term care supports and services for children and adults and is the chief source of long-term care coverage. This article focuses on planning for the elderly and people with disabilities who need long-term care Medicaid services.

To be eligible for Medicaid, you must meet certain financial requirements. For example, you cannot have more than $2,000 in countable resources (assets). Certain assets, such as a homestead, are not countable—you can still own a home, with limitations on the value if you are single, and qualify for Medicaid. Because Medicaid is for people with insufficient resources to pay the high cost of nursing home care, the federal government mandates that states to try to reclaim what the state paid for a recipient’s care.

Under the Medicaid Estate Recovery Program (MERP), Texas may recover the cost of Medicaid benefits provided to you during your life by filing a claim against your estate after your death. For the state to file a claim, you must have received benefits after the age of 55 and received long-term care Medicaid services on or after March 1, 2005. For example, if you lived in a nursing home for 10 years and Medicaid covered the bill for that length of time, Medicaid may have paid hundreds of thousands of dollars during that time, all subject to MERP. Note: many mistakenly call the MERP claim a lien against your property. It is not a lien.

First, know that there are certain exemptions under Texas law. For example, if, on your death, you leave a spouse, a child under age 21, a disabled adult child, an unmarried adult child who had lived in your home continuously for one year prior to your death, or a handful of less common scenarios, and your estate representative can provide the required evidence, the state cannot recover on its claim. However, you do not want to take any chances—you can’t predict who will survive you or whether your family will be able to gather the evidence needed. Therefore, planning is critical. Without it, and if there are no exemptions, the state will file a claim and may be able to take what is in your estate.

Second, MERP can only file a claim against your probate estate. Therefore, if you can convert your assets into non-probate assets, you can protect them from Medicaid estate recovery. For example, if you are applying for Medicaid benefits and you own a home, you would include as part of your estate plan—a Will, powers of attorney, advance directives—a Lady Bird Deed, which allows you to maintain ownership of your house during your life and allow it to pass to your beneficiaries upon your death. The concept is similar to a bank account with a TOD (transfer on death) designation. The account is not a probate asset. It passes to your TOD beneficiary on your death and not according to your beneficiaries named in your Will or to your heirs under the Texas laws of descent and distribution should you die without a Will.

With the proper planning, you can protect your home and other assets from Medicaid estate recovery.

You may visit our website at www.wrightabshire.com.  Thank you to Wright Abshire associate attorney Theresa A. Clarke who contributed to the article. Wesley E. Wright and Molly Dear Abshire are attorneys with the firm Wright Abshire, Attorneys, P.C., with offices in Bellaire, and Carmine. Both are Board Certified by the Texas Board of Legal Specialization in Estate Planning and Probate Law and are certified as Elder Law Attorneys by the National Elder Law Foundation. Nothing contained in this publication should be considered as the rendering of legal advice to any person’s specific case but should be considered general information.