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The Texas Medicaid Recovery Rules

The Medicaid Recovery plan is designed to return monies paid to Texas Medicaid beneficiaries during their lifetime to the State Medicaid Program.  Benefits paid to a recipient after the age of 55 are considered recoverable.  Persons who are already approved for Medicaid, or who are receiving Medicaid, are not affected.

Persons who apply for Medicaid Long-Term Care Services after March 1, 2005, are eligible for a Medicaid recovery claim at their death.  A reimbursement claim will be filed as a Class 7 claim against the estate of a Medicaid recipient. Claims can be filed whether or not there is a probated estate; a claim can be filed even if the Medicaid recipient did not have a will.

Reimbursements will be sought for Medicaid benefits paid for the following services:  services in a nursing facility; services in an intermediate care facility for the mentally retarded; home and community based services; and all hospital and prescription drug services.  The reimbursement program is called “The Medicaid Estate Recovery Program” or MERP.  It may be found in the Texas Administrative Code, Title 1, Part 15, Chapter 373.

The Texas State Medicaid office must give notice of their intent to seek reimbursement of benefits.  These notices will be delivered to Medicaid applicants, when application is made for Medicaid benefits.  Then, when the Texas State Medicaid office receives actual notice of the death of a Medicaid recipient, over age 55, who received covered long-term care services, a MERP Notice of Intent to File a Claim will be filed with the personal representative, administrator, agent or guardian of the Medicaid beneficiary within 70 days of that actual notice.

The primary target for the MERP program, appears to be the homestead of the deceased Medicaid recipient, although all real and personal property is included as part of the estate.  Homesteads valued at less than $10,000 will be exempt from reimbursement claims.   In other words, the tax appraisal district value of the homestead must exceed $10,000 in order for it to be eligible for reimbursement.

However, there are several situations when the MERP claim will not be filed:

If there is a surviving spouse; if there is a surviving child under age 21; if there is a surviving child of any age who is blind or disabled, as defined by 42 U.S.C. S1382c; if there is an unmarried adult child continuously living in the homestead for a year prior to the recipient’s death; or if there will be an undue hardship and the recovery will not be cost effective.

The Undue Hardship Waiver

Title 1, Part 15, Section 373.209 of the Texas Administrative Code discusses the Undue Hardship Waiver.  An Undue Hardship Waiver may be submitted to avoid the MERP claim.  It must be submitted within 60 days of the date of the MERP Notice of Intent to File a Claim.  It can be approved for a variety of reasons:  1) if the estate has been the site of a family business, farm or ranch for at least 12 months prior to the death of the Medicaid beneficiary, and produces 50 percent or more of the livelihood of heirs and legatees, and would cause these individuals to lose their primary source of income; 2) if the heirs and legatees would have to have public assistance if the claim were made; 3) if the recipient survivors, would be eligible to discontinue their own public assistance payments; 4)  if the deceased Medicaid recipient received medical assistance as the result of a crime against the recipient survivor; or 5)  other compelling reasons.

Undue Hardship waivers are applicable to homesteads and an heir may assert that the recovery against the homestead would be an undue hardship. The following lists of conditions have to exist in order for the Health and Human Services Commission to exempt a homestead from recovery: