It can be maddening to think about Medicaid filing a claim against your estate to recoup the costs of long-term services and support. However, there are legal ways to protect your assets from a Medicaid recovery claim after you’re gone. With proper planning, you and an experienced estate attorney select the best legal solution to avoid Medicaid estate recovery in Texas. Don’t try to walk this path alone. Medicaid rules are technical and convoluted; you may be penalized if they’re not followed.
What Is the Medicaid Estate Recovery Program?
The federal government requires states to establish a Medicaid estate recovery program (MERP) to recoup all or a portion of the deceased’s long-term healthcare costs. A MERP claim can be filed against an estate to recover the cost of nursing home care, intermediate care facilities, home and community services, and hospital services. The recovery claim is limited to these long-term benefits recipients receive from the time they turn 55 until they die.
What Is the Medicaid Recovery Process?
After a Medicaid recipient passes away, the hospital, funeral director, or medical examiner will file a report of death with Texas. Medicaid is notified of the recipient’s death through government systems. If it is going to file a claim, Medicaid will send a notice of intent to file within 30 days after being notified of the person’s passing. This notice will contain information on MERP, a questionnaire, and an undue hardship waiver request. that must be completed and returned to Medicaid within 60 days of the date on the notice of intent to file.
How Long Does Medicaid Have to File a MERP Claim?
The Texas Medicaid estate recovery time limit allows Medicaid to file a claim against the deceased’s estate at any time before the estate is closed or within 4 months of receipt of notice from the estate administrator.
What Assets Are Exempt From Medicaid Estate Recovery Rights?
Medicaid can only recover from the portion of the estate that is probated, which means the following assets are exempt from MERP claims:
- Insurance proceeds,
- Retirement accounts,
- Pensions, and
- Annuities.
Also, Medicaid doesn’t pursue recovery claims when the deceased is survived by:
- A spouse,
- Children under 21 years of age,
- A child who is blind or disabled, or
- An unmarried adult child who lived with the deceased for more than a year before their death.
Unfortunately, Medicaid can file a claim against the deceased’s house, if the house has to be probated to transfer to the new owner. Consulting with a Texas estate planning attorney can help you determine which assets may be subject to MERP.
How to Avoid Medicaid Estate Recovery
Real property is usually the most valuable asset in a person’s estate. A few legal methods allow you to transfer your property automatically when you pass to keep the property out of the probate estate.
Medicaid Asset Protection Trust
A Medicaid asset protection trust (MAPT) is an irrevocable trust created by the Medicaid recipient who transfers their assets (home, car, and other property) to the trust. After the assets are transferred to the MAPT, the Medicaid recipient no longer controls or owns the assets. The MAPT is managed by the trustee for the well-being of the beneficiaries, usually a spouse and children. A MAPT should be carefully considered because it’s not easy to remove assets transferred to the trust, and changes to the MAPT may impact the recipient’s Medicaid eligibility.
Life Estate Deed
A Medicaid recipient (the grantor) can use a life estate deed to transfer property upon their death. A life estate deed allows the grantor to live at the property until they die and names the beneficiaries who will own the property when the grantor passes. However, the grantor can’t sell, mortgage, or substantially change the property without the beneficiaries’ consent, which may pose a problem for certain people.
Transfer-on-Death Deed
A transfer-on-death deed also names the beneficiaries and transfers ownership when the Medicaid recipient (the grantor) passes. However, unlike with a life estate deed, the grantor in a transfer-on-death deed is free to sell, mortgage, and change the property without the beneficiary’s consent. The transfer-on-death deed must be recorded with the county recorder where the property is located to be effective.
Each of these documents must satisfy numerous legal requirements to be enforceable. You should work with an attorney to ensure your document is properly executed and filed to try and avoid future disputes.
Contact Robbins Estate Law for More Information
Our attorneys at Robbins Estate Law were at the top of their graduating class, and we strive to be the top estate planning attorneys in Texas. Rules governing asset protection from Medicaid claims are dense. Contact us to get more information from one of our experienced attorneys.
Kyle Robbins
Kyle Robbins is the founder and sole owner of The Law
Offices of Kyle Robbins. He received his J.D. with honors from the University of Texas School of Law and his B.S. in Food Chemistry and Microbiology from Oklahoma State University.
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