Medicaid paid for Janet M.’s expenses for long-term care in a nursing home for two and a half years before she died. Her daughter, Megan K., unmarried and disabled, receives Medicaid benefits herself. She lived with her mother for two years prior to Janet’s entering the nursing home and has continued living in the homestead to the present. Janet named Megan, an only child, as her executor, leaving the house to Megan in her will. Megan is worried that Medicaid will take the home in reimbursement for the medical expenses the agency paid on her mother’s behalf, leaving Megan on the street.

Will Medicaid Seek Reimbursement from this Estate?

Medicaid should not evict Megan from her home. The Medicaid Estate Recovery Program (MERP), in accordance with Tex. Admin. Code §373.207, will seek reimbursement for funds it has paid only if the decedent Medicaid recipient has no surviving spouse, surviving child under the age of 21, surviving child of any age who is blind or disabled as defined by 42 U.S.C §1382c or unmarried child residing continuously in the decedent’s homestead for at least one year prior to death.

Janet’s estate is relieved from recovery by MERP on two counts. First, Megan is a surviving child who is disabled. Second, Megan, as an unmarried child, resided continuously in her mother’s homestead for at least one year prior to the Medicaid recipient’s death.

What Additional Circumstances Prevent Reimbursement from a Medicaid Recipient’s Estate?

Pursuit of Reimbursement is Not Cost-Effective      

Medicaid will not seek reimbursement from a recipient’s estate if the cost of obtaining the expected recovery would be greater than the amount of anticipated recovery. The Health and Human Services Commission has deemed it not cost-effective to pursue a reimbursement claim if the value of the recoverable estate is $10,000 or less, if Medicaid has expended less than $3,000 on behalf of the decedent or if the cost involved in the sale of the recovered property would be equal to or greater than the value of the property.

Janet’s estate would not fit into this exception because her home is worth $400,000 and the cost of recovery would be substantially less than that.

Pursuit of Reimbursement Creates Undue Hardship

Within 60 days of receipt of notice by MERP to seek reimbursement, a recipient may request a waiver of the claim based on undue hardship. The general circumstances that would support a waiver are those in which: (1) the estate property has been the site of a family business, farm or ranch at least 12 months prior to recipient’s death, that business is the primary income-producing asset of the legatees and heirs of the recipient; and produces 50% or more of their livelihood; (2) the heirs and legatees would become eligible for public assistance if the property were recovered; (3) one more legatee or heir would be able to be taken off public assistance due to waiver; and (4) the recipient received benefits as a result of a crime against the recipient as defined by Texas law. In addition MERP may grant waiver for other compelling reasons.

Janet’s estate does not fit into this category because she did not operate a business on the the homestead.

Hardship Due to Homestead Appraisal Value of Less than $100,000 and Low Income

If the tax appraisal district has valued the recipient’s homestead at less than $100,000 and one or more siblings or direct descendants, such as children or grandchildren, of the recipient has a gross family income of less than 300 percent of the Federal Poverty Level, MERP exempts that homestead. If some heirs have gross family income over the 300 percent level, only that percentage of the qualifying heir is exempt. Under these same circumstances, if the homestead is valued by the appraisal district at greater than $100,000, the first $100,000 is exempt.

If Janet’s estate were not exempt for the reasons stated above, as long as Megan’s income is less than 300 percent of the poverty level, only the first $100,000 appraised value of the homestead would be exempt from recovery.

It is imperative that the executor of a Medicaid recipient’s estate seek representation in handling the estate from an attorney who is experienced with Medicaid and the rules governing reimbursement by MERP for benefits paid out to the decedent.

 Sandra W. Reed is an attorney with Katten & Benson, an Elder Law firm in Fort Worth. She lives and practices in beautiful Somervell County, near Chalk Mountain.