Medicaid Estate Recovery and the Family Home in Texas

Congress made Medicaid estate recovery mandatory for all states in 1993 [18], but how aggressively each state enforces it varies. In Texas, recovery is limited to assets included in the decedent's probate estate, and MERP cannot reach property that passes through a valid nonprobate transfer [1].

How Texas MERP Works in Practice

The program is administered by the Texas Health and Human Services Commission (HHSC). As of August 17, 2026, HHSC identifies Health Management Systems, Inc. (HMS), a Gainwell Technologies company, as its MERP contractor. HHSC has announced that MERP operations will transition to Stellarware Corporation effective September 1, 2026. Because contact information and submission instructions may change during that transition, families should follow the instructions on the notice they receive and confirm current information on the HHSC MERP website.

Texas implemented MERP on March 1, 2005. Whether recovery applies depends on the recipient's age, the type and timing of Medicaid services received, the property included in the probate estate, and any applicable exclusion, cost-effectiveness rule, deduction, or hardship waiver.

2026 Rulemaking Activity

In March 2026, HHSC proposed substantial amendments to the Texas MERP regulations. Among other changes, the proposal would extend MERP's claim-filing period after actual notice of death from 70 to 120 calendar days, extend the period for sending a Notice of Intent from 30 to 60 calendar days, and increase the cost-effectiveness thresholds from a recoverable estate value of $10,000 to $15,000 and recoverable Medicaid costs of $3,000 to $5,000.

As of this article's August 17, 2026 verification date, those figures appeared in proposed amendments, while the currently published Texas Administrative Code and HHSC consumer guidance continued to state the existing 70-day, 30-day, $10,000, and $3,000 rules. Families and executors should verify the rule in effect when their case arises rather than relying on a pending proposal.

What MERP Can and Cannot Reach

Under current Texas MERP rules, recovery is limited to property included in the deceased recipient's probate estate. Property that passes outside the probate estate — such as property transferred under a valid survivorship agreement or properly implemented nonprobate transfer — generally falls outside the current Texas MERP definition of 'estate.' Whether a particular asset is probate or nonprobate depends on its title, beneficiary designation, governing document, and surrounding facts. Families should not assume that the absence of a full estate administration by itself resolves MERP.

A Transfer on Death Deed, enhanced life-estate deed, survivorship agreement, beneficiary designation, or trust must be legally valid and properly implemented to produce the intended nonprobate result. Title companies and probate courts may also request an Authorization and MERP Certification even when a family believes the property passed outside a conventional administration. The certification is widely used in Texas title practice, but it is not a substitute for legal analysis of ownership and creditor rights.

This distinction matters most when it comes to the family home. Under the current Texas rule, MERP does not seek a claim if the recipient is survived by a spouse, a child under age 21, a child of any age who is blind or disabled under the applicable federal standard, or a qualifying unmarried adult child who resided continuously in the recipient's homestead for at least one year before death. The surviving-spouse and qualifying-child protections are not conditioned on the home being the only estate asset. Texas law protects certain family situations from full recovery, and understanding those protections is the first step in defending the estate.

MERP may apply when a person received covered Medicaid long-term-care services at age 55 or older and initially applied for those covered long-term-care services on or after March 1, 2005. Under the currently published rule, a person is treated as age 55 beginning on the first day of the month following the month in which the person turns 55.

What Services May Be Recoverable

Under the current Texas rules, recoverable services include:

• Nursing-facility services;
• Intermediate-care-facility services for individuals with intellectual disabilities or related conditions, including applicable state-supported-living-center services;
• Covered Home and Community-Based Services under Section 1915(c) of the Social Security Act;
• Community Attendant Services covered under Section 1929(b); and
• Related hospital and prescription-drug services.

MERP does not recover every Medicaid payment the recipient ever received. Routine medical care unrelated to the covered long-term-care services is not recoverable. Medicare benefits are not Medicaid payments, and services received before the applicable age and program dates are outside the Texas MERP claim. Because related hospital and prescription-drug costs can be included, the article should not state categorically that all "acute care" is excluded [3][4][11].

The Notice of Intent and the 60-Day Response Deadline

Under the currently published rule, MERP is to provide a Notice of Intent to File a Claim within 30 days after MERP is notified of the recipient's death. The notice includes a program overview, a questionnaire concerning possible claim exclusions, and information about requesting an undue-hardship waiver.

A hardship-waiver request and all required supporting documents must be submitted within 60 days of the date of the Notice of Intent. A request for allowable home-maintenance or care-cost deductions must be made in writing within 60 days after receipt of the notice. These deadlines should be treated as firm. A late or incomplete hardship application may not be reviewed, so the recipient's representative or heirs should not assume that missing the deadline merely makes the process more complicated [7][9][12].

Not every estate is subject to MERP. Texas law provides several exemptions that can prevent or limit a claim [1][6].

Surviving-Family Circumstances That Prevent a Claim

MERP cannot file a claim if any of the following apply at the time of the recipient's death:

• Surviving spouse: If the Medicaid recipient had a surviving spouse, MERP cannot file a claim against the estate [1][6].
• Child under 21: If there is a surviving child under 21 years of age, MERP cannot file [1][6].
• Blind or disabled child: If there is a surviving child of any age who is blind or disabled as defined by 42 U.S.C. §1382c, MERP cannot file [1][6].
• Unmarried adult child residing in the home: If an unmarried adult child lived continuously in the recipient's homestead for at least one year immediately before the recipient's death, MERP cannot file [1][6].

When Recovery Is Not Cost-Effective

Under the currently published version of 1 TAC §373.215, MERP will not file a claim if any one of the following applies:

• The value of the recoverable estate is $10,000 or less;
• The recoverable amount of Medicaid costs is $3,000 or less; or
• The cost involved in selling the property would be equal to or greater than the property's value.

These are cost-effectiveness rules, not hardship waivers. A pending 2026 proposal would increase the first two thresholds to $15,000 and $5,000, respectively, but proposed figures should not be presented as current law unless the amendment has been adopted and has taken effect [10].

Homestead Undue-Hardship Waiver

A qualifying heir may request a waiver for the inherited homestead. Under the current rule, HHSC will exempt the homestead when the required conditions are established. The rule uses the tax-appraisal-district value for the relevant tax year. If that value exceeds $100,000, the first $100,000 is exempt and the excess may remain subject to recovery.

The property must pass to one or more siblings or direct descendants, such as children or grandchildren, who satisfy the income requirement. The 300-percent-of-the-federal-poverty-level test uses gross family income without exclusions or deductions. HHSC considers adult heirs separately. If only some heirs qualify, only the percentage corresponding to the qualifying heirs' ownership shares is exempt [7].

This waiver requires a request from the qualifying heir together with the required supporting documentation.

What May and May Not Keep the Home Outside MERP

• If the home is included in the probate estate, a will does not by itself prevent a MERP claim. A claim may still be barred or limited by the recipient's eligibility history, surviving-family protections, cost-effectiveness rules, deductions, or a hardship waiver.
• A properly executed and recorded Transfer on Death Deed (TODD) may keep the home out of probate and therefore out of MERP [14].
• A properly prepared enhanced life-estate or "Lady Bird" deed may also accomplish a nonprobate transfer at death, but it is a different legal instrument from a TODD.
• Trust ownership may also avoid MERP, depending on how the trust is structured and funded.

The surviving-spouse exemption is one of the most important MERP protections. If the Medicaid recipient's spouse is alive at the time of death, MERP cannot file a claim against the estate [1][6]. This protection applies regardless of whether the spouse is living in the home. This is a regulatory circumstance that prevents a claim rather than an undue-hardship waiver. Nevertheless, the family should promptly return the requested questionnaire and provide proof of the marriage and the spouse's survival so MERP can document that the protection applies.

The disabled-child exemption applies to any child, regardless of age, who is blind or disabled as defined by 42 U.S.C. §1382c [1][6]. This protection requires documentation of the disability, so families should gather medical records and Social Security disability determinations before or immediately after death.

For adult children living in the home, Texas law protects an unmarried adult child who lived continuously in the home for at least one year immediately before the recipient's death. This requires documentation of continuous occupancy for that full one-year period [1][6].

If no exemption applies, families can request an undue-hardship waiver. This is a separate process from the exemptions and requires demonstrating that MERP recovery would cause undue hardship to the heirs or legatees [7].

Grounds for Hardship

Texas Administrative Code Section 373.209 lists several grounds for hardship waivers [7]:

• The estate property has been the site of a family business, farm, or ranch for at least 12 months before the recipient's death, is the primary income-producing asset of the heirs, produces 50% or more of their livelihood, and recovery would cause the heirs to lose that primary income source
• The heirs would become eligible for public or medical assistance if MERP recovers the claim
• Allowing a survivor to keep the estate would let that person get off public or medical assistance
• The Medicaid recipient received the underlying medical assistance because they were the victim of a crime
• Other compelling reasons, evaluated case by case
• Separately, the homestead itself may qualify for the hardship waiver described above (the first $100,000 of applicable tax-appraisal-district value, subject to the qualifying-heir, income, documentation, and proportional-share requirements) [7]

The 60-Day Deadline

Hardship waiver applications must be submitted within 60 days of the Notice of Intent to File a Claim [7][12]. HHSC will make a determination within 40 days of receiving the complete application [7]. If MERP denies the waiver, the applicant may request an informal review. Under 1 TAC §373.211, MERP must receive the review request within 60 days after the applicant receives notice of the denial. The review is not a hearing. The denial letter should provide the current submission address and instructions [8].

Circumstances That Do Not Establish Hardship by Themselves

Under the currently published rule, undue hardship does not exist solely because:

• Recovery would merely prevent heirs from receiving an anticipated inheritance
• The hardship was created by estate planning methods that sheltered assets contrary to Medicaid law [7]

Under 1 TAC §373.213, the estate representative, heirs, or legatees may request a reduction of the MERP claim for documented, necessary, and reasonable expenses in two categories:

• Expenses and taxes incurred to maintain the recipient's home, including real-estate taxes, utility bills, homeowners insurance, repairs, ordinary maintenance, and lawn care; and
• Direct payments for the recipient's care, including personal-attendant care, when the care enabled the recipient to remain at home and delayed institutionalization.

The person requesting the deduction must provide receipts or other sufficient supporting documentation. The request must be made in writing within 60 days after receipt of the Notice of Intent to File a Claim. HHSC determines whether an expense is necessary, reasonable, documented, and allowable.

Approved deductions reduce the recoverable claim and, depending on the documented amount, may substantially reduce it [9].

The Notice of Intent

After MERP is notified of the recipient's death, the currently published rule directs MERP to provide a Notice of Intent within 30 days. The notice begins the applicable 60-day period for submitting a hardship-waiver request and supporting documents. The deduction rule separately requires a written deduction request within 60 days after receipt of the notice.

What Happens After the Notice

After reviewing the available information, MERP may present or file a probate claim if the recipient and estate fall within the program, no surviving-family claim bar applies, recovery is cost-effective, and no waiver prevents recovery. The claim is classified as a Class 7 claim under Texas Estates Code §355.102 [5][13]. Subject to the program-date requirements, allowable deductions, and the value available for recovery, the claim amount is based on covered Medicaid long-term-care services provided after the recipient reached the age used by the MERP rules.

MERP's Claim-Filing Rule

Under the currently published version of 1 TAC §373.205(b), a MERP claim is to be filed within 70 days after MERP has actual notice of the death of a recipient who was at least 55 and received covered long-term-care services. HHSC proposed changing that period to 120 calendar days in 2026, but the proposed period should not be described as current law unless the amendment has been adopted and has taken effect.

A separate 120-day creditor deadline can arise when a Texas personal representative sends an unsecured creditor the permissive notice authorized by Texas Estates Code §308.054. If the creditor does not present its claim before the 121st day after receiving a compliant notice, Texas Estates Code §355.060 bars the claim. That probate-creditor procedure is not the same as MERP's regulatory deadline following actual notice of death. An executor should consult a Texas probate attorney before attempting to use a permissive creditor notice.

Claim Priority

MERP claims are Class 7 claims under the Texas Estates Code [13]. Claims against a Texas estate are paid in this order, and MERP is paid only after Classes 1 through 6 are satisfied:

• Class 1: Funeral expenses and costs of last illness (capped at $15,000 each)
• Class 2: Expenses of estate administration
• Class 3: Secured claims, such as a mortgage or tax lien, paid from the proceeds of the property securing the debt
• Class 4: Confirmed child support arrearages
• Class 5: Taxes, penalties, and interest owed to state and local taxing authorities
• Class 6: Costs of confinement owed to the Texas Department of Criminal Justice
• Class 7: MERP claims under §355.102
• Class 8: Other claims not included in Classes 1 through 7

If the estate has insufficient assets to pay all claims in order, MERP may receive nothing or only a partial payment [13].