Medicaid Estate Recovery Program (MERP)
Federal law requires states to seek repayment of certain Medicaid costs from the estates of deceased recipients. MERP applies only after death and only in specific circumstances — and federal law includes protections for surviving family members.
What is Medicaid Estate Recovery?
The Medicaid Estate Recovery Program (MERP) is a federal requirement, established under the Omnibus Budget Reconciliation Act of 1993 (OBRA 1993), directing states to attempt to recover certain Medicaid costs paid on behalf of deceased recipients from their estates. Estate recovery does not affect you while you are alive — it applies only after a recipient's death, and only under specific circumstances defined by federal and state law.
It is important to understand that estate recovery applies primarily to individuals who received long-term care services — particularly nursing facility care — and in some cases other Medicaid services received at or after age 55. Estate recovery is not triggered by routine medical care such as doctor visits, hospital stays, or prescription drugs received when you are younger than 55 and not in long-term care settings.
When states must seek recovery
Federal law mandates that states seek recovery in these circumstances:
- Recipients aged 55 and older who received certain services — At minimum, states must seek recovery from estates of individuals who were 55 or older when they received nursing facility services, HCBS services, or related hospital and prescription drug services.
- Nursing facility residents of any age — States must seek recovery for nursing facility costs for any Medicaid recipient who was permanently institutionalized, regardless of age.
- HCBS waiver recipients — Recipients of home and community-based services through Medicaid waiver programs may be subject to estate recovery in many states.
- Optional: all Medicaid services for recipients 55+ — States have the option (but not the obligation) to expand recovery to all Medicaid services — including regular medical care — received by individuals age 55 and older.
What states can recover
At a minimum, federal law requires states to recover costs for nursing facility services, HCBS, and related hospital and prescription drug services provided to recipients age 55 or older. States may optionally expand recovery to cover all Medicaid services (including regular medical care) provided to individuals 55+. The decision to expand recovery varies by state.
States also have a choice in how they define the "estate" from which they recover. Some states limit recovery to assets that pass through the probate process (the "probate estate"), such as individually owned real and personal property. Other states use an "expanded estate" definition that includes non-probate assets such as joint accounts, life estates, living trust assets, and other arrangements — which can significantly expand the assets subject to recovery.
Who is protected from estate recovery
Federal law includes several mandatory protections that prevent or delay estate recovery:
- Surviving spouse — No estate recovery may occur while a surviving spouse is alive, regardless of whether the couple's assets have been transferred or the nature of the assets involved.
- Surviving child under age 21 — Estate recovery is prohibited if the recipient had a surviving child under age 21 at the time of death.
- Surviving child who is blind or disabled — Regardless of age, a surviving child who is blind or permanently disabled exempts the estate from recovery.
- Undue hardship waivers — States must have a process for granting hardship waivers when estate recovery would cause undue hardship to the heirs.
What happens to the family home
The primary home is generally an exempt asset for Medicaid eligibility purposes — it typically does not count against asset limits while you are alive and intend to return home (or while a spouse or qualifying dependent lives there). However, the home can be subject to estate recovery after the recipient's death depending on state law, equity value, and who else lives there.
Some states place a Medicaid lien on the home during the recipient's lifetime if they are permanently institutionalized with no reasonable expectation of returning home. This lien is typically enforceable when the home is sold or when the recipient dies. Other states only pursue the home through the estate recovery process after death. A small number of states have limited their estate recovery programs to reduce the burden on families.
The home equity value subject to recovery varies by state. If other qualifying individuals (such as a sibling who has lived in the home for at least a year and provided care) reside in the home, additional protections may apply. Because these rules are highly state-specific, consulting an elder law attorney familiar with your state's rules is strongly recommended if you are concerned about the family home.
How to request a hardship waiver
Federal law requires every state to have a process for granting undue hardship waivers to exempt estates from recovery in appropriate cases. Common grounds for hardship waivers include: a family caregiver who lived in the home for at least two years before the recipient's institutionalization and provided care that delayed institutionalization; a sole income-producing asset of the heirs; and family heirloom situations where the property has been in the family for generations and its loss would cause exceptional hardship.
Hardship waivers are evaluated on a case-by-case basis and are not automatically granted. The heirs must typically apply within a specified period after being notified of the estate recovery claim. Documentation supporting the hardship claim is required. The standard and process for hardship waivers vary by state.
Estate recovery rules vary substantially by state. If you or a family member is receiving long-term care Medicaid, consult an elder law attorney about your specific state's recovery rules and any planning options available to you and your family.