In Texas, you do not have to pay back Medicaid for benefits you legitimately received while you were alive. After a recipient dies, though, the state can file a claim against the probate estate to recover what Medicaid paid for long-term care, through the Medicaid Estate Recovery Program (MERP). The claim only reaches assets that pass through probate, several categories of survivors block it entirely, and heirs are never asked to pay anything out of their own pockets.
When Texas Can Come After Medicaid Money
Federal law requires every state to recover long-term care costs from the estates of deceased Medicaid recipients.1Office of the Law Revision Counsel. 42 USC 1396p – Liens, Adjustments and Recoveries, and Transfers of Assets The Texas Health and Human Services Commission runs that program here. Two conditions have to line up before MERP applies at all: the person was 55 or older when they got the covered services, and they first applied for those services on or after March 1, 2005.2Texas Health and Human Services. D-7800, Medicaid Estate Recovery Program Anyone already receiving long-term care Medicaid before that date is outside the program.
Recovery is also limited by what kind of Medicaid the person used. MERP targets long-term care, not regular medical coverage. The covered services include nursing facility care, intermediate care facilities for people with intellectual disabilities (including state supported living centers), home and community-based waiver programs, and related hospital and prescription drug costs tied to that care. Routine Medicaid doctor visits, children’s Medicaid, and Medicaid for pregnant women do not trigger recovery.2Texas Health and Human Services. D-7800, Medicaid Estate Recovery Program
The state never pursues a MERP claim while the recipient is alive, and it never recovers more than Medicaid actually paid for the covered services.3Texas Health and Human Services. Guide to the Medicaid Estate Recovery Program
What MERP Can and Can’t Touch
Texas uses the narrow definition of “estate” for recovery. Only property that passes through probate counts.1Office of the Law Revision Counsel. 42 USC 1396p – Liens, Adjustments and Recoveries, and Transfers of Assets Federal law lets states expand recovery to things like joint tenancy property and living trusts; Texas has not done that. So the probate estate is the whole playing field: a home titled only in the deceased’s name, bank accounts without a payable-on-death designation, vehicles, and other personal property that would normally go through probate.
Assets that pass directly to a named beneficiary skip probate and sit outside MERP’s reach. That includes life insurance proceeds with a named beneficiary, retirement accounts and pensions with designated beneficiaries, bank accounts set up as payable-on-death or joint with right of survivorship, and real property transferred through a Transfer on Death Deed or a Lady Bird deed.
MERP files its claim the same way any other creditor would, against the probate estate. It does not put a lien on property during the recipient’s life or at death.3Texas Health and Human Services. Guide to the Medicaid Estate Recovery Program
Survivors Who Block Recovery Entirely
Some family situations stop a MERP claim completely, no matter how much Medicaid paid. The state will not pursue recovery if the recipient left behind:
- A surviving spouse
- A child under 21
- A child of any age who is blind or permanently and totally disabled under Social Security’s definition
- An unmarried adult child who lived in the recipient’s home continuously for at least a year before the death
These are full exemptions. If a surviving spouse exists, no claim is filed, regardless of the spouse’s own finances.3Texas Health and Human Services. Guide to the Medicaid Estate Recovery Program The last category is sometimes called the caretaker child exception, but Texas does not require the child to have provided medical care. Continuous residence in the home for the year before death is what matters.
Hardship Waivers
When none of the automatic exemptions apply, heirs can still ask the state to waive the claim on undue hardship grounds. The homestead version of this waiver is the one that comes up most.
Homestead Hardship
If the home’s tax appraisal value is under $100,000 and every heir who would inherit it has gross family income below 300% of the federal poverty level, the state exempts the home from recovery.4Legal Information Institute. 1 Texas Administrative Code 373.209 – Undue Hardship Waivers For 2026, 300% of the poverty level works out to $47,880 for a single person and $64,920 for a family of two.5HHS ASPE. 2026 Poverty Guidelines If the home is worth more than $100,000, the first $100,000 of appraised value is still exempt as long as the income test is met, and only the value above that amount is subject to recovery.
Other Hardship Grounds
The state may also waive recovery if the estate is an heir’s primary source of income, or if collecting would push heirs onto public assistance themselves. Any hardship waiver requires the Application for Hardship Waiver (Form 5006) along with supporting financial documentation, submitted within 60 days of receiving the Notice of Intent to File a Claim.6Legal Information Institute. 1 Texas Administrative Code 373.307 – Notice of Intent to File a Claim upon the Death of a Medicaid Recipient Missing that 60-day window does not forfeit every option, but it makes contesting the claim much harder.
What Heirs Actually Owe
Within 30 days of learning a Medicaid recipient has died, MERP sends a Notice of Intent to File a Claim to the estate representative, guardian, power of attorney, or known family members.6Legal Information Institute. 1 Texas Administrative Code 373.307 – Notice of Intent to File a Claim upon the Death of a Medicaid Recipient The packet includes a questionnaire and the hardship waiver form.
Two points matter here for the family. Heirs are never asked to pay with their own money. The estate’s assets settle the claim, and if the estate cannot cover the full amount, the rest simply goes unpaid. Nobody in the family owes the difference. MERP also does not offer payment plans. If the claim stands and no exemption or waiver applies, the probate assets are used to pay it.7Texas Health and Human Services. Medicaid Estate Recovery Program FAQs
If the paperwork is ignored, or if HHSC denies the waiver and nothing else resolves the claim, the state can file a formal claim in probate court.
Planning Ahead to Keep Assets Out of Reach
Because Texas only recovers from the probate estate, the usual strategy is routing valuable assets around probate. Several tools do this.
A Transfer on Death Deed lets a homeowner name a beneficiary who takes the property automatically at death. The home never enters probate, so under current Texas rules it stays outside MERP. A TODD does not transfer ownership during life, so it does not trigger Medicaid’s asset transfer penalties, and the owner can revoke it anytime. One risk: if the probate estate lacks enough to pay its debts, a court could potentially pull the property back in. Texas could also expand its definition of estate in the future, though it has not.
A Lady Bird deed, formally an enhanced life estate deed, works along similar lines. The owner keeps the right to live in, sell, or mortgage the property, and the property passes automatically to the named beneficiary at death outside probate. These have a longer track record in Texas Medicaid planning.
Payable-on-death designations on bank accounts, named beneficiaries on retirement accounts and life insurance, and joint accounts with right of survivorship all move those assets outside probate as well.3Texas Health and Human Services. Guide to the Medicaid Estate Recovery Program
Timing matters. Transferring assets for less than fair market value within five years of applying for Medicaid can trigger a penalty period during which Medicaid will not cover long-term care. These steps work best done well before any Medicaid application.
If You Were Overpaid or Accused of Fraud
MERP is a post-death program, but repayment can come up during life in one other situation. If someone received Medicaid based on incorrect information about income, assets, or household makeup, the state can pursue the overpayment directly from the living recipient. That applies whether the error was innocent or intentional.
For intentional fraud, consequences go well past repayment. The Texas Medicaid Fraud Prevention Act, in Chapter 36 of the Texas Human Resources Code, lets the state recover the full fraudulent amount, impose civil penalties per violation, and seek additional damages. The Office of the Attorney General handles these cases, and penalties can include permanent exclusion from Medicaid. Criminal charges are also possible, ranging from misdemeanors to felonies depending on the dollar amount.
Honest errors are handled differently. Reporting a change in income or assets to HHSC promptly protects you from fraud allegations, even if you turn out to have been overpaid for a stretch. The state can still recover the overpayment, but without the legal consequences that follow a fraud finding.