San Antonio Express-News
August 17, 2004

Update: Medicaid Estate Recovery Program

copyright 2004, Paul Premack

The Medicaid Estate Recovery Program (MERP), which was expected to come into effect by September 1, has been delayed while the federal government (via the Center for Medicaid Services) reviews and comments on the proposed Texas plan.

The probable timeframe for implementation of MERP in Texas is November 1, 2004, though that is not a certain date. The Center for Medicaid Services is determining whether Texas MERP should include two additional types of Medicaid programs that Texas Health and Human Services Commission has omitted: Community Based Assistance (which helps provide homebound patients with assistance) and Medicaid services to the mentally retarded.

It appears the other features of Texas MERP, which was designed to be as lenient as federal law allows, may be approved. Those features, if approved, will include:

• The state can seek reimbursement for expenses it incurs in the Medicaid nursing home program for those 55 or older. The state will have a claim it can enforce as a creditor in probate court. Liens against recipient’s homes will not be used. Medicaid will be on the same footing as any other unsecured creditor.
• If there is a surviving spouse, a child under age 21, a blind or disabled child, or an adult child (living in the beneficiary's home for at least a year) then the state will not bring any type of claim.
• There will be no recovery against property if recovery would cause undue hardship to survivors. When a house is valued at less than $50,000 and the family claims undue hardship, the state will exempt the house. Further, undue hardship will exist if (1) the property has been the site of the operation of a family business for at least a year and that business is the sole income producing asset of an heir, and produces over half that person’s livelihood, or (2) if the property is a family farm or ranch, and recovery would result in the heir losing his or her primary source of income.
• To encourage families to protect and maintain a home (instead to abandoning it because the property will just be grabbed by the state anyway), the state will exempt an amount needed to reimburse the family for real estate taxes, utility bills, home repairs, and home maintenance expenses like lawn care. Proper evidence must support an exemption, and a written receipt is the best evidence.
• Anyone who is already receiving Medicaid nursing home benefits prior to the effective date of MERP will be left out of the program. Thus, only new applicants who fail to do proper prior planning will be at risk of losing assets under the program.
• The State will honor efforts to protect assets through planning that removes them from the probate process. No claims will be made against property held in a revocable trust, that pays to heirs by Right of Survivorship, or that passes through a life estate arrangement.