Dear Mr. Premack: My mom is a Medicaid beneficiary at a nursing home in San Antonio. We were told by Medicaid that there would be an estate recovery claim after her death. My dad is living at home and is fully aware that the home is subject to an estate recovery claim when mom dies. I would like to prepare a form where when both of them die their home will automatically go to the State of Texas and record the form in the BCAD. Please explain the process so that I can get this done ASAP. – A.O.
You are missing a few pieces in your understanding of this complex jigsaw puzzle called Medicaid. Let me try to fill in the gaps so that your parents don’t make an avoidable mistake.
It is true that when your mother became a Medicaid beneficiary your parents needed to be notified of the Medicaid estate recovery program (MERP), and to be aware that it is possible for the state to make a legal effort for the taxpayers to be reimburse for the cost of caring for your mother. MERP operates under a set of specific rules. There are two rules which you need to know.
First, if the Medicaid beneficiary dies before her spouse, then MERP cannot legally bring a claim. Thus, if you father lives longer than your mother there will be no claim from MERP. Instead, they will send him a questionnaire that asks if any of the exemptions apply and he’ll send it back saying, "Yes, there is a surviving spouse”. They will then cease any effort to bring a claim.
Second, MERP’s rules only allow it to enforce a claim in probate court when the beneficiary’s Will and estate are administered. So, avoiding probate can avoid MERP’s claim. One way to do so is for your parents to agree (in a formal written contract) that title to the house is transferred to your father as his separate property. He would then have his lawyer draw up a Will leaving the house to the children upon his death.
That way, if he dies before your mother, house title passes to the children without a MERP claim. She is left with no home but lives in the nursing home paid for by Medicaid. On the other hand, if she were to die before your father, the house is exempt from MERP and there is no probate.
You do not want to capitulate to MERP when it is avoidable. Do not seek out a form to give the house to MERP (besides, filing a form with BCAD – the Bexar County Appraisal District – would have no effect; they keep the tax records, not the ownership records which are kept by the Bexar County Clerk).
Paul Premack is a Certified Elder Law Attorney and a Five Star Wealth Manager (Texas Monthly Magazine 2009-2013) practicing estate planning and probate law in San Antonio.
Original Publication: San Antonio Express News, September 17, 2010