Alabama Medicaid estate recovery applies after the death of a recipient 55 or older who received long-term care, and it reaches only assets that pass through probate. If your parent or spouse received Medicaid long-term services in Alabama, here is exactly what that means for your family's home and estate.

Federal law created the estate recovery program in 1993 and every state must operate one. Alabama follows the federal floor: the Alabama Medicaid Agency pursues recovery from probate estates of qualifying recipients, but applies the mandatory federal protections and offers an undue-hardship waiver. This guide walks through who is subject, what can and cannot be claimed, who is protected, and what to do after a loved one on Alabama Medicaid passes away.

What Is Alabama Medicaid Estate Recovery?

The Medicaid Estate Recovery Program (MERP) was created by the Omnibus Budget Reconciliation Act of 1993 (OBRA-93, Pub. L. 103-66), which added Section 1917(b) to the Social Security Act, codified at 42 USC § 1396p(b). The implementing regulation is 42 CFR 433.36. Every state Medicaid program is required to operate an estate recovery program; there is no opt-out.

What the law requires: after the death of a Medicaid recipient who was 55 or older and received nursing facility services, Home and Community-Based Services (HCBS), or related hospital and prescription services, the state must seek recovery of the Medicaid costs from that person's estate. Because Medicaid is jointly funded by the state and the federal government, a portion of whatever Alabama recovers is returned to the federal government and the remainder is kept by the state.

Alabama administers the program through the Alabama Medicaid Agency. The state applies the federal mandatory recovery floor without electing the broader optional expansion, which some states use to recover for all Medicaid services (not just long-term care) provided after age 55.

Does Estate Recovery Apply to Your Family Member?

Not every Alabama Medicaid recipient is subject to estate recovery. The rules are more specific than many families realize.

Recovery applies when all of the following are true:

  • The person was 55 years of age or older when they received the Medicaid-covered service.
  • The Medicaid-covered service was nursing facility care, Home and Community-Based Services (HCBS) waiver services, or related hospital and prescription-drug services (that is, long-term services and supports, not general health coverage).
  • The person has passed away and left a probate estate.

Recovery does not apply to:

  • Recipients who received Medicaid only for standard medical coverage (doctor visits, hospital care, prescriptions) without long-term care services.
  • Long-term care services received before age 55.
  • Children's Medicaid.
  • Medicare cost-sharing paid for Medicare Savings Program enrollees (Qualified Medicare Beneficiary, or QMB; Specified Low-Income Medicare Beneficiary, or SLMB; and Qualifying Individual, or QI), meaning Medicare premiums, deductibles, coinsurance, and copayments. Federal law at 42 USC § 1396p(b)(1)(B)(ii) excludes this cost-sharing from estate recovery.

Alabama's long-term care Medicaid program serves adults who need nursing facility or HCBS-waiver services and meet the financial eligibility rules. The asset limit is $2,000 for a single applicant, and the income cap is $2,982 per month (300% of the 2026 Supplemental Security Income (SSI) Federal Benefit Rate). Applicants whose income exceeds that cap must establish a Qualified Income Trust. These are eligibility mechanics, not estate recovery rules, but the same population that qualifies for long-term care Medicaid is the population that may be subject to estate recovery after death.

Which of Your Assets Can the State Reach?

Alabama uses the probate-only definition of "estate." Under federal law, states may choose between recovering from the probate estate only or expanding recovery to non-probate transfers (joint tenancy, life estate, living trust, and similar arrangements). Alabama uses the narrower probate-only approach, so an asset is reachable only if it passes through probate court.

The table below shows how common Alabama assets fall on each side of that line.

Asset Reachable by estate recovery?
Real estate held solely in the deceased's name with no transfer-on-death deed Yes (passes through probate)
Bank account in the deceased's name with no payable-on-death (POD) beneficiary Yes (passes through probate)
Personal property (vehicles, household goods, valuables) titled to the deceased Yes (passes through probate)
Real estate held in joint tenancy with right of survivorship No (passes outside probate)
Bank account with a named POD beneficiary No (passes outside probate)
Investment account with a transfer-on-death (TOD) designation No (passes outside probate)
Life insurance with a named beneficiary other than the estate No (passes outside probate)
Retirement account (401(k), IRA) with a named beneficiary No (passes outside probate)

A note on non-probate transfers and attorney review: If the home or other property passes through joint ownership, TOD designations, or other non-probate arrangements, Alabama's current recovery practice does not typically reach those assets. However, property titling, deed structures, and beneficiary designations interact with federal Medicaid look-back rules in ways that vary by situation. Consult an elder-law attorney before making changes to how property is titled if a Medicaid application may be needed within five years.

Who Is Protected from Recovery?

Federal law at 42 USC § 1396p(b)(2) establishes categorical protections that block recovery regardless of the estate's size.,

Alabama must not pursue recovery when any of the following applies:

  • A surviving spouse is alive, regardless of the spouse's age or financial situation.
  • A surviving child under age 21 is alive.
  • A surviving child of any age who is blind or permanently and totally disabled (as determined under the SSI standard at 42 USC § 1382c) is alive.
  • A sibling with an equity interest in the home who lived in the home at least one year before the recipient was institutionalized still lives there.
  • A son or daughter who lived in the home for at least two years before the recipient was institutionalized, provided care that delayed institutionalization, and has continued to live in the home, still lives there (the "caregiver child" protection).

The first three protections apply to the full estate, not just the home. While the surviving relationship persists, no recovery may occur at all. Recovery is deferred, not permanently waived. When the protected person later dies, the state may potentially seek recovery from assets that can be traced back to the original Medicaid recipient, depending on how the property has been titled or transferred in the meantime.

The sibling-with-equity and caregiver-child protections apply specifically to the home. If these apply, the home is protected from recovery as long as the qualifying person continues to live there.

Can You Get a Hardship Waiver?

Federal law also requires every state to offer an undue-hardship waiver under 42 USC § 1396p(b)(3). Alabama must waive recovery when pursuing the claim would cause undue hardship. The CMS State Medicaid Manual (§ 3810.C) identifies three standard hardship categories:

  1. The asset is the sole income-producing asset. If the asset in the estate is the only meaningful source of income for the surviving family (for example, a family farm or rental property that the family depends on), recovery would remove the family's livelihood.

  2. The asset is a homestead of modest value. If the home is modest relative to the cost of the Medicaid services and the family depends on it for housing, recovery may constitute undue hardship.

  3. Other compelling circumstances. The standard is flexible enough to cover situations not listed above. The applicant must document why recovery would be disproportionately burdensome given the specific facts.

To request a hardship waiver, contact the Alabama Medicaid Agency after the recipient's death and before the estate is closed. The waiver request should include documentation of the hardship circumstances. Alabama Medicaid reviews the request and issues a determination. If the waiver is denied, there is an appeals process through the agency's fair-hearing procedures.

How Do You Respond to a Recovery Claim?

Handling an estate while grieving is hard, and the recovery process can feel like one more weight at the worst time. The steps below are meant to make it manageable. When an Alabama Medicaid recipient 55 or older who received long-term care dies, the estate administrator or family should notify the Alabama Medicaid Agency and be prepared for a potential recovery claim. Here is the general sequence:

1
Step 1

Notify Alabama Medicaid

Contact the Alabama Medicaid Agency to report the death. The agency's main number is 1-800-362-1504, and the website is medicaid.alabama.gov. The agency will initiate its review of whether a recovery claim applies.

2
Step 2

Provide an estate inventory

During probate, the estate will need to provide an accounting of the probate assets. Alabama Medicaid will assess those assets to determine whether a claim will be made and for how much.

3
Step 3

Identify any protective relationship

If a surviving spouse, minor child, or blind/disabled child of any age is alive, document that relationship for the agency. This triggers the mandatory deferral or waiver of recovery.

4
Step 4

Apply for a hardship waiver if applicable

If the estate includes a family home or income-producing asset and the family would face real hardship from recovery, submit a written hardship-waiver request with supporting documentation.

5
Step 5

Work with probate

Alabama Medicaid's claim, if any, is handled through the normal probate process. Medicaid's claim generally comes after administrative costs and funeral expenses in the priority order for creditor claims. The estate cannot close and distribute assets to heirs until any Medicaid claim is resolved.

An elder-law attorney can help navigate each of these steps, especially if the estate includes significant assets or if a hardship waiver is being sought. The Alabama State Bar's referral service and the National Academy of Elder Law Attorneys (NAELA) both maintain Alabama member directories.

Frequently Asked Questions

Will Alabama Medicaid take my parent's house?

Not necessarily. Alabama uses a probate-only definition of estate, which means the home is only at risk if it passes through probate. If the home is held in joint tenancy with a spouse or has a properly recorded transfer-on-death deed, it passes outside probate and is not reachable. Recovery also cannot happen while a surviving spouse, minor child, or blind/disabled child is alive. The situations where the home is genuinely at risk are narrower than many families expect.

Does Alabama Medicaid put a lien on the home while the recipient is alive?

Federal law permits states to file TEFRA liens on the homes of permanently institutionalized Medicaid recipients during the recipient's lifetime. Whether Alabama currently uses this option should be confirmed with the Alabama Medicaid Agency or an elder-law attorney. A TEFRA lien, if filed, must be lifted if a surviving spouse, minor child, blind/disabled child, sibling with equity interest, or caregiver child moves into the home.

What if my parent only had Medicaid for doctor visits and prescriptions, not nursing home care?

Recovery does not apply. Alabama Medicaid estate recovery is limited to recipients 55 or older who received nursing facility care, HCBS, or related long-term services. Standard medical coverage without long-term care services is not subject to estate recovery.

Can we protect the home by adding a child to the deed?

Adding a child as a joint tenant with right of survivorship means the home would pass outside probate at the parent's death and would not be subject to Alabama Medicaid estate recovery (under the probate-only rule). However, adding someone to a deed is a transfer of property, and transfers within five years of a Medicaid long-term care application are subject to the federal 60-month look-back rule., An uncompensated transfer can trigger a penalty period for Medicaid eligibility. Consult an elder-law attorney before making any deed changes if Medicaid may be needed within five years.

How do I apply for a hardship waiver in Alabama?

Contact the Alabama Medicaid Agency after the recipient's death, before the estate closes. Submit a written request explaining the hardship circumstances, with documentation (for example, proof that the asset is the family's sole income source, or evidence that recovery would cause disproportionate hardship). Alabama Medicaid will review the request and issue a determination. If denied, the fair-hearing appeal process is available through the agency.

What is the difference between estate recovery and the Medicaid look-back rule?

They operate at different points in time and govern different things. The federal 60-month look-back rule applies before a Medicaid application for long-term care, scrutinizing transfers made in the prior five years., Estate recovery applies after the recipient's death, to assets remaining in the probate estate. A family can potentially protect the home from estate recovery by restructuring how title is held, but those same restructuring steps may trigger look-back penalties if done within five years of a Medicaid application.

Questions about whether estate recovery applies to your family's specific situation? The rules can look complicated from a distance but simplify considerably once you map them against the actual assets involved. Brevy's care navigator can walk through the situation and explain what, if anything, Alabama Medicaid can reach.

Learn More

MedicaidAlabama Medicaid: A Guide for Seniors and FamiliesAlabama Medicaid for seniors and families: 2026 income caps, the Miller Trust rule, asset limits, Medicare Savings Programs, and how to apply. MedicaidAlabama Medicaid Eligibility and Income LimitsAlabama Medicaid income limits: $2,982/month for long-term care, with a Miller Trust over the cap, plus the MAGI limits for parents, children, and pregnancy. MedicaidHow to Apply for Alabama MedicaidHow to apply for Alabama Medicaid as an elderly or disabled resident: application channels, the Miller Trust gate, required documents, timelines, and appeals. MedicaidAlabama Medicaid Spousal ImpoverishmentAlabama Medicaid spousal impoverishment 2026: CSRA up to $162,660 and MMMNA up to $4,066.50/month protect the at-home spouse when one enters nursing care. MedicaidMedicaid Estate Recovery ExplainedMedicaid estate recovery explained: federal law, 51-state matrix, categorical protections, hardship waivers, and 2025-2026 reform updates. Verify before acting.

Find personalized help understanding Alabama Medicaid estate recovery at brevy.com.

The information on Brevy.com is for educational purposes only and is not a substitute for professional legal, financial, or medical advice. Rules vary by state and program and change frequently. Always verify with the relevant agency or a qualified professional. Brevy is not a law firm, financial advisor, or healthcare provider.

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Brevy Care Team

Expert eldercare guidance from Brevy's team of healthcare professionals and researchers.