Indiana Medicaid estate recovery applies after death to recipients 55 or older who received long-term care. Here is how Indiana's rules work and what protections apply.

Federal law requires every state to operate a Medicaid estate recovery program, and Indiana carries out that obligation through the Indiana Family and Social Services Administration (FSSA) Office of Medicaid Policy and Planning. After a qualifying recipient dies, FSSA may seek repayment from the probate estate for certain Medicaid long-term care costs. The mandatory federal protections -- for a surviving spouse, a minor child, and a blind or disabled child -- block recovery in a substantial share of cases. And a hardship waiver is available when recovery would cause genuine financial distress.

This guide covers who is subject to Indiana Medicaid estate recovery, what assets can be reached, who is protected, how to claim a hardship waiver, and how to respond if the estate receives a claim from FSSA.

Who Does Indiana Medicaid Estate Recovery Apply To?

Indiana Medicaid estate recovery rests on a federal foundation. OBRA-93 (Pub. L. 103-66, Section 13612) added Section 1917(b) to the Social Security Act, codified at 42 USC Section 1396p(b), requiring every state to recover certain Medicaid expenditures from the estates of deceased recipients. The implementing regulation is 42 CFR 433.36.

Under the federal mandatory floor, Indiana must seek recovery from the estates of residents who were:

  • Age 55 or older at the time they received services, AND
  • Receiving nursing facility care, HCBS, or related hospital and prescription drug services paid by Medicaid.

The recovery program targets long-term services and supports (LTSS), not the full range of Medicaid benefits. A person who received standard Medicaid medical coverage without LTSS is not subject to estate recovery. The age threshold also matters: someone who received nursing facility care before turning 55 is not subject to recovery, even if they later received more care after 55.

In Indiana, LTSS is coordinated through FSSA's Division of Aging and delivered in part through Indiana PathWays for Aging, the state's managed long-term services and supports program launched July 1, 2024 for members aged 60 and older. HCBS waiver services also fall within the scope of Medicaid LTSS. If FSSA paid for qualifying services for a recipient who was 55 or older, those payments become the basis of a potential estate recovery claim after the recipient's death.

Indiana is an income-cap state, which means applicants whose gross income exceeds $2,982 per month must route excess income through a Qualified Income Trust (Miller Trust) to qualify for LTSS coverage. This Medicaid eligibility rule is separate from estate recovery -- but families managing both a Miller Trust during life and estate recovery after death benefit from understanding how these two pieces of the Medicaid program interact.

One important federal carve-out: Medicaid payments made solely for Medicare premiums and cost-sharing through the Medicare Savings Programs (QMB, SLMB, QI) are excluded from estate recovery under an ACA provision effective January 1, 2010. A person who only had a Medicare Savings Program enrollment and never received Medicaid LTSS would not have a recovery claim against their estate.

What Assets Can Be Recovered?

Indiana Medicaid estate recovery reaches the probate estate of a qualifying deceased recipient. Probate assets are those owned in the deceased person's sole name, without a beneficiary designation, joint ownership, or other survivorship mechanism that would transfer them automatically at death.

Typical probate assets include:

  • Real estate titled solely in the deceased's name (no joint tenancy, no transfer-on-death deed)
  • Bank accounts in the deceased's name alone with no payable-on-death (POD) beneficiary designation
  • Investment accounts in the deceased's name alone with no transfer-on-death (TOD) designation
  • Personal property (vehicles, household goods, personal effects) titled to the deceased
  • Business interests held individually

Assets that typically pass outside probate -- jointly-held accounts with survivorship rights, accounts with POD or TOD designations, life insurance with named beneficiaries, retirement accounts with named beneficiaries -- are not directly captured by the probate estate recovery rule.

Whether Indiana also pursues recovery against non-probate assets through an expanded estate definition is a question for an elder-law attorney with current knowledge of FSSA practice. The federal statute permits states to define "estate" broadly enough to reach non-probate transfers, and Indiana's classification in published surveys is listed as a state that may exercise this option for at least some service categories. Families with significant non-probate assets should consult an attorney before assuming those assets are outside FSSA's reach.

TEFRA liens. Federal law at 42 USC Section 1396p(a) permits states to file pre-death liens against the homes of permanently institutionalized Medicaid recipients. If FSSA has filed a lien, it will appear on a title search and must be satisfied before the property can be sold or transferred. The lien does not force a sale during the recipient's lifetime. Federal protections require that the lien be released if a surviving spouse, minor child, blind or disabled child, or a sibling with an equity interest and residency history is present.

Who Is Protected from Indiana Medicaid Estate Recovery?

Federal law at 42 USC Section 1396p(b)(2) creates mandatory categorical protections that block recovery in defined family situations. Indiana must honor all of them.

Recovery cannot proceed while any of the following are true:

  • A surviving spouse is alive. Recovery is deferred while the spouse lives. Recovery may potentially be sought from the spouse's estate later if identifiable property from the Medicaid recipient passes to the spouse and remains in the estate at the spouse's death. Families with surviving spouses and significant real property should consult an attorney about planning during the spouse's lifetime.
  • A child under age 21 is alive. Recovery is fully blocked until the child's 21st birthday.
  • A child of any age who is blind or permanently and totally disabled (under the SSI disability standard at 42 USC Section 1382c) is alive.

Two additional home-specific protections apply:

  • A sibling with an equity interest who lived in the home for at least one year before the recipient was institutionalized and has lived there continuously since the institutionalization.
  • A caregiver child (any age) who lived in the home for at least two years before institutionalization, provided care during those two years that delayed or prevented institutionalization, and has continued living in the home since.

These protections must be affirmatively asserted and documented by the estate administrator during the recovery process. They are not applied automatically. The caregiver child protection for estate recovery is also legally distinct from the caregiver child lifetime transfer exception under 42 USC Section 1396p(c)(2)(A)(iv), which applies to the eligibility look-back period rather than post-death recovery.

How to Claim a Hardship Waiver

Federal law at 42 USC Section 1396p(b)(3) requires Indiana to maintain a hardship waiver process. When estate recovery would cause undue hardship for the surviving household, the estate administrator can apply for a waiver to reduce or eliminate the recovery claim.

The CMS State Medicaid Manual Section 3810.C identifies three categories of qualifying hardship:

  1. The asset is the sole income-producing asset. If the primary estate asset is the sole source of income for the surviving family, recovery can be waived to protect that income stream.
  2. The asset is a homestead of modest value. Recovery against a modest family home can be waived when the loss would cause genuine financial hardship for heirs who depend on it.
  3. Other compelling circumstances. Indiana may recognize additional hardship situations beyond these baseline categories.

To apply, the estate administrator should contact FSSA OMPP's Medicaid Estate Recovery program in writing, explain the specific hardship circumstances, and attach supporting documentation (proof of income, property valuations, family circumstances). FSSA will review the application and issue a determination. If the waiver is denied, the estate administrator has the right to request a fair hearing.

Documentation quality matters in waiver applications. A well-prepared submission that clearly establishes the statutory hardship ground, with supporting evidence, gives the waiver the best chance. Legal assistance from an elder-law attorney is worth considering for complex situations.

How to Respond If You Receive a Claim

When an Indiana Medicaid recipient dies, FSSA's estate recovery program will typically learn of the death through state records. The estate administrator or executor should contact FSSA proactively to understand whether a recovery claim exists before distributions are made to heirs.

Contact information for FSSA Medicaid Estate Recovery:

Steps for the estate administrator:

  1. Notify FSSA of the recipient's death and request information about any outstanding recovery claim.
  2. Compile an inventory of probate assets and their values.
  3. If a mandatory protection applies (surviving spouse, child under 21, blind or disabled child), document and assert it to FSSA in writing.
  4. If a sibling or caregiver child protection applies, document the residency history and care provided.
  5. If hardship applies, submit a written waiver request with supporting documentation.
  6. Review any claim FSSA asserts to confirm it covers only qualifying LTSS paid for services at age 55 or older -- not Medicare Savings Program cost-sharing.
  7. If you disagree with the claim amount or a waiver denial, request a fair hearing within the deadline specified in the notice.

Probate should not close until FSSA's recovery position is settled. Distributing assets to heirs before a recovery claim is resolved can create liability for the estate administrator personally.

Frequently Asked Questions

It depends on how the home is held and whether any protections apply. If the home is in the deceased's sole name and passes through probate, FSSA may include it in a recovery claim. But recovery is completely blocked if a surviving spouse, a child under 21, or a blind or permanently disabled child is alive. The caregiver child and sibling protections can also apply to the home specifically. If none of those protections fit the situation, and the home passes through probate, FSSA may pursue recovery up to the amount of Medicaid LTSS benefits paid.

Yes. HCBS services delivered through Indiana Medicaid waivers, including PathWays for Aging, also qualify as LTSS subject to recovery. The relevant question is whether qualifying long-term services and supports were received at age 55 or older, not whether those services were provided in a nursing facility or at home. Both settings count.

The Miller Trust (Qualified Income Trust) is an eligibility tool that allows Indiana's income-cap Medicaid applicants whose income exceeds the monthly limit to route the excess into a trust. Assets remaining in the trust at the recipient's death are generally subject to state Medicaid payback as part of the estate recovery process. The estate administrator should be aware that FSSA's recovery claim may include amounts from the trust as well as from the broader probate estate. An elder-law attorney can help the administrator understand the trust's terms and how payback interacts with the recovery claim.

Yes, Indiana can file a TEFRA lien against the home of a permanently institutionalized recipient before death. The lien does not force a sale during the recipient's lifetime, but it encumbers the property. It will appear on a title search. The lien must be released if a qualifying protection applies (surviving spouse, minor child, disabled child, sibling with equity interest). If you believe a lien was filed in error or a protection applies, contact FSSA and consider legal assistance.

These are two separate rules that apply at different points in time. The look-back rule (at 42 USC Section 1396p(c)) applies before and during a Medicaid LTSS application: it reviews asset transfers made within 60 months before the application and can create a penalty period that delays eligibility. Estate recovery applies after the recipient's death: it seeks repayment from the probate estate for LTSS costs that Medicaid paid. Planning tools that reduce look-back exposure (like irrevocable Medicaid Asset Protection Trusts executed more than five years before application) can also reduce what passes through probate and is available for estate recovery. But each rule requires its own analysis.

The hardship waiver allows FSSA to reduce or eliminate recovery when it would cause undue financial hardship for the surviving household. The core qualifying situations are when the primary estate asset is the family's sole income source, or when the home is modest and the family would face genuine hardship from losing it. The estate administrator applies by contacting FSSA in writing with supporting documentation. FSSA issues a determination, and the administrator can request a fair hearing if the waiver is denied.

Indiana Medicaid estate recovery has real rules and real protections. Brevy's care navigator can help you understand which protections apply to your family's situation and connect you with an elder-law attorney in Indiana.

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Find personalized help understanding Indiana 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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