Texas Medicaid Estate Recovery 2026: Will MERP Take the House?

Texas Medicaid estate recovery is how the state seeks repayment, after a Medicaid recipient dies, for the long-term care it paid for. The good news for most Texas families is that the program is one of the most protective in the country: Texas reaches only the probate estate, only for people who were 55 or older when they got care, and it does not file a claim at all when the estate is worth $10,000 or less. Knowing how the Medicaid Estate Recovery Program (MERP) works, and what it cannot touch, is how you protect the home your family has built.1

What Federal Law Requires, and What Texas Chooses

Estate recovery is not a Texas invention. Every state has to run one, because federal law (42 U.S.C. 1396p(b), enacted by the Omnibus Budget Reconciliation Act of 1993) tells every Medicaid program to recover from the estates of people who were 55 or older when they received nursing facility services, home and community-based services, and related hospital and prescription drug care.2

What varies is how far a state goes beyond that floor. The federal rules let a state expand recovery to assets that pass outside probate, such as joint property, life estates, and living trusts. Texas does not take that option. In Texas, "estate" means the probate estate, and nothing more. That single choice is why so much careful planning works here that would fail in a state with an expanded program.1,2

Federal law also carves out one category of spending that no state may recover: the Medicare premiums, deductibles, and copays that Medicaid paid for people enrolled in a Medicare Savings Program. Those Qualified Medicare Beneficiary costs are off the table everywhere, Texas included.3

The rest of this guide walks through how the Texas program actually works: what it can reach, the dollar thresholds that protect smaller estates, the family members whose presence stops a claim cold, the planning tools that move a home out of reach, and the deductions and hardship waivers that can shrink or erase a claim that does get filed.

What Texas Medicaid Estate Recovery Can Reach

Texas runs MERP under Chapter 373 of the Texas Administrative Code, the rules that spell out every step of the program. Under those rules, the state may file a claim only when two things are both true: the person was age 55 or older when the care was provided, and they first applied for covered long-term care services on or after March 1, 2005. Someone who received Medicaid only before age 55, or only for care outside the covered categories, leaves nothing for MERP to claim.1

The covered categories are long-term care, not routine medical care. MERP can seek repayment for:1

• Nursing facility services.
• Care in an Intermediate Care Facility for Individuals with an Intellectual Disability or Related Conditions (ICF/IID).
• Home and community-based waiver services and Community Attendant Services, including the kind of in-home long-term care delivered through STAR+PLUS.
• The related hospital and prescription drug costs tied to that long-term care.

What MERP does not touch is just as important. It does not recover for routine primary care, dental visits, or pharmacy benefits that have nothing to do with long-term care. It does not recover the Medicare cost-sharing described above. And it never reaches care given to someone under 55.1,3

The $10,000 Threshold: When Texas Will Not Bother

One of the most reassuring rules in the whole program is that Texas does not chase small estates. The state files a claim only when doing so is cost-effective, and its own rules (1 TAC §373.215) define exactly when it is not. A claim is not cost-effective, and so will not be filed, if any one of these is true:1

• The value of the recoverable estate is $10,000 or less.1
• The recoverable amount of Medicaid costs is $3,000 or less.1
• The cost of selling the property would equal or exceed what the property is worth.1

Because Texas counts only the probate estate, a family with a home that passes by deed and bank accounts that pass to named beneficiaries can easily fall under the $10,000 line even when the household is far from poor. For many Texas families, this threshold alone ends the matter.1

One change to watch: in March 2026 the state proposed raising these figures to $15,000 and $5,000 to keep pace with inflation. As of mid-2026 that was still a proposed rule, not yet adopted, so the current thresholds remain $10,000 and $3,000. If your situation sits near the line, confirm the figure in force when the notice arrives.1

Texas Medicaid Estate Recovery Exemptions: Family Members Who Stop a Claim

Some Texas families are protected not by the size of the estate but by who survives the recipient. The MERP rules (1 TAC §373.207) bar the state from filing any claim while certain relatives are living or living in the home. Think of these less as paperwork and more as people whose presence simply turns the program off.1

A surviving spouse stops recovery. So does a child under 21. A child of any age who is blind or disabled under the federal SSI standard stops it too, for as long as that protection applies. And in a rule that matters enormously for caregiving families, an unmarried adult child who lived continuously in the parent's homestead for at least one year before the death keeps the home out of reach.1

If your family is counting on one of these protections, the time to assemble proof is now, not after a notice arrives. Utility bills, voter registration, mail, and a driver's license tied to the address all help establish that an adult child truly lived in the home. The protection is real, but it is the family that has to show it applies.1

Keeping the Home Out of Probate

For families whose loved one has assets but no protected survivor, the most powerful move is the simplest one: keep the home and accounts out of probate in the first place. Because MERP reaches only the probate estate, anything that passes by another route generally passes free of any claim. This is where the worry about losing the house usually gets resolved.1

The everyday tools Texas families use are:

• A Lady Bird deed (an enhanced life estate deed), which lets the owner keep full control of the home during life, including the right to sell or change their mind, and then passes it directly to named beneficiaries at death, outside probate. Because the home never enters the probate estate, MERP has nothing to file against.1
• Transfer-on-death and pay-on-death designations on real estate, bank accounts, and brokerage accounts, which carry those assets straight to a beneficiary.1
• Joint ownership with right of survivorship, which passes property automatically to the surviving co-owner.1
• A revocable living trust, which holds title through and after death so the assets never pass through probate.1

A few cautions keep these tools from backfiring. A Lady Bird or transfer-on-death deed has to be properly drafted and recorded before death to work. Selling the home during the recipient's life turns it back into countable cash for Medicaid eligibility. And these moves avoid the recovery claim, but they do not by themselves cure a problem created during the Medicaid application, where the separate transfer-penalty rules still apply. A Texas elder-law attorney can match the right tool to your situation, often for a fraction of the cost of a more elaborate trust.

The Caregiver-Child Transfer That Moves the Home During Life

There is one more route that solves the problem before estate recovery is ever in the picture. Federal law (42 U.S.C. 1396p(c)(2)(A)(iv)) lets a parent transfer the home, during life, to an adult son or daughter who lived in the home for at least two years immediately before the parent entered a nursing facility and who provided care that kept the parent out of that facility. When those conditions are met, the transfer does not trigger a Medicaid transfer penalty.3

Once that transfer is done, the home belongs to the caregiver child. It is no longer in the parent's estate, so when the parent dies there is nothing for MERP to reach. The catch is timing: the transfer has to happen before the parent enters the nursing facility, not after. A caregiving child who has carried this load for years should talk to an elder-law attorney early, while the window is still open.3

Deductions and Hardship Waivers When a Claim Is Filed

Even when MERP does file a claim, two more layers of protection can shrink it or wipe it out. Both run on a 60-day clock from the state's Notice of Intent to File a Claim, so the single most important thing a family can do is respond promptly rather than set the notice aside.

First, the rules (1 TAC §373.213) let heirs deduct real costs they carried. Necessary and reasonable home-maintenance expenses and taxes, such as property taxes, insurance, utilities, and repairs, come off the claim with documentation. So do the reasonable costs of care that kept the recipient at home and delayed their move into a facility. These deductions are submitted in writing within 60 days of the notice.1

Second, Texas grants undue hardship waivers (1 TAC §373.209) when recovery would cause real harm. The most important category for ordinary families is the homestead: the state exempts the home from recovery when its tax-appraisal-district value is under $100,000 and the heirs inheriting it are lineal heirs (children, grandchildren) whose gross income is below 300% of the federal poverty level. Other hardship grounds include a property that is the family's main source of income, like a farm or small business. A waiver request must reach MERP within 60 days of the notice, and the state issues its decision within 40 days of receiving a complete request.1

If a notice arrives and you are unsure which protection fits, get help before the 60 days run. Free legal aid is available statewide, and an elder-law attorney can often identify a deduction or waiver that the family would have missed.

Learn More

Find personalized help understanding how Texas estate recovery affects your family's home 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.