When a Medicaid recipient dies in Texas, the state can seek repayment from the person's estate. Texas runs one of the more family-friendly recovery programs in the country: it uses a probate-only definition, applies only to nursing-facility and home- and community-based services for people 55 and older, and won't pursue claims below $10,000. Understanding how that works can help families protect what they've built.
What Federal Law Requires
Every state Medicaid program must operate a Medicaid Estate Recovery Program (MERP). That requirement traces to the Omnibus Budget Reconciliation Act of 1993 (OBRA-93), codified at 42 USC § 1396p(b). The federal mandate is a floor, not a ceiling: states must recover at minimum from the estates of Medicaid recipients age 55 or older who received nursing-facility services, home- and community-based services (HCBS), and related hospital and prescription drug care.
States can expand beyond that floor. Texas does not. Texas elects the federal minimum, which means:
- Recovery applies only to the 55-and-older population.
- Only nursing-facility, HCBS, and related services are within scope (not routine primary care or pharmacy unrelated to long-term care).
- Only probate assets are reachable.
That last point is significant. Because Texas does not elect the "expanded estate" option under 42 USC § 1396p(b)(4)(B), assets that pass outside probate, including assets held in Transfer-on-Death accounts, joint tenancy with right of survivorship, payable-on-death bank accounts, and Lady Bird deeds, are generally not recoverable.
The $10,000 Texas Medicaid Estate Recovery Threshold
Texas HHSC will not open a recovery claim if:
- The total countable estate is $10,000 or less, or
- The total Medicaid long-term care costs paid are $3,000 or less.
Both thresholds are evaluated at the time of death. If either is met, HHSC closes the file. This protects a significant share of lower-value estates from any recovery action.
What Texas Medicaid Estate Recovery Can Reach
Subject to the threshold and categorical protections described below, Texas MERP can seek repayment from the probate estate of a Medicaid recipient 55 or older for:
- Nursing facility services paid by Medicaid.
- STAR+PLUS HCBS waiver services, including personal assistance services, adult day care, and home health.
- Related hospital and prescription drug services received in connection with nursing-facility or HCBS care.
Texas MERP does not recover for:
- Routine outpatient primary care, dental, or pharmacy benefits unrelated to long-term care.
- Medicare cost-sharing that Medicaid paid (QMB premiums and copays). The ACA § 6021 carve-out, effective 1/1/2010, prohibits recovery for those amounts.
- Services provided to Medicaid recipients under age 55.
- Long-term care partnership policy benefits up to the policy's payout amount.
Categorical Protections (No Recovery While These Apply)
Federal law, at 42 USC § 1396p(b)(2), bars recovery in five situations. All five apply in Texas:
Surviving spouse. Recovery is deferred until after the surviving spouse's death. This is a deferral, not a permanent waiver. After the spouse dies, HHSC may pursue recovery against assets that passed from the Medicaid recipient to the spouse and then to heirs.
Child under age 21. No recovery while any child of the Medicaid recipient is under 21.
Blind or permanently disabled child (any age). If the recipient's child is blind or permanently and totally disabled under the SSI standard (42 USC § 1382c), recovery is deferred for as long as that child lives and remains disabled.
Sibling with equity interest. No recovery against the home if a sibling of the deceased who holds an equity interest in the home lived there for at least one year before the recipient entered institutional care, and continues to live there.
Caregiver child. No recovery against the home while a son or daughter who lived in the home for at least two years before the recipient's institutionalization, and who provided care that delayed that institutionalization, continues to reside there.
These protections require documentation. Families relying on the caregiver-child or sibling protections should gather residency records (utility bills, voter registration, mail) and care records (physician statements, level-of-care assessments) before HHSC opens a file.
Lady Bird Deeds: Texas's Probate-Bypass Tool
Texas is one of five states (along with Florida, Michigan, Vermont, and West Virginia) that recognize Lady Bird deeds (enhanced life estate deeds). A Lady Bird deed lets the grantor:
- Retain full control over the property during their lifetime, including the right to sell, mortgage, or revoke the deed.
- Pass the property directly to named beneficiaries at death, outside probate.
Because the property passes outside probate, it generally is not part of the probate estate Texas MERP can reach. That makes a Lady Bird deed one of the most accessible estate-recovery-planning tools for Texas families who own a home.
A few caveats. The deed must be properly drafted and recorded before death. If the grantor sells the home during their lifetime, the proceeds become countable for Medicaid purposes. And because Texas operates a probate-only recovery program anyway, the deed's primary practical benefit is avoiding probate (and the recovery claim that flows through it), not shielding against an expanded-estate recovery program that Texas doesn't run.
An elder-law attorney familiar with Texas real property law can draft a Lady Bird deed for a fraction of the cost of a Medicaid Asset Protection Trust.
The Caregiver-Child Lifetime Transfer Exception
Separate from the post-death caregiver-child protection, federal law at 42 USC § 1396p(c)(2)(A)(iv) permits a lifetime transfer of the home to a qualifying caregiver child without triggering the 60-month Medicaid lookback penalty.
To qualify, the son or daughter must have:
- Lived in the recipient's home for at least two years immediately before the recipient entered institutional care, and
- Provided care that permitted the recipient to remain at home rather than enter a nursing facility.
If those conditions are met, a quitclaim deed transferring the home to the caregiver child before institutionalization does not create a transfer-penalty period. The home permanently exits the recipient's estate, and Texas MERP cannot recover against it.
This is a powerful tool. The key is timing: the transfer must occur before the parent enters a nursing facility, not after. Once the recipient is institutionalized, the (c)(2)(A)(iv) window has closed.
| Tool | How It Works | Effective in Texas? |
|---|---|---|
| Lady Bird deed | Passes real property outside probate | Yes (Texas recognizes Lady Bird deeds) |
| TOD/POD accounts | Pass bank/brokerage accounts outside probate | Yes (Texas is probate-only) |
| Joint tenancy (JTWROS) | Property passes to surviving co-owner outside probate | Yes (Texas is probate-only) |
| Caregiver-child transfer (lifetime) | Transfer home before institutionalization; no lookback penalty | Yes (federal exception, works in every state) |
| Medicaid Asset Protection Trust (MAPT) | Irrevocable trust removes assets from estate; 5-year lookback | Yes (most protective option for large estates) |
| Revocable living trust | Avoids probate | Yes (Texas is probate-only) |
Hardship Waivers
Federal law requires every state to provide a hardship-waiver process (42 USC § 1396p(b)(3)). Texas HHSC will waive or reduce a recovery claim when applying it would cause undue hardship.
Texas recognizes hardship in situations including:
- The property is the sole income-producing asset of the estate (family farm or business).
- The estate value is modest relative to the amount Texas would recover.
- Compelling personal or financial circumstances of surviving heirs.
To request a waiver, heirs must typically submit a written request to HHSC's estate recovery unit within 30 days of receiving the recovery notice. That 30-day window is short, so don't wait. If you receive a recovery notice, contact a legal aid organization or elder-law attorney promptly.
Free help is available statewide through the Texas Legal Services Center and Area Agencies on Aging (1-800-252-9240).
Frequently Asked Questions
No. Several conditions protect the home from recovery. If a surviving spouse, child under 21, or blind/disabled child lives there, recovery is deferred. A caregiver child who lived in the home for two-plus years before a parent's nursing home admission and provided qualifying care also gets a protection. And a properly executed Lady Bird deed means the home passes outside probate entirely, so Texas MERP has nothing to reach.
Texas will not pursue a recovery claim if the total countable estate is $10,000 or less, or if Medicaid paid $3,000 or less in covered long-term care costs. If either threshold applies, the file is closed with no claim.
Generally no. Texas uses a probate-only definition of "estate." Property held in joint tenancy with right of survivorship passes to the surviving co-owner outside probate. Texas MERP can only reach assets that go through probate.
Texas HHSC must file a claim within the probate creditor period, typically four years from the date of death under Texas Estates Code § 355.055 if no probate is opened. If a formal probate proceeding is opened, the standard creditor deadline applies. Heirs should not distribute estate assets until they confirm whether a MERP claim will be filed.
No. Estate recovery is a post-death program. Whether or how much Texas will recover after a person dies has no bearing on that person's Medicaid eligibility during their lifetime.
Learn More
- Texas Medicaid Eligibility and Income Limits
- How to Apply for Medicaid in Texas
- Will Medicaid Take Your House? Medicaid Estate Recovery Explained
- Medicaid Planning Strategies
Find personalized help understanding how Texas Medicaid estate recovery affects your family's home and estate 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.