Estate Recovery, Explained

Long-Term Care Medicaid pays for care while a person is alive. After they die, the state may try to get some of that money back from what they leave behind. This is called estate recovery, and the state program is often called MERP (Medicaid Estate Recovery Program). For many families, the home is the main asset involved. This guide explains what the rules require, what is protected and what families can expect.

Figures change periodically. Double-check current amounts before relying on them.

What federal law requires

Section 1917(b) of the Social Security Act requires every state to seek recovery from the estates of certain Medicaid recipients. States must recover the costs of:

nursing facility services,
home and community-based services, and
related hospital and prescription drug services

paid for a person who was 55 or older when they received the care.

States may also recover the cost of other Medicaid services for people 55 and older. And when a state has placed a lien during life on the home of a person of any age who was permanently in a nursing home or other medical institution, it must seek recovery from the estate or from the sale of that home.

What “estate” means

At a minimum, a state must recover from the probate estate: property that passes under a will or by state inheritance law.

States can choose a broader definition. Under the federal option, the estate can include any property the person had an interest in at death, including property that passes outside probate, such as:

jointly owned property with a right of survivorship;
life estates;
living trusts;
payable-on-death accounts.

Each state guide explains which definition the state uses.

Protections required by federal law

Recovery must wait

A state may not recover from the estate while any of these people is alive:

a surviving spouse;
a child under 21;
a blind or disabled child of any age.

When the surviving spouse dies, the state may then seek recovery from what is left of the first spouse’s estate (depending on state law).

Hardship waivers

Every state must have a process to waive recovery when it would cause undue hardship. States define undue hardship differently. Common examples include when the estate is a family farm or business that heirs depend on, or when an heir would become homeless or need public benefits.

Protections for the home in certain cases

When the state placed a lien on the home during the person’s life, it cannot recover from the home while certain relatives lawfully live there, such as:

a sibling who has an ownership share and lived in the home at least a year before the person entered the institution, and has lived there continuously since; or
a son or daughter who lived in the home at least two years before the person entered the institution, provided care that let them stay home, and has lived there continuously since.

Long-term care partnership protection

People who used a qualified long-term care partnership insurance policy may have assets protected from estate recovery equal to the benefits the policy paid. See Long-term care partnership policies.

Liens

Federal law allows two types of liens:

After death, a lien on the estate as part of recovery.
During life, a lien (often called a TEFRA lien) on the home of a person who is permanently in a nursing home and cannot reasonably be expected to return, after notice and a chance for a hearing. A lien during life cannot be placed if the spouse, a child under 21, a disabled child, or a qualifying sibling lives there. The lien must be removed if the person returns home.

Not all states use liens during life.

What recovery is limited to

The state can recover only what Medicaid paid for covered services, up to the value of the estate. It cannot recover more than what is in the estate. Heirs are not personally responsible for paying the Medicaid bill from their own money.

How the process usually works

Notice. After the recipient dies, the state is notified (often through the probate court or a required notice from the estate’s representative).
Claim. The state files a claim against the estate for the amount paid, often with a statement of services.
Deferral or waiver. If a surviving spouse or protected child is living, recovery is deferred. Heirs can apply for a hardship waiver.
Payment. If recovery goes ahead, the claim is paid from the estate, often after the home is sold.

States must give notice of the claim and an opportunity to request a hardship waiver.

Common examples

Example 1: surviving spouse. Henry received Long-Term Care Medicaid in a nursing home. He dies, survived by his wife, who lives in their home. The state cannot recover while she is alive. After her death, depending on state law, the state may seek recovery from what remains of Henry’s estate.

Example 2: single parent. Martha, a widow, received six years of nursing home care paid by Medicaid. She dies owning a home worth $200,000 and a $3,000 bank account. Her children are adults and not disabled. The state may file a claim for what Medicaid paid, up to the $203,000 estate value, subject to any hardship waiver.

Example 3: caregiver child. Leo’s daughter lived with him for three years and provided care that kept him out of a nursing home. She still lives in the home. The home is protected from recovery under the caregiver child rule.

Planning and estate recovery

Families sometimes use tools that affect what is in the estate, such as:

exempt transfers of the home (to a spouse, child under 21, disabled child, qualifying sibling or caregiver child);
Lady Bird deeds in states that recognize them and limit recovery to the probate estate;
irrevocable trusts set up well before care is needed, subject to the look-back.

These tools work differently in each state, and some can create look-back or tax problems if used wrongly. Any deed or trust must be prepared by an attorney. Many families work with a Certified Medicaid Planner (CMP) to understand how estate recovery fits with eligibility before choosing.

Common questions

Will my children have to pay my Medicaid bill? No. Recovery comes from the estate, not from heirs’ own money.

Can the state take the house while my spouse lives there? No. Recovery must wait until after the surviving spouse’s death.

Is regular Medicaid health coverage recovered too? For people 55 and older, states must recover long-term care costs and may recover other costs. Rules vary.

Can recovery be waived? Yes. Every state must have a hardship waiver process.

What families can do now

Learn your state’s rules. Does it limit recovery to the probate estate, or use a broader definition? Does it place liens during life?
Keep records of who lives in the home and for how long, in case a sibling or caregiver child protection applies.
Know the hardship waiver process and its deadline.
Talk as a family about what each person expects to happen to the home.
Get experienced help early, before a crisis, when more options are open.

Estate recovery and the spouse at home

Recovery must wait while a surviving spouse is alive. Many couples transfer the home to the spouse at home after the applicant is approved, which is allowed without penalty. The home is then the spouse at home’s property. Whether the state can later recover from the spouse at home’s estate for care paid for the first spouse depends on state law and its definition of “estate.” This is an area where state rules differ widely, so it is worth understanding your state’s approach.

Questions families ask after a death

Does the family have to pay the estate recovery claim out of their own money? No. Recovery comes from the deceased person’s estate, not from heirs’ own assets. Heirs are not personally liable for the debt.

What if the estate has other debts? Funeral expenses, administration costs and other debts are generally paid according to state probate law. The estate recovery claim takes its place among them.

How long does the state have to file a claim? It depends on state probate law and the state’s procedures. Families should respond promptly to any notice from the state.

Can the claim be negotiated? States can waive recovery for undue hardship and may agree to delay or settle a claim in some cases. Ask in writing, and keep copies.

What if no one opens a probate estate? Some states can open one to collect. Others rely on liens or other methods.

Last updated for 2026. General information only, not legal or financial advice. Medicaid Answers is a free educational resource published by Medicaid Answers Foundation.