Medicaid Estate Recovery Program (MERP)
What Is the Medicaid Estate Recovery Program (MERP)?
The Medicaid Estate Recovery Program, also known as MERP or MER, is a federal requirement that states must attempt to recover the cost of long-term care services paid for certain Medicaid recipients. This can include nursing home care, Home and Community-Based Services (HCBS), and related hospital or prescription costs tied to long-term care. Recovery happens after the Medicaid recipient passes away, usually through assets in their estate—most often their home.
While the home is exempt during a person’s lifetime for Medicaid eligibility purposes, it is not automatically protected from MERP after death unless specific planning steps are taken beforehand. Other estate assets that can be subject to recovery include bank accounts, stocks, vehicles, and any remaining funds in trusts such as a Qualified Income Trust or Irrevocable Funeral Trust.
How Does Medicaid Estate Recovery Work After Death?
After a Medicaid recipient’s death, the state Medicaid agency typically sends a notice to the executor or surviving family members indicating its intent to recover costs. The agency can only collect up to the amount it spent on care. For example, if Medicaid paid $153,000 and the estate is worth $300,000, the state can recover $153,000.
Most states recover from the recipient’s probate estate—assets that go through the court-supervised probate process. Some states also have an “expanded estate recovery” definition, which includes certain jointly owned property, life estates, and assets in living trusts.
Can Medicaid Place a Lien on a Home?
Yes, Medicaid may place a lien on a home if the recipient is permanently institutionalized (for example, living in a nursing facility without expectation of returning home). This lien ensures Medicaid is repaid before the home can be sold. Under federal law, certain family members living in the home—such as a spouse, minor child, disabled child, or a sibling with equity interest—prevent a lien from being placed.
Do Estate Recovery Rules Vary by State?
Yes, each state has its own MERP regulations within federal guidelines. Some states won’t recover if the estate value or Medicaid costs are below a certain threshold, and others differ on whether they pursue recovery after the death of a surviving spouse. States also vary on whether they recover from probate-only assets or use the expanded estate definition.
Which States Use Probate-Only vs. Expanded Estate Recovery?
| Probate-Only States | Expanded Definition of Estate States |
|---|---|
| Alaska | Alabama |
| California | Arizona |
| Colorado | Arkansas (limited) |
| Delaware | Connecticut |
| Florida | Georgia |
| Hawaii | Idaho |
| Illinois | Indiana |
| Louisiana | Iowa |
| Maryland | Kansas |
| Massachusetts | Kentucky |
| Michigan* | Maine |
| Missouri | Minnesota |
| New Mexico | Mississippi |
| New York | Montana |
| North Carolina* | Nebraska |
| Oklahoma | Nevada |
| Pennsylvania | New Hampshire |
| Rhode Island | New Jersey |
| South Carolina | North Dakota |
| Tennessee | Ohio |
| Texas | Oregon |
| Vermont | South Dakota |
| Washington DC | Utah |
| West Virginia | Virginia |
| Washington | |
| Wisconsin | |
| Wyoming |
*Michigan and North Carolina use expanded recovery for certain Long-Term Care Partnership Program participants.
When Is Medicaid Estate Recovery Not Enforced?
Federal law prevents recovery in certain situations, including when:
- A surviving spouse is still living
- A child under 21 lives in the home
- A blind or disabled child (any age) is a survivor
- A sibling with equity interest lived in the home at least one year before institutionalization
- An adult child lived in the home for at least two years before institutionalization and provided care that delayed nursing home placement
What Is the Undue Hardship Waiver?
The Undue Hardship Waiver allows states to waive estate recovery if enforcing it would cause significant hardship to the heirs. Examples include when the property is a family’s sole source of income (such as a farm) or the home is of modest value. Rules and deadlines to apply vary by state—often 30–60 days from the notice of intent to recover.
How Can You Protect Assets from Medicaid Estate Recovery?
Options vary by state, but strategies can include:
- Using a Ladybird Deed or life estate deed to transfer property outside probate
- Transferring the home under the Sibling Exemption or Child Caregiver Exception (if requirements are met)
- Structuring ownership so that assets avoid probate entirely in probate-only states
- Establishing a Medicaid Asset Protection Trust well before applying for benefits
Because rules differ widely, it’s best to consult with a Certified Medicaid Planner who understands state-specific laws and can help design a protection strategy.
