Planning To Avoid Probate
Typically, Medicaid planning involves the development of a Medicaid Estate Recovery Program protection plan. Such protection plans will often include the execution of a general warranty deed to divest the Medicaid applicant of his real property interest. Alternatively, these protection plans may involve the execution of a Ladybird Deed or Transfer on Death Deed that will transfer the ownership of the real property after death without the need of probate court.
For a free legal consultation, contact us at 936-9620.
Categories:Kearney, McWilliams & Davis, an assumed name of Inception Law, PLLC. Principal offices located in Houston, Texas.
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The Type Of Assets That A Recipient Can Own And Still Be Medicaid
6:00 AM on Jul 5, 2020 CDT
MERP is the Texas Medicaid Estate Recovery Program. Its sole purpose is to seize money from the estates of deceased Medicaid recipients and then plop the recovered funds back into the states coffers. The government, acting through a contractor called Health Management Systems, Inc., does this by filing a claim in probate.
Why is this a prudent financial maneuver by the government? Because although Medicaid is a needs-based program, not every Medicaid recipient is a pauper. The type of assets that a recipient can own and still be Medicaid-eligible such as a homestead, an automobile and a retirement account can be valuable.
MERP claims can involve a significant amount of money. Long-term care alone for a Medicaid recipient can run into hundreds of thousands of dollars.
Large government claim, finite probate assets the result is that a successful MERP claim can end up wiping out the value of a probate estate. The government wins and the probate estates distributees lose.
The Texas version of MERP plays as follows.
A MERP claim is limited to Medicaid monies paid on your behalf after you reach the age of 55, and then only if your Medicaid application was filed on or after May 1, 2005.
HMS can only recover a MERP claim after you die, and then only against the assets that go through your probate estate.
Name a beneficiary on your accounts. Ownership of the account goes directly to the beneficiary when you die.
What Is The Medicaid Estate Recovery Program In Texas
The Texas version of MERP plays as follows.
A MERP claim is limited to Medicaid monies paid on your behalf after you reach the age of 55, and then only if your Medicaid application was filed on or after May 1, 2005.
HMS can only recover a MERP claim after you die, and then only against the assets that go through your probate estate.
The loophole? There is no recovery against assets that do not go through your probate estate. It only takes a bit of planning on your part to protect your assets.
A few popular tactics:
- Name a beneficiary on your accounts. The ownership of the account will go directly to the beneficiary when you die.
- Establish a Revocable Living Trust. The assets that pass through a revocable living trust are non-probate assets. When you die, your trustee will distribute the assets to the beneficiaries.
- Sign a Lady Bird Deed for your homestead. This transfers the ownership of your home at the moment of your death.
There is a lot of fine print to the MERP law, and a lot to consider before you implement a plan. Remember the big picture and do not jeopardize your Medicaid eligibility by trying to protect assets. For example, through a quirk in the law, if you put your house into your trust during your lifetime then it becomes a countable asset for Medicaid purposes. And beware: tactics that are available for a single person may not work for a married couple.
This column does not constitute legal advice.
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Who Does Merp Affect
This program will affect only long-term care services and supports you receive after the age of 55, and only if you first applied for these services after March 1, 2005. If you applied for these services before March 1, 2005, MERP does not affect you.
If you were on an interest list for services before that date but did not complete an application for services until after March 1, 2005, MERP does affect you.
The following services and programs are affected by MERP:
- Nursing facility care
- Intermediate Care Facility for Individuals with an Intellectual Disability or Related Condition
- The following Medicaid waiver programs:
- Community Attendant Services
- Community Living Assistance and Support Services
- Consolidated Waiver Program
- Deaf-Blind with Multiple Disabilities
- Home and Community-based Services
- Integrated Care Management
- STAR+PLUS
- Texas Home Living
MERP also affects the costs of certain hospital and prescription drug services you receive. Primary Home Care is not affected by MERP.
If you are not sure whether MERP applies to the services you currently receive or will be receiving, you should ask your Health and Human Services case manager.
Medicaid managed care enrollees should contact their health plan service coordinator for further information.
How Will Heirs Or Personal Representatives Find Out If The State Will File A Claim
The estate recovery contractor will send a Notice of Intent to File a Claim within 30 days of when they receive notice of the death of a Medicaid recipient. The NOI will be mailed to the decedent’s estate representative, guardian, power of attorney or family members who have acted on behalf of the recipient, if their name and address are known. The NOI will include information on the program, a list of questions for you to complete and return, and an undue hardship waiver request form.
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Are You Facing A Merp Claim
If the state does file a claim, then your family could lose everything from insurance policies to pension plans. However, with the proper legal guidance, you may be able to minimize the financial effects on the estate.
For more than 25 years, the attorneys at Wright Abshire have dedicated their practice to estate planning with a special emphasis in Medicare and Medicaid issues. In many cases, we are able to work out an agreement that benefits you and your family, while satisfying the states needs.
Beware The Merp Texas Offers Huge Loophole To Recovery Program
MERP is the Texas Medicaid Estate Recovery Program. Its sole purpose is to seize money from the estates of deceased Medicaid recipients and then plop the recovered funds back into the states coffers. The government, acting through a contractor called Health Management Systems, Inc. , does this by filing a claim in probate.
Why is this a prudent financial maneuver by the government? Because although Medicaid is a needs-based program, not every Medicaid recipient is a pauper. The type of assets that a recipient can own and still be Medicaid -eligible such as a homestead, an automobile, and a retirement account can be valuable.
MERP claims can involve a significant amount of money. Long- term care alone for a Medicaid recipient can easily run into the hundreds of thousands of dollars.
Large government claim, finite probate assets the result is that a successful MERP claim can end up wiping out the entire value of a probate estate. The government wins and the probate estates distributees lose.
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Texas Deeds And Medicaid Asset Protection
Several types of deeds are used in Texas for estate planning purposes. Transfer-on-death deeds, lady bird deeds, and traditional life estate deeds can all transfer real estate at a persons death while retaining a right to use the property during the persons life. These types of deeds avoid probate and have important Medicaid planning benefits.
Understanding Medicaids Estate Recovery Program & How To Protect The Home
What is the Medicaid Estate Recovery Program?
Medicaids estate recovery program, abbreviated as MERP or MER, is a program through which a states Medicaid agency seeks reimbursement of all long term care costs for which it paid for a Medicaid beneficiary. This includes nursing home care, home and community based services to prevent premature institutionalization, and hospital / prescription drug costs related to long term care. Medicaids estate recovery follows the Medicaid recipients death, and it is through his / her remaining estate that the Medicaid agency attempts repayment.
Ones estate might include cash, checking and savings accounts, stocks and bonds, remaining funds in a qualified income trust and / or irrevocable funeral trust, a vehicle, and any other items of value. In most cases, ones home is the last remaining asset of any real value from which Medicaid can seek reimbursement. This might come as a bit of surprise since the home is generally exempt from Medicaids asset limit. To be clear, unless planning strategies have been implemented, ones home is often not safe from Medicaid estate recovery. Learn more here. Generally speaking, a life insurance policy is safe from estate recovery if a beneficiary is named other than ones estate.
How Does MERP Work?
Can Medicaid Put a Lien on the Home?
A lien cannot be put on a Medicaid recipients home if one of the following relatives lives in it:
Does MERP Differ Based on the State?
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Medicaid Estate Recovery Program: The New Death Tax
by The Garrett Law Firm | Oct 12, 2021 | Long-term care
Texas has no estate tax. Texas has no inheritance tax. The federal estate tax exemption for a married couple has risen to $23.4 million. But many of us will pay a death tax called the Medicaid Estate Recovery Program.
We all pay into Social Security and Medicare with every paycheck. None of us pays into Medicaid. In 1965, when Medicare and Medicaid were created, the average American male lived to 66 the average American woman to 73. Only a small number of people were expected to need Medicaid long-term care. Paying for it from the general tax revenues seemed reasonable.
Now those of us who make it to 65 can expect to live, on average, another 25 years. For six to eight of those years, we will need significant physical help. For three to four we need help with mental tasks.
That costs money. Whether they are facing their own retirement or raising the next generation, family can only do so much.
To keep the nation from going broke paying for our long-term care, Congress now requires every state to have a Medicaid Estate Recovery Program. Medicaid is a loan from your fellow taxpayers. The Medicaid Estate Recovery Program is a new death tax.
Those who die with more than $22.8 million generally have a way to get around paying the federal estate tax, or most of it.
What Kinds Of Medicaid Services Are Subject To Merp
The MERP program can recover the cost of long-term care provided through a nursing home state supported living center Medicaid 1915c waiver programs such as Deaf Blind with Multiple Disabilities, Home and Community-based Services, Texas Home Living Program, STAR+PLUS and Community Attendant Services. MERP also includes hospital care and prescription drugs received under these services. Primary Home Care services are not subject to MERP.
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Hhsc / Medicaid Estate Recovery Program
Alias:
- Area Served:Atascosa, Bandera, Comal, Frio, Gillespie, Guadalupe, Karnes, Kendall, Kerr, McMullen, Medina, Wilson, Bexar
- Fees:Please contact provider for fee information.
- Application Process:Call or visit website for additional information.
- Eligibility Requirements:Please call service provider or visit website to learn more about eligibility requirements.
- Payment/Insurance Accepted:Please contact provider for accepted forms of payment.
- ADA Access:Please contact facility for accessibility information.
The Question You May Not Have Asked
It is a well established technique for your Medicaid Attorney in The Woodlands to exempt your home as a resource for the purpose of establishing Texas Medicaid eligibility. This means that in many cases a you can keep your home during your lifetime without having to sell it. Your Medicaid attorney can also prevent the HHSC from counting the home against you as an asset in excess of the $2,000 limit. The question most people do not consider is this: what happens when you pass away after having received Texas Medicaid nursing home benefits?
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What Is Medicaid Estate Recovery
People who do not have the money to pay for nursing home care may qualify for Medicaid to pay for it. However, when they die, the government may try to recover what it spent through Medicaid estate recovery. Through this program, the government may force your home to be sold so that it can recoup some of its money. Planning can help you to make certain that your home will go to your family instead of to the state.
Are There Times When The State Will Not Ask For Money Back
Yes, the state will not ask for money when:
- There is a spouse who is still alive.
- There is a child under 21 years of age.
- There is a child of any age who is blind or permanently and totally disabled under Social Security requirements.
- The value of the estate is $10,000 or less.
- The amount of Medicaid costs is $3,000 or less.
- There is an unmarried adult child who lived full-time in the Medicaid person’s home for at least one year before this person died.
- The cost of selling the property is more than the property is worth.
Also, the state will not ask for money when this would cause an undue hardship for the heirs.
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How Can You Get More Information On Medicaid Estate Recovery
For general information on this program call Consumer Rights and Services toll-free at 800-458-9858, option 8. This line is answered 8 a.m.-5 p.m., Monday through Friday. Voicemail is available 24 hours a day. You also may email questions to .
HHS contracts with HMS for the administration of the Medicaid Estate Recovery Program. For information regarding a specific case, call HMS toll-free at 800-641-9356.
Upon receipt of a clearance letter from HMS, estate representatives of deceased Medicaid recipients should contact HHS Long-term Care Provider Services by calling 512-438-2200, option 4. Long-term Care Provider Services determines if there are other outstanding Medicaid claims against the estate that may be recoverable through other assets and if HHS is the residual beneficiary of the assets. Examples of assets potentially payable to HHS include trusts, annuities, torts and non-Medicaid insurance coverage.
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When Are Merp Claims Possible
Are you worried that a MERP claim may be filed against the estate after your loved one passes? There are guidelines that can tell you whether or not your loved one is eligible for this process. For instance, the state can only make a claim for Medicaid services received after the age of 55 and after March 1, 2005 .
Claims may be filed for services such as:
- Nursing and long-term care facilities
- Hospital stays
- Waiver programs
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Avoiding Medicaid Estate Recovery Program
If the Medicaid Estate Recovery Program can only enforce its claim against the Medicaid recipients estate in probate court, then the solution to avoiding the Medicaid Estate Recovery Program is to avoid probate court. Without proper estate planning, however, avoiding probate is often difficult to accomplish when someone dies owning real property. Medicaid applicants sometimes attempt to avoid the need for probate by divesting themselves of any real property interests prior to dying. However, transferring property to someone else may cause transfer penalties when applying for Medicaid and could potentially prevent the applicant from receiving benefits. Therefore, professional guidance is often required to ensure that no transfer penalties are applied, that the Medicaid applicant leaves behind no probate estate, and that the Medicaid Estate Recovery Program can be avoided. While some prefer to rely on the statutory exemptions to a Medicaid Estate Recovery Program claim, such as a surviving spouse living in the property or the propertys value is less than $10,000, among a few other exemptions, others enjoy the peace of mind in knowing that the Medicaid Estate Recovery Program cannot enforce their claim.
Are There Any Exceptions To Merp
Yes. MERP does NOT apply where there is:
- a surviving spouse, or a surviving child under 21 years of age
- a surviving child of any age who is blind or has a disability
- an unmarried adult child residing continuously in the Medicaid recipients homestead for at least one year before the recipients death or
- a surviving child of any age who is blind or visually impaired and is totally disabled as defined by Social Security requirements.
Additionally, MERP does NOT apply where:
- the value of the estate is $10,000 or less
- the recoverable amount of Medicaid is $3,000 or less
- the cost of selling the property would be equal to or greater than the property’s value.
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How Can I Get More Information On Medicaid Estate Recovery
HHSC contracts with Health Management Systems, Inc. for the administration of the Medicaid Estate Recovery Program. For information regarding a specific case, call HMS toll-free at 800-641-9356 or email: .
Upon receipt of a clearance letter from HMS, estate representatives of deceased Medicaid recipients should contact HHSC Provider Recoupments and Holds department by calling 512-438-2200, option 4. HHSC Provider Recoupments and Holds department determines if there are other outstanding Medicaid claims against the estate that may be recoverable through other assets and if HHS is the residual beneficiary of the assets. Examples of assets potentially payable to HHS include trusts, annuities, torts and non-Medicaid insurance coverage.
If you have a problem or complaint you should first discuss it with the MERP program. Many times, they can explain specific policies or correct the problem immediately. If your problem or complaint is not resolved to your satisfaction, you can contact the HHS Office of the Ombudsman by calling 877-787-8999 or by making an online submission.
