This article about Medicaid Estate Recovery in Texas by Texas estate planning and Medicaid attorney Joy McNair and the McNair Law Group, PLLC, should not be construed as legal advice. It is for informational purposes only. For advice specific to your situation, contact us today.

If you or a loved one own a Texas home, you might wonder if Medicaid can take your house. The short answer is yes, but it isn't that simple.

The good news is that there are ways to protect your home from estate recovery. In this blog post, we'll cover everything you need to know about Medicaid estate recovery in Texas, including what it is, how it works, and how to avoid it.

As we grow older, healthcare costs inevitably increase. In most cases, this can lead to significant costs that hinder our retirement savings and leave us in difficult financial situations.

Medicaid Benefits Help Many Families Pay For The Care They Need As They Age

If you or a loved one end up needing nursing home care or long-term care services, that's where Medicaid comes in handy. It's a federally and state-funded program that offers affordable healthcare to eligible low-income individuals and families, including older adults.

Many individuals in Texas, even ones that weren't expecting to, rely on Medicaid benefits, which are paid as a government-funded healthcare program. However, there is a lot of fear and uncertainty regarding estate recovery, especially around whether the government or nursing home can take someone's home.

This is why many people ultimately ask, "Can Medicaid take my house in Texas?"

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How Does the Medicaid Estate Recovery Program in Texas Work?

Medicaid Estate Recovery Program (MERP) is the process by which the state of Texas can "recover" the cost of benefits paid to a Medicaid recipient who has passed away. This "recovery" comes from collecting funds from the individual's estate after death.

In other words, if you were a Medicaid beneficiary during your lifetime, the state can try to recoup those Medicaid costs from your estate (which includes your home), as they hold an equity interest in the home from providing Medicaid services to you.

Ultimately, it is a legal process in which the state collects unpaid medical bills from a Medicaid recipient's estate. In Texas, the state can recover from the estate of a deceased Medicaid recipient who was 55 years of age or older at the time they received benefits, or who had a permanent institutional stay.

Simply put, Medicaid holds an equity interest in a Medicaid recipient's home, and can try to collect the money it spent on your healthcare in any form, including in the nursing home, from your house or any other assets you leave behind after you pass away.

What Is The Time Limit for Estate Recovery in Texas?

It's important to note that Texas has a time limit for Medicaid estate recovery.

As of September 1, 2021, the state must file a claim for estate recovery within 30 months after the death of a Medicaid recipient. In other words, When a Medicaid recipient dies, the state has 30 months from the date of their death to file a claim against their estate.

This means that if you're worried about estate recovery in Texas, you have up to 30 months after the recipient's death to worry about whether or not there will be an estate recovery claim.

What Are The Limits To The Estate Recovery Program?

That being said, the amount that can be recovered may be limited.

In Texas, there is a five-year look-back period for the Medicaid estate recovery program . This means that the state can only recover funds from an estate for benefits received in a nursing home or for other care during the five-year period prior to the individual's death.

Additionally, the state can only recover up to the amount of benefits the state paid out to a Medicaid beneficiary during their lifetime. If someone received benefits for longer than five years before their death, those years aren't counted.

Certain Circumstances Can Provide Additional Exemptions

Additionally, Medicaid can only recover its expenses from the deceased individual's estate that incurred on or after their 55th birthday. Texas law provides some exemptions and exceptions that may help you avoid estate recovery, including if you have surviving minor children or a surviving spouse or have designated a homestead as exempt property. However, the rules can be complex and may differ depending on your situation.

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How Do I Avoid Estate Recovery in Texas?

Now that you understand what estate recovery is and when it can occur, it's time to discuss how to avoid it in Texas. There are several strategies you can use to protect your estate from recovery, including:

1. Asset protection trusts: An asset protection trust can be used to transfer ownership of assets to an irrevocable trust, thus removing them from your estate. An added benefit of this trust is that it allows you to sell the home if desire and protect the proceeds from the sale of the home.

2. Gifting: Giving away assets as gifts can reduce the size of your estate, thus reducing the potential amount subject to estate recovery. However, caution should be tsken when gifting as it could trigger a penalty (a period that Medicaid will not cover the cost of care)/

3. Life estate deeds: Transferring property ownership with a life estate (lady bird) deed can also reduce the value of the asset limit fair market value of the property subject to recovery.

Our office can help with any and all of these things, and more. Contact us today!

Can You Gift Your Home To Someone Else To Protect From The Nursing Home?

This is a commonly held belief, that all you need to do is give your home to someone else and that is how you protect it.

While there are legal ways to accomplish this, it isn't as simple as just giving it away. The rules are very strict, and you could end up worse off if you don't follow them!

Strategies a qualified attorney can help you with

With the assistance of a qualified attorney, here are some strategies to consider:

- Gift assets: You can gift your assets, including your house, to your heirs before you apply for Medicaid. However, keep in mind that Medicaid has a five-year lookback period, meaning any asset transfers you've made within five years of your application may impact your eligibility for Medicaid.

- Irrevocable trust: You can transfer your assets to an irrevocable trust at least five years before you apply for Medicaid to protect them from estate recovery. The trust needs to be set up correctly, and you cannot revoke it once you've transferred assets.

- Life Estate Deed: A Life Estate (Lady Bird) Deed can give your house to your heirs upon your death, bypassing probate altogether. It allows you and living spouse to retain ownership equity interest and control of the property throughout your lifetime, and after your death, the beneficiaries automatically inherit the property without going through estate recovery.

Important: Consult with a Medicaid planning attorney!

Estate planning can be complicated, especially when it comes to protecting your assets and qualifying for Medicaid. Consulting with a Medicaid planning attorney can help you understand your options and put a plan in place that aligns with your goals.

What strategies are NOT recommended?

One way is to transfer your home ownership to a trusted family member or friend. This can be done through a transfer-on-death deed or a living trust.

Another option is to make your home "unavailable" to the state by taking out a reverse mortgage or purchasing a "life estate" interest.

It's important to note that these strategies can be complicated, so it's best to consult with an estate planning attorney familiar with Texas's Medicaid laws.

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Protect Your Home From The Nursing Home and Medicaid: We Can Help

In conclusion, when it comes to Medicaid estate recovery in Texas, there are many things to keep in mind. Protecting your home from nursing home poverty is a complex process, but there are ways to protect your home from being taken by the state of Texas.

The key is to plan and consult with an attorney who can help you navigate the laws and regulations surrounding Medicaid and estate planning. Remember, your home is likely your biggest asset, so taking steps toward protecting it for the long-term care of yourself and your loved ones is important. That's where we come in!

Our office has the legal know-how to protect your home from Medicaid and nursing home poverty.

Understanding the ins and outs of estate recovery and taking proactive steps to protect your assets can help alleviate many of your fears. You can take control and reduce or eliminate the potential amount subject to recovery.

The bottom line?

Medicaid can take your house in Texas, but their right to recover medical expenses has limitations, and it is avoidable with the right help. It's essential to have a strategic plan in place if you want to protect your assets from estate recovery and ensure your heirs inherit them.

The best way to avoid negative consequences is to educate yourself and seek guidance from our office. Remember, the sooner you start Medicaid planning, the more options you have to meet your unique circumstances and needs.