Medicaid Estate Recovery Program (MERP): What Families Need to Know

Your parent spent their final years on Medicaid. They qualified because they had almost nothing left — liquid assets depleted, income below the threshold, dignity stretched thin by the eligibility process itself.

Then they die, and the state sends a letter explaining that it intends to recover the cost of their care from their estate. The primary target: the family home.

How MERP Works

Federal law (42 U.S.C. § 1396p(b)) requires every state to operate an estate recovery program. The mandate covers Medicaid expenditures for nursing facility services, home and community-based services, and related hospital and prescription drug costs provided to individuals who were 55 or older at the time of service, or who were permanently institutionalized regardless of age.

The mechanism varies by state. Some file claims against the probate estate. Others place liens on real property during the beneficiary's lifetime or after death. A handful use expanded estate definitions that reach assets outside of probate — joint accounts, life estates, trusts — depending on state law.

The result for families is the same: a home that may have been an excluded asset for Medicaid eligibility while the beneficiary was alive can become vulnerable to recovery after death.

The Exemptions That Protect You

MERP has mandatory federal protections. States may not recover from the estate while a surviving spouse is alive, or if the deceased has a surviving child under age 21 or a blind or disabled child of any age:

• Surviving spouse: The state cannot pursue recovery while a surviving spouse is alive, regardless of whether the spouse lives in the home. This is the most common and most powerful protection.
• Child under 21: Recovery is barred if the deceased has a surviving child under age 21.
• Blind or permanently disabled child: A surviving child of any age who is blind or permanently and totally disabled blocks recovery.

Beyond the mandatory protections, federal law requires states to establish procedures for waiving estate recovery when it would cause an undue hardship. The waiver process requires an application, and the qualifying criteria and approval standards are state-specific. The option exists even when no mandatory exemption applies.

State-specific caps also matter. Georgia, for example, protects the first $25,000 of an estate's value from recovery. Other states have similar thresholds or limit recovery to specific categories of Medicaid spending.

What Families Get Wrong

Assuming the home is safe because it was exempt during the person's lifetime. A home may be excluded for Medicaid eligibility while the beneficiary is alive. After death, it may be subject to recovery depending on what counts as part of the estate under state law, unless an exemption or hardship waiver applies.

Transferring the home after learning about MERP. The five-year Medicaid look-back addresses certain asset transfers made before applying for long-term-care benefits; it is separate from estate recovery after death. Transferring property after death does not necessarily avoid a claim against assets included in the estate.

Ignoring the claim letter. The state's recovery claim is a legal process. Ignoring a notice can cause you to miss the deadline to assert an exemption or apply for a hardship waiver. Follow the notice instructions and ask the state recovery unit about the response deadline.

Not knowing the claim is negotiable. Estate recovery programs operate within state budgets and administrative capacity. Some states accept reduced settlements, payment plans, or voluntary partial payments. Engaging with the process — ideally through an elder law attorney — often produces better outcomes than surrendering the full claim.

Timeline for Families

MERP claims typically arrive months after the death, sometimes longer. The timing and filing process depend on the state's recovery rules and whether probate is opened. Ask the state recovery unit about the applicable deadline and whether a claim or lien can reach assets after probate closes.

If your parent was on Medicaid and owned a home:

1. Do not sell, transfer, or encumber the property without legal advice
2. Review whether any mandatory exemptions apply to your situation
3. Contact your state's Medicaid estate recovery unit and request their specific procedures and waiver application
4. Consult an elder law attorney — the initial consultation is often worth more than months of anxious guessing

The When Your Patient or Client Dies guide covers MERP protections, nursing home debt defenses, and the broader financial triage families face in the first months after a death — including the POA termination trap, account freezing, and creditor notification timelines.

The Larger Picture

MERP exists because Medicaid was designed as a last-resort safety net, not a wealth-transfer vehicle. The policy logic is straightforward: if someone received publicly funded care, the public recovers costs from whatever assets remain.

The human reality is more complicated. For many families, the home is the only asset left — not because of poor planning, but because they exhausted everything else paying for care before Medicaid even kicked in. Losing the home after losing the person feels less like fiscal responsibility and more like a second bereavement.

Understanding the exemptions doesn't remove the grief. But it prevents the state from recovering costs it's not legally entitled to — and that protection is worth knowing about before the letter arrives.