TennCare Estate Recovery in Tennessee: What Every Executor Needs to Know

If the person you're settling an estate for was 55 or older and received Medicaid benefits in Tennessee, you cannot close the estate without dealing with TennCare. This isn't optional, and missing it doesn't make the issue go away — it creates long-term personal liability for the executor and can reopen a closed estate years later.

Here's what TennCare estate recovery actually is, how much it can claim, and how to get the release you need to close the estate.

What Is TennCare Estate Recovery?

Under T.C.A. § 71-5-116 and federal Medicaid law, every state that operates a Medicaid program is required to seek reimbursement from the estates of deceased Medicaid recipients for certain long-term care costs. In Tennessee, this is administered by the Bureau of TennCare through its Estate Recovery program.

TennCare can file a claim against the probate estate of any Medicaid recipient who:

• Was 55 years of age or older at the time they received benefits, and
• Received nursing facility services, home and community-based services (waiver services), or related hospital and prescription drug services

The claim is against the probate estate — assets that flow through the court. Assets that pass outside of probate (jointly held property, POD accounts, life insurance with named beneficiaries) are not subject to TennCare estate recovery in most circumstances.

How Much Can TennCare Claim?

TennCare can claim reimbursement up to the full amount it paid for covered services on behalf of the decedent. For someone who spent years in a nursing facility, this figure can be substantial — potentially hundreds of thousands of dollars.

However, there are automatic limits and exemptions that apply in many cases:

$10,000 cost-effectiveness threshold: TennCare policy states that claims of $10,000 or less are considered not cost-effective to pursue and are automatically released. If the estate's value is modest, the recovery amount may fall below this threshold.

Mandatory hardship waivers — recovery is waived or deferred when:

• The decedent was survived by a spouse (recovery is permanently waived until the surviving spouse also dies)
• The decedent was survived by a child under 21
• The decedent was survived by a child who is blind or permanently disabled (regardless of age)
• Recovery would result in undue hardship as determined by TennCare's hardship criteria

Sibling and caregiver exceptions: Recovery may also be waived if an adult sibling or adult child lived in the home for specified periods before the decedent's institutionalization and can demonstrate continuous residence.

The Executor's Obligation: Submit Form TC-0087

No Tennessee probate estate can be closed without a formal written release from TennCare. The executor must submit:

Form TC-0087 (Request for Release / RFR 2021-2) along with a legible, unredacted copy of the decedent's certified death certificate to the Bureau of TennCare's Estate Recovery Processing Unit in Nashville.

Submit this immediately when Letters are issued. Don't wait until the creditor period is nearly expired. TennCare processing takes time, and delays in receiving the release are one of the most common reasons Tennessee estates stay open longer than necessary. Executors who submit the form at the start of the administration receive their release well before they need to close — executors who wait often find themselves extending the estate administration by months.

TennCare will respond with one of three outcomes:

1. A formal release letter stating they have no claim against the estate
2. A release letter stating the claim falls below the $10,000 cost-effectiveness threshold
3. A formal claim amount, which the executor must satisfy (or negotiate a hardship waiver) before distribution

The 48-Month Special Rule

Here is the provision that makes TennCare uniquely dangerous for executors to ignore: Under Tennessee law, if the Bureau of TennCare is not properly notified of the probate proceeding within the first year, TennCare retains the explicit statutory right to file a claim or petition to reopen a closed estate for 48 months from the date of death.

This means that even after you've distributed assets to beneficiaries, TennCare can potentially reopen the estate and pursue recovery. Executors who distributed assets without notifying TennCare can face personal liability for the value of assets distributed.

The 48-month rule was clarified by House Bill 93/Senate Bill 761. It is not a theoretical risk — TennCare actively pursues estate recovery as a funding mechanism for the Medicaid program.

What If the Decedent Received Medicaid But Was Under 55?

If the Medicaid recipient was under 55 at the time of death, Tennessee cannot pursue estate recovery. TennCare estate recovery is strictly limited to individuals who were 55 or older when they received covered services. However, if the decedent received both Medicaid before age 55 and after age 55, the recovery claim applies only to services provided after age 55.

What If the Estate Has No Probate Assets?

If all of the decedent's assets passed outside of probate — through jointly held accounts, POD designations, life insurance, beneficiary designations — and no probate estate is ever opened, TennCare's ability to recover is significantly limited. This is one of the reasons estate planning attorneys often recommend structuring assets to pass outside of probate for individuals receiving Medicaid.

However, if a probate estate is opened for any reason (even to clear real estate title), TennCare's claim procedures apply.

Practical Steps for Executors

1. Determine if TennCare applies. Was the decedent 55 or older? Did they receive TennCare (Medicaid) benefits? If yes to both, proceed.

2. Submit Form TC-0087 immediately when Letters are issued. Include an unredacted death certificate. Keep a copy of everything you submit.

3. Review hardship grounds. If a surviving spouse, minor child, or disabled child survived the decedent, note this in your submission — it may qualify for a mandatory waiver.

4. Do not distribute assets until you have the written TennCare release. This is the rule. Distributing before you have the release creates potential personal liability.

5. Follow up. If you haven't heard from TennCare within 60 days of submitting the form, contact the Estate Recovery Processing Unit directly.

The Tennessee Probate Process Guide includes a complete TennCare submission checklist and explains how the TennCare requirement fits into the broader estate closing sequence — alongside the creditor period, inventory deadlines, and final accounting.

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