If you are selling a home tied to an estate in Texas—especially after a loved one received long-term care—MERP (Medicaid Estate Recovery Program) is something that needs to be addressed early.

This is not just a technical issue. It can directly affect title, delay closing, and impact the net proceeds from a sale.

This article explains what MERP is, when it applies, when it does not apply, and what sellers should do before listing a property.

What Is MERP?

MERP is required under federal law pursuant to 42 U.S.C. § 1396p(b), which requires states to seek reimbursement for certain Medicaid benefits paid for long-term care after a recipient passes away.

In Texas, MERP is administered by the Texas Health and Human Services Commission (HHSC) and governed by Title 1, Part 15, Chapter 373 of the Texas Administrative Code.

In practical terms, if Medicaid paid for long-term care services, the state may seek reimbursement from the deceased person’s estate.

When MERP Applies in Texas

MERP applies only under specific conditions:

• The Medicaid recipient was age 55 or older; and
• The recipient received long-term care services; and
• The application for those services was made on or after March 1, 2005

If the application for long-term care Medicaid services was completed before March 1, 2005, MERP generally does not apply. However, if the individual was on a waiting list before that date but did not complete the application until after March 1, 2005, MERP may still apply.

What Services Trigger MERP?

MERP generally applies to long-term care services, including:

• Nursing facility (nursing home) care
• STAR+PLUS long-term services
• Home and community-based waiver programs such as HCS, CLASS, DBMD, and similar programs

It may also include certain hospital and prescription drug costs related to long-term care.

Not all Medicaid services are subject to MERP. For example, Primary Home Care (PHC) is not included.

What Property Is Subject to MERP?

MERP applies to the estate, not all assets.

Examples of property typically not subject to recovery include:

• Life insurance policies with a named beneficiary
• Bank accounts payable on death to another person

Texas generally follows a probate estate recovery model. This means that assets passing through probate are more likely to be subject to MERP claims, while certain non-probate transfers may not be pursued. However, this depends on the specific facts and should be reviewed with an attorney.

When MERP Is Not Collected

There are several situations where MERP is not collectible or will not be pursued under Texas rules.

Protected Family Members

The state will not seek recovery if any of the following individuals are alive:

• A surviving spouse
• A child under the age of 21
• A child of any age who is blind or permanently disabled

These protections are required under federal law.

Small Estate or Low Claim Amount

The state will not pursue recovery if:

• The value of the estate is $10,000 or less; or
• The Medicaid claim is $3,000 or less

These are clear statutory thresholds where recovery is not pursued.

Caregiver Child Exception

The state will not seek recovery if an unmarried adult child lived in the home full-time for at least one year prior to the Medicaid recipient’s death.

Cost of Sale Exceeds Value

If the cost of selling the property exceeds its value, the state will not pursue recovery.

Estate Debts Are Paid First

Before MERP is paid, the estate must satisfy higher priority debts, including:

• Funeral expenses
• Legal and administrative costs
• Secured debts such as mortgages

Depending on the estate, these costs may significantly reduce or eliminate any amount available for MERP recovery.

Undue Hardship Waivers

Texas allows heirs to request a hardship waiver under 1 Tex. Admin. Code § 373.209.

Examples of hardship include:

• The property is a family business, farm, or ranch that serves as the primary source of income
• The heirs would require government assistance if recovery is pursued
• The homestead has a value under $100,000, and heirs meet certain income limitations

As of 2025, income thresholds are approximately:

• $46,950 for a single individual
• $63,450 for a household of two

A hardship waiver is not automatic. The heirs must apply and provide supporting documentation.

When MERP May Be Reduced

The amount of a MERP claim may be reduced if certain qualifying expenses are documented, including:

• Property taxes
• Insurance
• Utilities
• Maintenance and repair costs
• Expenses incurred to provide care that delayed institutionalization

Receipts and documentation are required to support any requested deductions.

What Happens After Death

After the Medicaid recipient passes away, the process generally follows these steps:

1. The state sends a Notice of Intent to File a Claim
2. The estate representative or heirs must respond with the requested information
3. The state determines whether to pursue recovery

If MERP is not addressed before listing or going under contract, the title company will likely flag the issue, and closing may be delayed until it is resolved.

Common Seller Misconceptions

There are several common misunderstandings about MERP:

“There is no lien, so there is no issue.”

MERP claims are not always recorded as liens, but must still be resolved before closing.

“We can address it after closing.”

Title companies will not insure the transaction until MERP is cleared.

“Transferring the property avoids MERP.”

Improper transfers may trigger Medicaid penalties under the five-year lookback period and do not necessarily avoid recovery.

Official Resources

For more information or to address a specific case:

Texas Health and Human Services MERP Page:

https://www.hhs.texas.gov/services/health/medicaid-chip/programs/medicaid-estate-recovery-program

MERP Contractor (Health Management Systems):

+1 800-641-9356

Texas Medicaid & Healthcare Partnership:

+1 800-846-7307

Hardship Waiver Form:

Form 5006 (available through HHSC)

So Seller's Beware - Food for Thought

MERP is not always a barrier to selling a property, but it can become one if it is not addressed early.

The key for sellers is understanding when it applies, when it does not, and taking the right steps before listing the property.

If you are dealing with an estate property in Texas, especially one involving long-term care, MERP should be evaluated at the beginning of the process, not after a buyer has been secured.

About the Author

Viviana Shoulders is a Texas REALTOR® and paralegal with experience in probate-related transactions, title issues, and estate property sales. She works closely with attorneys and title companies to help sellers navigate complex situations that require both legal and real estate insight.