ALERT Estate Recovery Rules are now in place

The following web site has the Texas Estate Recovery Rules

Estate Recovery

Estate Recovery


Why is estate recovery such a big issue and why are we taking time to write to you about it in these newsletters?  For most Medicaid applicants, the most valuable property owned is usually their homestead.  This is because they are usually entitled to keep their homestead and sometimes an automobile when they qualify for Medicaid even though they must effectively be impoverished in all other respects.  The estate recovery rules enable the State of Texas to make a claim against the assets in the deceased Medicaid recipient’s estate.  The claim will be for all the Medicaid benefits paid on behalf of the deceased recipient up to the total value of the estate, including the homestead.  So Medicaid recipients and their families have been concerned about what will happen to their homestead and automobile, etc. after the new rules become effective. 


As I wrote last time, we fully expected the new estate recovery rules to be in place and effective by September 1.  However, this date was pushed back several times as Austin and Washington worked out the details. The start-up date for estate recovery was on March 1, 2005.  The final rules include “grandfathering” provision.  Anyone who filed an initial application for Medicaid before March 1, 2005, and the application resulted in approval for covered services, will be “grandfathered out” of estate recovery.  But anyone who files an initial application on or after March 1, 2005, resulting in approval for covered services, will be subject to estate recovery. 


Please note that anyone who was receiving Medicaid long-term-care benefits on March 1, 2005 will not be subject to estate recovery in the future.  That should be a great relief to many people who have loved ones in nursing homes as their estates will not be claimed by the State of Texas to repay Medicaid benefits, both those paid on their behalf in the past and those paid from this point on.  The final estate recovery rules are posted at the link at the top of this page.


In the alphabet soup of Texas government, estate recovery is a HHSC program but it is run by DADS.  That means the Health and Human Services Commission set the final rules, policies and procedures for the estate recovery program while the Department of Aging and Disability Services is in charge of estate recovery operations, administration and claims.


Impact of Estate Recovery


In addition to the concern about the loss of the homestead, my colleagues in the Texas Chapter of the National Academy of Elder Law Attorneys are concerned about the serious risk of loss of the family farm or ranch in some cases.  The qualifications for an undue hardship waiver are onerous and not likely to be met by many families. Many farms or ranches belonging to Medicaid beneficiaries will be subject to estate recovery.  We can expect an uproar from those who lose their family farm or ranch that otherwise would have been passed from generation to generation.


So with estate recovery now the law in Texas, those who  seek qualification for Medicaid benefits will have more challenges to face, not in the actual application process but in planning to protect assets that would be in their estate at death from the claims of the State of Texas.  It is likely that many who qualify for Medicaid after March 1 will not have properly planned prior to their death.  As a result, their family will probably need legal counsel to guide them through the process of opposing the claims of the State of Texas against their loved one’s estate.


So the scope of our services will necessarily expand.  First, during the Medicaid application and qualification process, we will develop and implement specific strategies for protecting the estate assets from estate recovery after the death of the Medicaid recipient.  Such strategies will be dependent upon the particular facts and circumstances of each case in order to maximize the benefit of our counsel.  Second, if proper planning was not done before the death of the Medicaid recipient, we may be engaged to assist the family through the estate recovery claim process and the estate administration in an attempt to minimize the impact of the State’s claim.  The likelihood of success will be uncertain but we can make the State properly document and backup its claim with sufficient evidence before the probate court will allow it.





Mark R. Ensign, JD, CPA
Copyright © 2004 Ensign Law Firm, P.C. All rights reserved.
Revised: 8/12/09

Not Certified by Texas State Board of Legal Specialization