Medicaid Estate Recovery (MERP): What Can the State Take After Death?

Most families first hear about Medicaid estate recovery after a parent dies, when the state seeks repayment for long-term care Medicaid paid years earlier. The program is called MERP, and the answer to what the state can take depends first on one question: what does that state’s law count as the deceased person’s “estate”?

What is Medicaid estate recovery?

Since 1993, federal law has required states to recover certain correctly paid Medicaid benefits from deceased beneficiaries’ estates. The mandate is Social Security Act § 1917(b), codified at 42 U.S.C. § 1396p(b), and enacted by the Omnibus Budget Reconciliation Act of 1993, Pub. L. 103-66, § 13612.

Estate recovery is not a tax and it is not a bill sent to a beneficiary’s children from their own assets. It is a claim by the state against the deceased beneficiary’s estate for Medicaid payments the law makes recoverable. The practical result depends on the state’s estate definition, the services paid for, surviving family members, exemptions, and whether a hardship waiver applies.

Medicaid is not Medicare

The two programs are easy to confuse, and the difference decides everything in this guide. Medicare is the federal health program for people 65 and older and for some younger people with disabilities, and it has no estate recovery. Medicaid is the joint federal and state program that pays for long-term care, and Medicaid is the program with estate recovery. Some people have both programs at the same time. They are called dual eligibles, and for them, any estate recovery claim comes from the Medicaid side. Our guide to dual eligible special needs plans (D-SNPs) explains how Medicare and Medicaid work together.

What is long-term care?

Long-term care is the ongoing help a person needs when a chronic illness, a disability, an injury, or aging itself means they can no longer manage everyday life alone. The everyday tasks are called activities of daily living (ADLs): bathing, dressing, eating, using the toilet, getting in and out of bed or a chair, and managing continence. Long-term care also includes continuous supervision for someone whose memory or judgment is failing, as with dementia. What makes it “long-term” is the clock: it is measured in months and years, not the days of a hospital stay or the weeks of rehab after one.

Most people picture a nursing home. That is only one setting. Medicaid pays for long-term care in all of these:

To receive Medicaid long-term care at all, a person generally must pass a nursing facility level-of-care determination: the state certifies that the person needs the kind and amount of help a nursing facility provides, even when that help is actually delivered at home.

What part of long-term care can legally be recovered?

The recovery rules track the definition:

• Always recoverable at 55+: nursing facility services, home and community-based services, and the hospital stays and prescription drugs related to that care. A hospitalization during a nursing-home stay is part of the claim.
• Recoverable at any age: care paid for a person the state determined was permanently institutionalized.
• Recoverable in broader-scope states: every Medicaid service paid after age 55, doctor visits, surgeries, therapies, not just long-term care. Nineteen states and DC take this option. Medicare cost-sharing and Medicare Savings Program benefits are carved out by federal law and can never be added.
• Managed care (capitation): where long-term care runs through a managed-care plan, several states recover the plan’s monthly capitation payment itself. The debt then grows every month the person was enrolled, even in a month when few services were used.
• Never recoverable: Medicare benefits (Medicare has no estate recovery), care Medicaid did not pay for, and, outside the permanently-institutionalized rule, services paid for before age 55.

The scale explains the stakes: one year in a nursing facility commonly costs more than $100,000, the national median for a semi-private room was $111,325 in 2024 (Genworth Cost of Care Survey), so a few years of care can produce a six-figure claim, while the average amount actually collected per estate is far smaller, because most estates hold far less.

Who has to pay Medicaid back after death?

Under § 1396p(b)(1)(B)(i), for a person who was 55 or older when Medicaid paid for the care, the state must seek recovery for:

• Nursing facility services;
• Home and community-based services (HCBS); and
• Related hospital and prescription drug services.

A second mandatory category is not limited by age: a person determined to be permanently institutionalized, where recovery may run against the estate or property subject to a lien under § 1396p(b)(1)(A).

States may go beyond the federal floor. Under § 1396p(b)(1)(B)(ii), a state may recover other Medicaid services paid after age 55, but it may not recover Medicare cost-sharing or Medicare Savings Program benefits. Our national review found that 19 states and the District of Columbia use a broader-than-LTC scope. Florida is one of them: its statute defines the debt as the total amount paid for medical assistance after the recipient reached age 55.

Recovery follows what Medicaid paid, not the coverage you had

Estate recovery repays money Medicaid spent. Being eligible for Medicaid, being enrolled in it, or having access to a benefit creates no debt by itself. A person approved for long-term care Medicaid who never enters a facility, and whose family provides the care at home without Medicaid paying for it, owes nothing for long-term care, because Medicaid paid nothing for it.

This distinction decides the Medicare Savings Program question. A Medicare Savings Program on its own (QMB, SLMB, or QI) pays Medicare premiums and cost sharing only. It includes no long-term care benefit, and Medicare cost-sharing amounts can never be recovered from an estate. The plus categories are different. QMB Plus and SLMB Plus come with full Medicaid on top of the Medicare Savings Program help, and full Medicaid includes access to long-term care coverage. Both sit inside the broader class called full benefit dual eligibles (FBDE): everyone who has Medicare and full Medicaid together, however they qualified. Even then, access is not usage. Recovery starts only if Medicaid actually pays for the care.

One exception matters. Where long-term care is delivered through a managed care plan, the state pays the plan a monthly capitation amount for each enrolled person. In several states, including Iowa, Indiana, New Jersey, Ohio, Utah, Virginia, and Wisconsin, and in Kentucky for the long-term care period, that monthly payment itself is recoverable for the months the person was enrolled, even in a month when no services were used. The payment counts as money Medicaid spent on that person. See what counts as long-term care for how capitation fits the recoverable services list.

How does Medicaid estate recovery work?

1. Medicaid pays for recoverable care. The potential debt is created by payments for services the state may recover, not by enrollment alone.
2. The beneficiary dies. Estate recovery is generally a post-death process. A separate TEFRA lien is the main pre-death tool, and it is narrowly limited.
3. The state identifies the estate and files a claim. In a probate-only state, that claim is made in probate like another creditor claim. In an expanded state, the state may also pursue specified property transferred at death.
4. Protections are applied. A surviving spouse, certain children, exempt property, or a hardship waiver can bar, defer, or waive recovery.
5. Any valid claim is paid from the estate. Families should resolve the claim before distributing estate property.

Can Medicaid take your house?

The short answer is: sometimes after death, but not simply because Medicaid paid for care. Three different questions are often collapsed into one:

While the beneficiary is alive

A home can be treated as exempt for Medicaid eligibility under separate rules. Estate recovery does not itself force a sale during life. A TEFRA lien is different: under § 1396p(a), a state may lien real property only for a permanently institutionalized person who cannot reasonably be expected to return home, after notice and an opportunity for a hearing. No lien may be imposed on a home while a spouse, minor or disabled child, or qualifying sibling lives there, and the lien dissolves if the person returns home. Most states rarely or never use TEFRA liens; Florida’s estate-recovery law contains no TEFRA lien authority.

After death in a probate-only state

The state can claim against assets in the probate estate, subject to exemptions. Property that passes outside probate is outside the claim. Florida adds a major protection: property exempt from creditors’ claims under the Florida Constitution or laws, including protected homestead, cannot be used to enforce recovery.

After death in an expanded state

The state may reach property in which the deceased person held an interest at death even when it passes outside probate, including through joint tenancy, survivorship, life estates, living trusts, and similar arrangements. That is why a strategy that works in Florida may fail in Oregon or another expanded state.

What is the difference between probate-only and expanded estate recovery?

Section 1396p(b)(4) creates the central fork:

• Probate-only: “Estate” means the assets included in the estate under state probate law.
• Expanded: The state also reaches other real and personal property in which the person had legal title or an interest at death, including property conveyed through joint tenancy, tenancy in common, survivorship, life estate, living trust, or another arrangement.

Oklahoma is counted as probate-only because that is how its operative rule works, but its record carries a documented conflict: its filed state plan recites the expanded definition. Florida is probate-only under Fla. Stat. § 409.9101. Oregon is expanded under ORS 416.350 and its estate-administration rules.

Who is protected from Medicaid estate recovery?

Section 1396p(b)(2) restricts when recovery may occur:

• Surviving spouse: Recovery may be made only after the surviving spouse’s death.
• Children: Recovery is barred while there is a surviving child under 21 or a child who is blind or permanently and totally disabled.
• Sibling in the home: A sibling who lived in the home for at least one year before institutionalization and continuously afterward can block recovery from the home while lawfully residing there.
• Caregiver child: A son or daughter who lived in the home for at least two years before institutionalization and provided care that allowed the person to remain home can likewise block recovery while residing there.

Under § 1396p(b)(3), states must establish procedures to waive recovery for undue hardship. CMS guidance in State Medicaid Manual § 3810 recognizes examples such as an estate that is the survivors’ sole income-producing asset, a homestead of modest value, and recovery that would deprive survivors of necessities. The same guidance tells states not to pursue recovery when it is not cost-effective.

Certain income, resources, and property protected because of the federal responsibility to Indian Tribes and Alaska Native Villages are also exempt under § 1396p(b)(3)(B).

How much money do states collect from estate recovery?

In this context, collections means cash a state actually receives from estates, not the value of claims filed. States report estate recoveries to CMS on Form CMS-64, Summary Sheet Section B, Line 9B, “Collections: Probate.”

• FY 2019: approximately $733.4 million nationally.
• FY 2020: $656 million, the most recent compiled national total located in our research.
• Estate recovery equaled only 0.53%–0.62% of Medicaid fee-for-service long-term services and supports spending in each year from FY 2015 through FY 2019.
• Five states, Massachusetts, New York, Pennsylvania, Ohio, and Wisconsin, accounted for 38.5% of FY 2019 recoveries.
• The state’s net yield is lower than gross collections because the federal share is returned at the state’s FMAP rate and programs have administrative or contractor costs.

CMS has not published state-by-state Line 9B collections after FY 2020 in its public expenditure workbooks; the public files blend estate recovery with other collection categories. For most states, there is therefore no current official public figure, a transparency gap in a program that operates in probate courts every day.

What is the difference between estate recovery and the Medicaid look-back period?

Moving a house or money shortly before applying for Medicaid does not automatically protect it. It can trigger a transfer penalty and still leave an estate-recovery issue. Planning has to account for both doctrines, plus tax, probate, family, and care consequences.

What should you do if you get a Medicaid estate recovery claim?

1. Do not ignore the notice. Hardship and objection deadlines may run from the claim or notice.
2. Verify the debt. Compare the person, dates of service, age at payment, service categories, and total amount paid with Medicaid and probate records.
3. Identify protected survivors and property. Check for a spouse, minor or disabled child, protected homestead, caregiver or sibling facts, and creditor-exempt assets.
4. Evaluate hardship immediately. Gather residence, caregiving, income, medical-necessity, and property-value documentation.
5. Do not distribute the estate first. Resolve or formally contest the claim inside the probate process.
6. Get state-specific counsel. Estate recovery combines Medicaid, probate, property, and sometimes tax law. A Florida estate needs Florida advice; an expanded-state estate may need a different analysis.

If the issue is how Medicaid interacts with a parent’s Medicare coverage, Medicare Savings Program, or dual-eligible plan, Senior Benefit Assistance can explain the Medicare side. For a claim already filed, an elder law or probate attorney should handle the legal response.

Key terms and definitions

Medicaid Estate Recovery Program (MERP)

The state program that recovers specified Medicaid costs from deceased beneficiaries’ estates under 42 U.S.C. § 1396p(b).

Probate estate

Assets included in the deceased person’s estate under state probate law and administered through probate.

Expanded estate

A state’s broader definition reaching specified property in which the deceased person had title or an interest at death, including some transfers outside probate.

TEFRA lien

A limited pre-death lien on real property of a permanently institutionalized person under § 1396p(a).

Activities of daily living (ADLs)

The everyday tasks long-term care helps with: bathing, dressing, eating, toileting, transferring (bed to chair), and continence, plus supervision for cognitive impairment such as dementia.

HCBS

Home and community-based services provided instead of institutional care, generally through a Medicaid waiver or state-plan authority.

LTSS

Long-term services and supports, the formal name for long-term care: nursing facility care and home and community-based help with everyday activities, delivered over months or years. See “What is long-term care?” above.

Undue hardship waiver

A state’s waiver of estate recovery when enforcement would cause undue hardship under federal and state standards.

Collections

Cash actually received from estates, reported on CMS-64 Line 9B. Collections are not the same as claims filed or debts asserted.

FMAP

Federal Medical Assistance Percentage. States return the federal share of recoveries at this matching rate.

Look-back period

The 60-month period reviewed for asset transfers when a person applies for Medicaid long-term care.

Medicare Savings Programs (MSPs)

QMB, SLMB, QI, and QDWI programs that help pay Medicare costs. Federal law excludes Medicare cost-sharing and MSP benefits from the broader state recovery option.