This column first appeared in the San Antonio Express News on November 14, 2017.
Dear Mr. Premack: Our widowed mom was in a nursing home on Medicaid. She died this July. Her Will leaves her house to all her children. Last month MERP sent me a claim letter stating they will file a claim against the estate. We did not filed a hardship application. MERP has a contractor (HMS) that does their recovery and they are not being reasonable to our needs. They want private information like what you have in assets, tax stubs, bank accounts etc. We did not Probate the Will. Is there legal approach that will keep the MERP from taking the house? – R.M.
There is absolutely a way to keep MERP (Medicaid Estate Recovery Program) from taking the house, but it must be done properly while the homeowner is still living. More about that later.
Right now, the surviving children are facing a series of letters and demands from HMS, the collection agent for Texas Medicaid. You have no legal obligation to respond to their letters, and have no legal obligation to provide them with private information.
Of course, if answering a few questions would get them to leave you alone, that is a small price to pay. For instance, if there are any exceptions for which your family may qualify then you want to point them out to HMS. Exceptions include: a) a surviving spouse exists, b) an under-21 child of the decedent exists, c) a certified disabled child of the decedent exists, d) an unmarried adult child of the decedent lived in the house for at least a year before the date of death, e) the collection would not be financially beneficial to the state, and f) collection would impose an undue hardship on the heirs.
You did not ask for an undue hardship exception. You may be entitled to the exception if a) the heirs would be forced to rely on government benefits if the claim proceeds, b) your mother received Medicaid because she was a crime victim, c) any heir has annual income below $36,180. If you ask for an undue hardship exception, you must provide private documentation to substantiate the exception.
Also, you should note that MERP can only enforce its claim in probate court. You have not filed the Will for probate, which means a) the heirs cannot yet claim ownership of the house, and b) MERP cannot get a judge to enforce its claim. This stalemate cannot go on forever, but it is important to realize that MERP is regulated by the same laws that control claims from any other creditor in probate. The heirs themselves can never be forced to pay with their own money; only the remaining assets left by the decedent are liable for the MERP claim.
MERP must also, by law, give timely notice of a pending claim. If MERP did not follow the law, their claim is unenforceable.
Back to my first comment on pre-planning. MERP has acknowledged that under current law, a special type of deed entirely avoids a MERP claim. The Medicaid beneficiary (or her Agent under a valid Durable Power of Attorney) can sign a proper “Lady Bird Deed” in which she retains life estate and retains the right to cancel the deed until the moment of her death. This does not interfere with qualifying for Medicaid, but does transfer title without probate, and does avoid any claim from MERP. However, it must be done in advance as a planning strategy, and cannot be used after the fact to cure an existing MERP claim. Hence, anyone going into a nursing home should check with their Certified Elder Law Attorney on how to proactively eliminate any MERP claim.
Paul Premack is a Certified Elder Law Attorney with offices in San Antonio and Seattle, handling Wills and Trusts, Probate, and Business Entity issues. View past legal columns or submit free questions on legal issues via www.TexasEstateandProbate.com or www.Premack.com.