Medicaid Estate Recovery Programs (MERP)
- Learn how Medicaid Estate Recovery Programs (MERP) recover the cost of long-term care after a recipient dies. Find out how this law could impact your home.
Medicaid Estate Recovery Programs (MERP) in all 50 states and the District of Columbia allow the Center for Medicare and Medicaid Services (CMS) to claim reimbursement from the estate of a deceased Medicaid recipient aged 55 or older. If you have a family member who receives long-term nursing care through Medicaid, their estate will have to pay the bill for these services after the person dies.
Because of this law, many older adults worry that they'll lose their home if their spouse has to move into a nursing home before they pass away. CMS won't take the home in most cases, as long as the person who receives Medicaid or their spouse still resides at the property. However, it's important to understand the complexities of MERP in this situation.
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Can Medicaid Take Your House?
In most cases, MERP doesn't apply if the Medicaid member who received care or their spouse still live in the home. In addition, the state must file MERP claims within 1 year of the person's death, creating a limited time frame for CMS to recoup real estate. However, the exact laws and legal process vary by state, so it's important to consult a Medicaid planning expert in your area. They can help you implement strategies to protect your home and other assets, such as establishing a trust, if you or your spouse has to receive Medicaid.
These scenarios can help you understand how MERP may work if you're single:
- If you need to move to a nursing home, you can file a legal statement of intent to return to your home to prevent MERP from claiming the property in your absence.
- If you receive long-term care at home, MERP doesn't take effect unless your equity in the property exceeds $636,000 as of 2022.
- If you die after receiving Medicaid long-term care services, the state will claim your home unless you have a surviving child who is either younger than 21, blind or disabled.
Can I Sell My Home While Receiving Medicaid Long-Term Care Benefits?
Although you can sell your property in this situation, doing so may impact your Medicaid eligibility. Often, the proceeds of a real estate sale will exceed the asset limit of $2,000, which means you'll have to "spend down" the other funds until you become eligible for Medicaid again. You can't get around this requirement by giving these assets to someone else, as this goes against the CMS lookback policy.
How Can I Shield My Home From MERP?
Estate planning strategies can help you keep your home even if you or your spouse needs long-term care through Medicaid. These are some of the most common strategies:
- Strive to prevent your assets from going through probate. In certain states, MERP occurs only during the probate process. Usually, you can bypass probate by transferring assets to probate-exempt structures, such as an irrevocable trust. The trust owns the home, and since it's not in your name, it doesn't go through probate with the rest of your estate. However, you must take advantage of this strategy at least 60 months before applying for Medicaid long-term care benefits to avoid the lookback rule.
- Add another person to the deed of your home. If you own the property together, the real estate won't be subject to MERP as long as your family member still lives there. For example, you can transfer ownership of the property to an adult child or sibling who serves as your caregiver if they lived with you for at least 2 years before you began collecting long-term care benefits.
- Purchase a long-term care insurance policy through a partnership program. With this type of insurance, the provider protects a certain amount of your assets by repaying Medicaid on your behalf if MERP takes effect.
Because MERP and long-term care planning are so complex, working with a seasoned estate planner can help you avoid common pitfalls of Medicaid eligibility.
