How long does Medicaid Recovery Program in Texas have to come back for repayment?

Well isn't family fun…..
You have 4 years to close probate and the clock doesn't start ticking until letters are presented in probate. I try to keep up with all thingy MERP as my mom is in a NH on Medicaid and still has her homesteaded property. There are other issues to consider besides MERP…like your mom may not need to close out via full probate if all granny had was the house, mom could try to get the house done via a Muniment of Title. Lots simpler, google Muniment Texas and she could name you to do it; but there could be a problem with a MERP ghost when you go to act of sale. This is going to be long so get a adult beverage…….

Think back….who was the contact person for TX Medicaid for her? This would be the person who got the mailings from TXDADS or TX HHSC - those letters come from Austin or Lubbock. That usually would be the same person who would then gets the mailings from MERP - those mailings come from Dallas. They all have state of TX logo's on them but keep in mind that MERP is now for the past couple of years is done by a outside contractor (HMS) for the state (they get paid a % of the recovery too, so they are more akin to debt collectors). The MERP letters seem to get mailed out within 4 - 8 weeks of death. If you want to see what the letters look like, google Randy Drewitt and MERP. Drewitt is an elder law attorney in Beaumont and has lots of info on his website on all things MERP. Maybe your mom will remember this once she sees an example?

What can happen is that the state has the Medicaid recipient as the person for contact….so the MERP letter goes to the NH…which does you no good as really like you are going back to the NH ever again after they die.Sometimes the MERP letter goes to them @ the actual property …again problematic if the house is empty or a dead mail situation where stuff doesn't get picked up or gets trashed. Now the MERP letter requires that the state be notified within 30 / 45 days from the date on the letter, if the estate has either exemptions to MERP or claims against the estate that will make a difference at to MERP's claim. If the state does not get something from the heirs or executor, that there are exemptions or other claims on the estate then, the state seems to take the position that the MERP claim is valid. But that doesn't mean that a MERP claim will be done.

Now under TX law, MERP is a claim against the estate. For those who are on Medicaid, well they are basically poor and the only asset for the estate would be their home. MERP in Texas is NOT a lien and cannot ever be a lien…this is mucho importante to keep in mind. TX does probate by classes. For the most part Class 1 -3 are the ones that get paid. Your mom as executrix can be paid within Class 1 -3 to take care of the management of the estate. Often the administrative costs plus legal fees and the costs to place property on the market or do accounting stuff reduce the estate substantially so that when the house gets sold, there is no extra money once everybody has been reimbursed. (BTW I've been executrix twice). You mom should get paid something from the estate for all this too. MERP is a class 7 claim. Credit cards are class 8 and fat chance they ever get paid. In theory, MERP is supposed to do a cost / benefit analysis to determine whether the MERP claim is attempted. Before HMS, the state did not do any MERP unless the house was about 220K in tax assessor value (that was the cost / benefit amount) as it takes time for legal to go to court for the possibly 4 years you can run probate out to in TX. Under that didn't get done as really the state didn't have the legal manpower to do this and so no mailings. Most elderly homes are modest and under 100K and those in general are considered a "hardship", so the MERP recovery was about 5% of what the state spent overall on Medicaid. Now since a contractor is doing MERP, it seems to be different and the letters are sent to all without value of home being a factor. (Some states - like MS - have it so that home under 75K is never MERP'd). But rather than have to do all this via probate (which would be costly as they will need to present & get their legal in court or respond to requests for documentation by the executor - like to see if the amount is valid & correct), it seems it's more a debt collection by default…if you don't respond to MERP then the claim exists.

Now here is where it get's sticky. As MERP is NOT a lien on the property, it doesn't show up initially when you are looking issues which could cloud the property. It's not like a mortgage, or a workman's lein, or IRS lein, all of which are right there and easily found out when you put a property on the market and those are filed at the courthouse. MERP could totally queer the act of sale on the property as it shows up when the title search is being done AFTER there is an offer on the house which has been accepted and $ in escrow. (There is a whole other kinda a bigger issue when the home is being transferred from momma to a family member as the MERP claim is there but all subterranean till they need to get a mortgage or other $ and using the house as collateral and MERP has to be dealt with ages later). For you all, well you are going to go the Realtor route, correct? Then you have to disclose that there is the potential for a MERP claim on the property. Most Realtors just haven't dealt with MERP. I've found that Realtors really like estate property because there can be no issues on condition on the property as the owner is dead and therefore there cannot be anyone to do a condition report (required by law) so it's truly an "as is" sale. But MERP comes out of the blue to be an issue at the act of sale. You might have to do an indemnity to sell the property. There is a great article in TRGC Stargazer on all this. I will do a separate post on that for you next.

This is from TRGC - which is the big clearinghouse for title companies:
"NOTICES -
MERP provides that no person can receive Medicaid benefits after March 1, 2005, without a representative of the proposed recipient receiving notice of the applicability of MERP. MERP further provides that within 30 days of MERP receiving notice of the recipient’s death, MERP shall provide notice of the MERP claim to one of the following persons:
1. An “estate representative.” This term is not defined in MERP, but presumably means an executor or adminstrator of an estate.
2. The Medicaid recipient’s guardian (when alive), whether that be a guardian of the person, guardian of the estate, or both.
3. The decedent’s former agent under a durable power of attorney or a medical power of attorney.
4. If none of the above are known, family members who have acted on behalf of
the recipient in connection with Medicaid or medical care.
Note that MERP makes no provision for the filing of a lien on real property. No notice is likely to appear in the real property records. The only reason to suspect a MERP claim may exist against the estate is that:
a. Decedent is a person who might have received Medicaid benefits, and the estate meets the description in “Estates Applicable” above; or
b. An “estate representative” or family member has received actual notice that either decedent received Medicaid benefits or MERP has presented a claim.

And even more from Stargazer…this one is about the indemnity needed:

"Addressing MERP in Connection with Closing
If the property is being offered for a real estate transaction by an estate where decedent was over 55 at the time of death, the closer is required to obtain an affidavit and indemnity from the persons offering title that no Medicaid funds were received by decedent and that no notice of claim has been received by them or someone known to them from either the Texas Department of Health and Human Services, the Texas Department of Aging and Disability Services, or their representative, Health Management Services. So long as the persons offering title can swear to this and offer indemnity against this obligation, it is Title Resources’ opinion that the title agent has met the requirement to make reasonable inquiry.
The situation becomes more difficult when the property is being offered not by the estate or the immediate heirs, but by someone who has a predecessor in title who appears they may have qualified for Medicaid. A MERP claim is not covered by the Master Indemnity Agreement, and the fact a transaction has been previously insured does not necessarily protect the property from liability. However, MERP is not a lien on real property, and there is no provision in the law for it to become a lien on real property. Counsel at Title Resources are of the opinion that no inquiry is required where you are dealing with a subsequent purchaser from a decedent who may or may not have been a Medicaid recipient."

OK so what to do??? I would suggest that NO funds be dispersed till the property is sold. There will be costs to selling the house (utilities, yard, taxes, interim insurance) and those need to be reimbursed to family who paid for all that; plus there could be last minute costs (like electrician or survey or elevation certificate) that you all as the seller will have to pay for. Plus whatever costs, your mom has paid out on grannies house while she was in the NH too. I have a whole bin of paperwork on my mom's house, which I will document to the penny as to reimbursable expenses as does the other family member who pays for items on my mom's house (which neither of us inherit). If you have to get an indemnity done, that too will cost. You all need to pay yourself first & foremost before Sissy get's a peso. Good luck and keep a sense of humor in all this.

Thank you very much for the valuable information and spending your time to help me in gaining knowledge to assist my mother. The BS from her sister and husband is unfair and unjust. They just want control and to push my mother, but as long as I'm here---it ain't happening. Best of luck with your situation.

Can I ask a question about MERP in Texas ?
Thanks
Sam