MERP: Medicaid Estate Recovery Plan. My aunt left me her house in a written will in Texas and it was probated. She entered the nursing home 2 years prior to her death on Medicaid. After her death October 1, 2012, no letter of claim was sent to me and the title company at the time of sale said there was no MERP claim. Does this mean they will not file or will I be liable down the road?
•avoid probate of the property
•keep the right to use and profit from the property for your lifetime
•keep the right to sell the property at any time
•avoid making a gift that might be subject to federal gift tax
•avoid jeopardizing your eligibility for Medicaid
•in some states, prevent the property from being sold, after your death, to repay the cost of Medicaid benefits you received
Most importantly is also:
Medicaid Recovery of Assets
There’s another Medicare-related reason to use a Lady Bird deed, which helps your family members after your death. If you receive Medicaid benefits during your life, then after your death, the state will make a claim for repayment from the assets you leave behind. Federal law requires every state to have such a Medicaid “estate recovery” program.
Some states make payment claims only from the probate estate—that is, the property that goes through probate after your death. Others go after any property you leave, whether or not it goes through probate. For example, a state might make a claim on a payable-on-death bank account that goes (without probate) to your son at your death.
If you leave your property in a way that doesn’t go through probate, and your state doesn’t seek reimbursement from nonprobate assets, then your family will get to inherit your property without repaying the government for the benefits you received.
Can you please advise on what you know about this....Anyone
What is supposed to happen is that whomever is on file @ TxHHS's as the contact person & address for the Medicaid recipient will be sent the MERP "letter of intent". Now think back…..who was it in your family who got any correspondence regarding your aunt and her stay @ the NH; who did her Medicaid application; who was her annual renewal form for medicaid sent to? that is where the letter of intent was sent to. That is the person who is the one that is held liable for properly doing whatever to be compliant for MERP. (So if you were not auntie's person but instead another cousin was, than this was their error). MERP does not try to find the attorney for probate or other family either on this, nor do they have to. If the letter was not responded to in the very specific timeframe indicated in the MERP letter, the position seems to be that the claim is valid and it can become a claim/lien by default on the property.
What is supposed to happen is that you respond to the letter with whatever documentation is needed for the exemption, etc you are filing for. Then MERP does an evaluation of the exemption (cost/benefit analysis) and either approves or denies the request. If approved they send you a release of claim document. Then this goes to probate court, for the judge to distribute the house as per the will OR is filed at the courthouse if you are doing the ownership transfer as a muniment of title. If it's denied, they send you a letter stating the claim amount. I bet your aunt's house was overlooked in the transition.
Now one problem with MERP TX is how the enforcement of the "claim" is done.
I'm going to do another post on the issue & problems of having no exact "bright line rules" on title insurance and property transfer with MERP.
"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. (this is because in TX, MERP is a Class 7 claim against the estate in probate) 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.You are most likely to run into MERP issues were title has passed through an affidavit of heirship or muniment of title." "It appears that the State of Texas has left a hole in MERP big enough to hamstring the entire program. That is, nothing filed in the real property records evidences the existence of a MERP claim, so there is no public notice of the claim. If a purchaser has made reasonable inquiry, or has reason to think the estate property does not meet the type of estate that would be subject to a MERP claim, under the common law the purchaser is a bona fide purchaser for value without notice & should take the property free & clear of the MERP claim."
To me what this means is that the people that bought your aunt's house from you (as you inherited it and owned it at the time of sale) are OK in that MERP should not be an issue for them when they go to sell the house. BUT as you know that your aunt's estate was subject to MERP, the proceeds from the sale should be paid to the state to reimburse for her care. There have been posts on this forum from family who are now getting HMS letters for claims on assets for those long deceased. So it's good you have the proceeds set aside. There does not seem to be a set statute of limitations for HMS in TX either. If you had challenged the claim, so that HMS had to go to court on this, then it would have to have been resolved within the 4 years allows for probate to exist in TX. Or if you had filed for exemptions, exclusions or hardship, then you would have gotten the release of claim forms. (just as an aside, property with tax assessor value under 100K can file a hardship exemption as the costs to sell lower the value that it doesn't meet the cost/benefit to go to court or do the paperwork for the claim). But since none of that was done, then the whole amount from the sale can be claimed by MERP at this point. Just how they are going to enforce it is the question. My best guess is that they are going to take the approach of a debt collector and your credit will be ruined if you don't come to an agreement on the reimbursement and pay them. If you're at the point that all that doesn't matter to you (like your older, retired, not buying a new house or car, etc anymore and credit worthiness isn't an issue), then
maybe you can go hardball on not paying it. good luck whatever path you take
Texas Administrative Code:
TITLE 1 ADMINISTRATION
PART 15 TEXAS HEALTH AND HUMAN SERVICES COMMISSION
CHAPTER 373 MEDICAID ESTATE RECOVERY PROGRAM
SUBCHAPTER B RECOVERY CLAIMS
RULE §373.213 Deduction Allowed for Expenses for Home Maintenance and Costs of Care
(a) An amount equal to necessary and reasonable maintenance expenses and taxes may be deducted from the Medicaid Estate Recovery Program (MERP) claim for maintaining the home of the deceased Medicaid recipient, provided that sufficient supporting documentation of these expenditures, such as receipts, is provided to MERP by estate personal representatives, heirs, or legatees. Necessary and reasonable expenses for maintaining the home include real estate taxes, utility bills, insurance, home repairs, and home maintenance expenses such as lawn care.
(b) An amount equal to the necessary and reasonable expenses for the direct payment of the costs of care (including payment of personal attendant care) provided for a deceased Medicaid recipient that enabled the recipient to remain in his or her home and thereby delayed the institutionalization of the Medicaid recipient may be deducted from the MERP claim, provided that sufficient supporting documentation of these expenditures, such as receipts, is provided to MERP by estate personal representatives, heirs, or legatees.
(c) Requests for obtaining allowable deductions from MERP claims for expenses under subsections (a) or (b) of this section must be made in writing within 60 days after receipt of the Notice of the Intent to File a Claim by MERP. All supporting documentation must be attached to the request and sent to MERP, Home Maintenance/Costs of Care Request, P.O. Box 13247, Austin, Texas 78711.
I've been doing this for my mom's empty house now for a couple of years and it does add up to a tidy sum, which I will file as a deduction to the MERP claim.
When applying my cousin for Medicaid for AL, I consulted with several attorneys about estate recovery be Medicaid. They and the Social Worker who took the application, told me the same thing. And that is if the property in question was NOT in the probate estate of the recipient, meaning the recipient had reserved a Life Estate in the property, but transferred it at least 5 years prior to receiving benefits, then it was NOT a part of the recipient's estate, as their interest in the property ceases at the moment of death.
Some states are not like this, but all I can do is rely on the legal opinions and the confirmation from the social worker I encountered in NC. Besides, there is nothing I could do about it now anyway.
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