In Texas, you do not have to pay back Medicaid during your lifetime for benefits you legitimately received. After a recipient dies, though, the state can recover what it paid for long-term care from the person’s estate through the Medicaid Estate Recovery Program (MERP). So the real answer to whether you have to pay back Medicaid in Texas depends on two things: whether the person is living or deceased, and what kind of Medicaid services were involved. Routine Medicaid is not recovered. Long-term care is, and only from assets that pass through probate.
When MERP Applies
Federal law requires every state to run an estate recovery program for Medicaid long-term care costs.1Office of the Law Revision Counsel. 42 USC 1396p – Liens, Adjustments and Recoveries, and Transfers of Assets The Texas Health and Human Services Commission runs MERP here, and it only applies when both of these are true: the recipient was 55 or older when they received the covered services, and they first applied for those services on or after March 1, 2005.2Texas Health and Human Services. D-7800, Medicaid Estate Recovery Program Anyone already receiving long-term care Medicaid before that date is outside the program entirely.
The state never pursues recovery while the recipient is alive, and it never collects more than what Medicaid actually paid for their covered services.3Texas Health and Human Services. Guide to the Medicaid Estate Recovery Program
MERP also does not cover every type of Medicaid. It targets long-term care: nursing facility care, intermediate care facilities for individuals with intellectual disabilities, home and community-based waiver programs, and related hospital and prescription drug costs tied to that care. Standard Medicaid benefits, children’s Medicaid, and Medicaid for pregnant women are not subject to MERP.2Texas Health and Human Services. D-7800, Medicaid Estate Recovery Program
What the State Can Actually Collect From
Texas uses the narrow federal definition of “estate” for recovery: only property that passes through probate.1Office of the Law Revision Counsel. 42 USC 1396p – Liens, Adjustments and Recoveries, and Transfers of Assets Federal law would let states reach non-probate assets like joint tenancy property and living trusts, but Texas has not gone that far. MERP files a claim against the probate estate the way any other creditor would. It does not put a lien on your property during your lifetime or at death.3Texas Health and Human Services. Guide to the Medicaid Estate Recovery Program
Assets that pass directly to a named beneficiary sit outside probate and outside MERP:
- Life insurance proceeds with a named beneficiary
- Retirement accounts and pensions with designated beneficiaries
- Bank accounts set up as payable-on-death or with joint tenancy and right of survivorship
- Real property transferred through a Transfer on Death Deed or a Lady Bird deed
What typically does fall into the probate estate: a home titled solely in the deceased person’s name, bank accounts with no payable-on-death designation, vehicles, and other personal property.
One thing families should understand up front. Heirs are never asked to pay MERP out of their own money. The claim comes out of the estate, and if the estate cannot cover it, the balance goes unpaid. You do not owe the difference.
Exemptions That Block Recovery Entirely
Some situations stop a MERP claim from ever being filed, no matter how much Medicaid paid. Recovery is completely blocked if any of the following survivors exist:
- A surviving spouse
- A child under 21
- A child of any age who is blind or permanently and totally disabled under Social Security’s definition
- An unmarried adult child who lived continuously in the recipient’s home for at least one year before death
These are full exemptions. A surviving spouse blocks recovery even if that spouse is healthy and financially secure.3Texas Health and Human Services. Guide to the Medicaid Estate Recovery Program The adult child provision is sometimes called the caretaker child exception, but Texas does not require that the child provided medical care. Continuous residence in the home for at least a year before death is what matters.
The Undue Hardship Waiver
When none of the automatic exemptions apply, heirs can still ask the state to waive recovery on hardship grounds. The most useful version protects the family home.
Homestead Hardship
If the home’s tax appraisal value is under $100,000 and every heir who would inherit it has gross family income below 300% of the federal poverty level, the state will exempt the home from recovery.4Legal Information Institute. 1 Texas Administrative Code 373.209 – Undue Hardship Waivers For 2026, that income cap is $47,880 for a single person and $64,920 for a family of two.5HHS ASPE. 2026 Poverty Guidelines If the home appraises for more than $100,000, the first $100,000 is still shielded when the income test is met; only value above that is exposed.
Other Hardship Grounds
Recovery can also be waived if the estate is the heir’s primary source of income, or if collecting the claim would push the heirs onto public assistance themselves. Any hardship waiver request uses Form 5006, the Application for Hardship Waiver, filed with supporting financial documentation within 60 days of receiving the Notice of Intent to File a Claim.6Legal Information Institute. 1 Texas Administrative Code 373.307 – Notice of Intent to File a Claim upon the Death of a Medicaid Recipient Missing that window does not automatically kill your right to contest the claim, but it makes everything harder.
What Happens After the Recipient Dies
Within 30 days of learning about the death, MERP sends a Notice of Intent to File a Claim to the estate representative, guardian, power of attorney, or known family members.6Legal Information Institute. 1 Texas Administrative Code 373.307 – Notice of Intent to File a Claim upon the Death of a Medicaid Recipient The packet includes a program explanation, a questionnaire, and the hardship waiver form.
MERP does not offer payment plans. If the claim is valid and no exemption or waiver applies, the estate’s probate assets pay it.7Texas Health and Human Services. Medicaid Estate Recovery Program FAQs If the questionnaire and waiver paperwork are not returned, or if the waiver is denied and nothing else settles the matter, the state can file a formal claim in probate court.
Planning Ahead to Keep Assets Out of Reach
Because Texas only recovers from probate, most protection comes down to keeping valuable assets out of the probate estate.
Transfer on Death Deed
A Transfer on Death Deed lets a homeowner name someone who takes the property automatically at death, without probate. The home stays outside MERP’s current reach. A TODD does not move ownership during the owner’s lifetime, so it does not trigger Medicaid’s asset transfer penalties, and the owner can revoke it at any time. There is a risk to know about: if the probate estate cannot cover its debts, a court could potentially pull the property back to satisfy creditors. Texas could also expand its definition of “estate” someday, though it has not.
Lady Bird Deed
An enhanced life estate deed, or Lady Bird deed, works on the same principle. The owner keeps the right to live in, sell, or mortgage the home during life, and it passes to the named beneficiary automatically at death. It has a longer history in Texas Medicaid planning than the TODD.
Beneficiary Designations
Payable-on-death designations on bank accounts, named beneficiaries on retirement accounts and life insurance, and joint tenancy with right of survivorship all keep those assets out of probate and out of MERP.3Texas Health and Human Services. Guide to the Medicaid Estate Recovery Program
One timing warning. Transferring assets for less than fair market value within five years of applying for Medicaid can trigger a penalty period where Medicaid will not pay for long-term care. These moves work best done well before any Medicaid application is on the horizon.
When a Living Recipient Does Owe Money
MERP is only about after-death recovery. A living recipient can still be on the hook, but only for benefits they should not have received in the first place. If Medicaid was paid based on incorrect information about income, assets, or household, the state can pursue the overpayment directly, whether the error was innocent or intentional.
Deliberate fraud carries much heavier consequences. The Texas Medicaid Fraud Prevention Act, in Chapter 36 of the Texas Human Resources Code, lets the state recover the full fraudulent amount, impose civil penalties per violation, and seek additional damages. The Office of the Attorney General handles those cases, and outcomes can include permanent exclusion from Medicaid. Criminal charges are possible too, ranging from misdemeanors to felonies depending on the amount.
Honest mistakes are handled differently. Reporting a change in income or assets to HHSC promptly protects you from a fraud allegation, even if it turns out you were briefly overpaid. The state may still ask for the overpayment back, but without the penalties that come with fraud.