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Texas Medicaid Estate Recovery — What the State Can Take, Who Is Exempt, and the Hardship Waiver (2026)

By Oleg Kachko · Updated September 6, 2026

✓ Verified September 2026

Texas Medicaid Estate Recovery is the letter that arrives after a parent on Medicaid dies: the state asking to be repaid, from the estate, for the nursing home and medical care it covered. Federal law requires every state to seek that repayment for long-term care costs after age 55, but each state decides how far it reaches, which heirs are protected, and when it must let the claim go.

This guide gives the Texas answer in plain English: what the state can take, when it must wait, who is exempt, how the hardship waiver works, and what happens to the house. All facts are from Texas law, verified as of September 2026.

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Texas Medicaid Estate Recovery: At a Glance

Here are the Texas facts that decide most Texas medicaid estate recovery claims:

Governing statute or rule Texas Government Code §531.077 (Medicaid Estate Recovery Program), implemented by 1 Texas Administrative Code Chapter 373 (Subchapter A General, §§373.101–373.105; Subchapter B Recovery Claims, §§373.201–373.219; Subchapter C Notices, §§373.301–373.307). Claims are asserted under the Texas Estates Code as Class 7 claims (Estates Code §355.102 classification; presentment under Chapter 355). Chapter 373 was amended by HHSC rules filed August 7, 2026, published in the August 21, 2026 Texas Register, effective August 27, 2026.
Agency that files the claim Texas Health and Human Services Commission (HHSC), Medicaid Estate Recovery Program (MERP), operated through a contractor. Written requests, hardship waiver applications, and home-maintenance/cost-of-care deduction requests go to: MERP, P.O. Box 13247, Austin, Texas 78711. The contractor line has been 1-800-641-9356 (HMS Inc./Gainwell, P.O. Box 166889, Irving, TX 75016-6889); MERP operations transitioned to Stellarware Corporation effective September 1, 2026, so confirm the current claims address with HHSC before mailing.
What the state can reach PROBATE ONLY. Under 1 TAC §373.103 and §373.203, MERP asserts a Class 7 claim against the decedent’s probate estate — the real and personal property described by Texas Estates Code §22.012. Texas has not adopted the optional federal expanded-estate definition, so joint accounts with right of survivorship, pay-on-death and transfer-on-death accounts, transfer-on-death deeds, enhanced life estate (“Lady Bird”) deeds, remainder interests passing outside probate, living trust property, and life insurance and annuities paid to a named beneficiary are generally outside MERP’s reach.
What is recovered Texas recovers only the cost of covered long-term care services and supports, not all Medicaid services. Recovery applies to a recipient who was age 55 or older when services were received and who initially applied for covered long-term care services on or after March 1, 2005 (1 TAC §373.103). Covered categories include nursing facility care, intermediate care facilities for individuals with intellectual disability, state supported living centers, and §1915(c) Medicaid waiver programs, plus related hospital and prescription drug costs incurred while receiving those services.
Claim deadline Under 1 TAC §373.203 as amended effective August 27, 2026, MERP must present or file its Class 7 probate claim within 120 days after it receives notice of the recipient’s death (increased from 70 days). Once presented, Texas Estates Code §355.051 gives the personal representative 30 days to allow or reject the claim, and §355.052 deems it rejected on the 31st day if no action is taken. MERP must then sue on a rejected claim within 90 days (Estates Code §355.064).
Estates not pursued / limits MERP will not file when recovery is not cost-effective: the value of the recoverable estate is 10000 or less, or the Medicaid claim is 3000 or less, or the expected cost of selling the property exceeds its value (1 TAC §373.207). The claim may also be reduced by documented necessary and reasonable home maintenance costs — taxes, insurance, utilities, and repairs — and by the reasonable costs of care that kept the recipient at home, if requested within 60 days. HHSC charges no interest.

What Texas Medicaid Estate Recovery Can Actually Take

The claim is against the estate, not against the children. No heir in Texas is personally liable for a parent’s Medicaid bill; the state is a creditor of whatever the parent left, and if the estate is empty the claim goes unpaid. What counts as the estate is the question that matters.

Every state can reach the probate estate — assets in the parent’s name alone that pass through the court. Some states stop there. Others have adopted an expanded definition that reaches joint accounts, life estates, assets in a living trust, and property passed by a transfer-on-death deed, and in those states the planning that avoided probate does not avoid the state.

The amount is the total Medicaid actually paid for the covered services, and it is usually far larger than families expect — nursing home care at the Medicaid rate runs into six figures within a few years. The state cannot recover more than it paid, and it cannot recover from an estate while a surviving spouse or a dependent child is alive; the Texas rules on both are below.

When Texas Must Wait or Cannot Recover

Under 1 TAC §373.207, no claim is filed while there is a surviving spouse; a surviving child under 21; or a surviving child of any age who is blind or permanently and totally disabled under Social Security Act standards. Texas treats these as bars on filing rather than as claims held open.

HHSC may pursue recovery later only if the estate remains open and the protected status ends; families should confirm status with HHSC or a licensed Texas attorney.

The caregiver-child and sibling exemptions: Texas does not codify the federal two-year caregiver-child exemption or a sibling equity-interest exemption as separate estate-recovery exemptions, because those federal provisions govern liens and transfers, and Texas places no MERP liens. Instead, 1 TAC §373.207 exempts the estate where an unmarried adult child resided continuously in the decedent’s homestead for at least one year before the death.

Separately, 1 TAC §373.209 gives a homestead hardship waiver to siblings and lineal heirs meeting income limits.

The Texas Hardship Waiver

1 TAC §373.209 waives recovery where it would cause undue hardship.

Recognized grounds: the estate property was a family business, farm, or ranch operated at least 12 months before death and produces 50 percent or more of the heirs’ livelihood; heirs would become eligible for public or medical assistance without the waiver; the inheritance lets survivors leave public assistance; the recipient received assistance as the result of a crime; the homestead passes to siblings or lineal heirs (children,

grandchildren) whose gross family income is below 300 percent of the federal poverty level, protecting homestead value up to 150000 as amended effective August 27, 2026; or other compelling reasons.

A waiver request must be filed within 60 days of the date of the Notice of Intent to File a Claim, on the form supplied with the notice or Form 5006. MERP decides within 40 days of receiving a complete request. Hardship does not exist merely because heirs lose an expected inheritance, or because assets were sheltered by estate planning contrary to Medicaid law.

The Family Home and Texas Medicaid Estate Recovery

Texas files no TEFRA lien and no post-death lien on the homestead — recovery is by probate claim only (1 TAC §373.203). The homestead is protected from any claim while a surviving spouse, a child under 21, a blind or disabled child of any age, or an unmarried adult child who lived there continuously for one year before death survives (§373.207).

Texas Estates Code Chapter 353 homestead and exempt-property protections also apply. A hardship waiver protects homestead value up to 150000 for qualifying low-income siblings and lineal heirs.

How the Claim Arrives and How to Respond

Two notices apply. At application, 1 TAC §§373.301–373.307 require HHSC to give the applicant written MERP notice, acknowledged on Form 8001. After death, 1 TAC §373.303 requires MERP to mail a Notice of Intent to File a Claim to the estate representative, heirs, or the recipient’s last known address within 60 calendar days after MERP learns of the death (increased from 30 days effective August 27, 2026).

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The notice includes a questionnaire, deduction request, and hardship waiver form. No lien is filed.

Disputing the claim: An applicant whose undue hardship waiver is denied may request a written review under 1 TAC §373.211 within 60 calendar days of the denial notice; MERP completes the review within 40 days. This is an informal administrative review, not a Medicaid fair hearing at SOAH.

Separately, the personal representative may reject the Class 7 claim in the probate court under Texas Estates Code §355.051, forcing MERP to sue within 90 days; heirs may also object to the claim’s amount or classification in that court. Check with your county probate court or a licensed Texas attorney.

Other Texas rules: Texas is a probate-only recovery state and has never adopted expanded-estate recovery, so non-probate transfers are a widely used planning route. Texas started MERP late — only claims tied to long-term care applications on or after March 1, 2005 are recoverable — and places no liens during life or after death. The unmarried-adult-child one-year residence exemption is Texas-specific.

Certain American Indian and Alaska Native property on or near reservations and allotments is exempt under §373.207. HHSC’s August 27, 2026 amendments lengthened the notice and claim deadlines and raised the homestead hardship protection to 150000.

Mistakes That Make Texas Medicaid Estate Recovery Cost More

The first mistake is ignoring the letter. A Texas medicaid estate recovery notice carries a deadline to object or request a waiver, and silence is treated as consent; the estate’s personal representative then has no defense when the claim is paid ahead of the heirs. The second is distributing the estate before the claim is resolved.

A personal representative who hands the house to the children and then receives the state’s claim can be personally liable for what should have been paid.

The third mistake is assuming the house is safe because it avoided probate. In an expanded-recovery state it may not be, and in every state a lien placed during the parent’s life survives death. The last mistake is not asking for the waiver because the family assumes it will be denied.

The exemptions for caregiver children, disabled children, and low-value estates exist because the law expects them to be used, and the agency cannot apply one nobody claimed.

What to Expect from Texas Medicaid Estate Recovery

A Texas medicaid estate recovery claim arrives as a letter to the personal representative or a claim filed in the probate case, stating the amount Medicaid paid and the deadline to respond.

It is handled like any other creditor claim: the estate can pay it, object to the amount, assert an exemption, or request a hardship waiver, and the probate court or the agency’s hearing office decides what it cannot settle.

Two things surprise families. The first is the size of the number — years of nursing home care at the Medicaid rate. The second is that the exemptions are real and routinely granted when someone asks for them.

A surviving spouse, a disabled child, a caregiver child who kept the parent home, or an heir who would be left destitute can each stop or reduce a Texas medicaid estate recovery claim, but only by saying so in writing before the deadline.

You don’t have to do this alone

If you are settling a loved one’s estate in Texas, your state’s probate court self-help center and free legal-aid offices can walk you through the process at no cost. For an active probate or a deadline, talk to a licensed probate attorney in your state.

Key Takeaways: Texas Medicaid Estate Recovery

  • The estate pays, not the children: Texas medicaid estate recovery is a claim against what the parent left, never a personal debt of the heirs.
  • Scope is everything: whether Texas medicaid estate recovery reaches only probate assets or also joint accounts and trusts is the fact that decides the house.
  • Deferral is mandatory: Texas medicaid estate recovery must wait while a surviving spouse, a child under 21, or a disabled child of any age is alive.
  • The caregiver child is protected: a child who lived in the home and provided care for two years can usually stop Texas medicaid estate recovery on the house.
  • Ask for the waiver: every state must offer undue-hardship relief from Texas medicaid estate recovery, but only to families that request it in writing.

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Official Texas Sources & Resources

This Texas guide was last verified against official sources in September 2026. Laws change — verify with the state Medicaid agency or a licensed attorney.

More Texas Estate Guides

Disclaimer: This guide is informational only and is not legal or tax advice. Estate, probate, and tax laws change and vary by state and county. Verify current rules and dollar figures with your state’s court, statute, or a licensed attorney or tax professional before acting. For urgent matters like an active probate or a tax deadline, consult a licensed professional in your state right away.

Estate planning? Make sure your life insurance is in order — see Life Insure Guide. Worried about Medicaid estate recovery? See Medicare Cover Guide. Divorced recently? Update your will and beneficiaries — see Divorce Help Guide.