The New Medicaid Recovery Act for Texas Residents

The federal government now requires each state to implement an estate recovery program, the purpose of which is to attempt to recover part or all of the costs associated with providing long-term care services through Medicaid. To comply with this federal requirement, the Texas Legislature recently directed the Texas Health and Human Services Commission ("HHSC") to establish a Medicaid estate recovery program.

HHSC developed rules after gaining input through a multi-step process that included a state agency workgroup, statewide public hearings, and public comment. The revised rules proposed in December 2004 also reflect input from the Centers for Medicare and Medicaid Services, which is the federal agency that has final approval authority on all Medicaid estate recovery programs.

The Texas Medicaid estate recovery program began operations on March 1, 2005. The Department of Aging and Disability Services ("DADS"), an agency under the oversight of HHSC, administers the program.

Under this program, the state may file a claim against the estate of a deceased Medicaid recipient, age 55 and older, who applied for certain long-term care services on or after March 1, 2005. Claims include the cost of services, hospital care, and prescription drugs supported by Medicaid under the following programs:

• Nursing facility
• Intermediate Care Facility for Persons with Mental Retardation (ICF/MR), which includes state schools
• Medicaid Waiver Programs including
  • Community Living Assistance and Support Services
  • Deaf-Blind with Multiple Disabilities Waiver
  • Home and Community-based Services
  • Texas Home Living Program
  • Consolidated Waiver Programs
  • Community Based Alternatives, which includes Star Plus services
• Community Attendant Services

Exceptions to Filing Claims

Medicaid Estate Recovery Program claims will only be filed when it is cost-effective. Claims that are considered not cost-effective are those where:

• The value of the estate is $10,000 or less.
• The recoverable amount of Medicaid costs is $3,000 or less.
• The cost of the sale of the property would be equal to or greater than the value of the property.

In addition, a claim may not be filed should one or more of the following conditions exist:

• There is a surviving spouse.
• There is a surviving child or children under 21 years of age.
• There is a surviving child or children of any age who are blind or permanently and totally disabled under Social Security requirements.
• There is an unmarried adult child residing continuously in the Medicaid recipient’s homestead for at least one year before the time of the Medicaid recipient’s death.

An undue hardship waiver may be filed when:

• The estate property is: a family business, farm, or ranch; is the primary income producing asset of the heirs; produces at least 50 percent of the livelihood for heirs for at least 12 months prior to the death of the Medicaid recipient; and recovery by the state would affect the property and result in heirs losing their primary source of income.
• Beneficiaries of the estate will be eligible for public or medical assistance if recovery claim is collected.
• Allowing one or more heirs to receive the estate enables them to discontinue eligibility for public or medical assistance.
• The Medicaid recipient received medical assistance as the result of being a crime victim.
• The value assessed by the tax appraisal district is less than $100,000 and the heirs have gross family incomes below 300 percent of the Federal poverty level.
• Other compelling reasons exist.

Additional Information

• Information about the filing process, allowable deductions, and asset transfers can be found in the Texas Medicaid Estate Recovery Program Receipt Acknowledgement Form, which is in PDF format.

• You also may call DADS at 1-800-458-9858. This line is answered by in-office staff from 8 a.m. to 5 p.m. Monday through Friday. Voice mail is available 24 hours a day, seven days a week, with a message that states the call will be returned the next day. Voice mail is monitored by in-office staff from 8 a.m. to 5 p.m. on Saturday, Sunday, and holidays. You can also send e-mail to charline.stowers@dads.state.tx.us.

Rules and Statutes Concerning Medicaid Recovery in Texas

• Texas Probate Code, Section 298, Claims Against Estates of Decedents
• Texas Probate Code, Section 301 Claims for Money Must Be Authenticated
• Texas Probate Code, Section 322, Classification of Claims Against Estates of Decedent
• Texas Administrative Code, Title1, Part 15, Chapter 373