The people who worry about Medicaid estate recovery are usually beneficiaries of someone who's received Medicaid services. Medicaid recipients do not pay premiums for this coverage, however, there are often strict income and eligibility requirements to have Medicaid. Using Medicaid benefits comes with the expectation that costs may be recovered from the recipient's estate after their death.

It's possible that you've heard stories about the Medicaid estate recovery process, and that these stories involve misunderstandings or miscommunications. However, to ensure accurate information and address any concerns that you may have, you should consult with an attorney that specializes in Medicaid and estate planning matters.

Key Takeaways

  • Medicaid estate recovery is offered in all 50 states. However, only the state in which you received benefits can pursue estate recovery, and recovery efforts are limited to assets within that state. 
  • If certain criteria are met, Medicaid can seek repayment of services after a recipient has died.
  • If the recovery of Medicaid funds would cause undue hardship to certain individuals, such as surviving spouses, minor children, or disabled children, the state may exempt or delay the recovery.

What is Medicaid Estate Recovery?

Medicaid estate recovery is a process by which state Medicaid programs seek to recoup the costs of long-term care services provided to Medicaid recipients after their death. When an individual receives Medicaid benefits for certain types of long-term care, such as nursing home care or home health services, the state may have the right to recover the expenses from their estate.

Medicaid estate recovery rules and eligibility criteria can vary by state, but they generally apply to recipients who received long-term care services or certain Medicaid benefits regardless of age or institutionalization status.

States attempt to recover payments from a Medicaid recipient after that person has died. These payments are often for services such as nursing facility services, home or community-based services, certain hospital services, and prescription drug services. The state can also attempt to recover payments for other types of services offered under Medicaid, except for expenses paid with the help of the Medicaid Savings Programs (MSPs). 

Two women in a nursing home

How Does Medicaid Estate Recovery Work?

Medicaid estate recovery is a process through which state Medicaid programs seek to recover the costs of long-term care services provided to Medicaid recipients after their death. The specific details and procedures of Medicaid estate recovery can vary state to state, but here is a general overview of how it typically works:

Identification of Estate

When a Medicaid recipient passes away, their estate is identified as the collection of assets and property they owned at the time of their death. This can include bank accounts, real estate, vehicles, investments, and other valuable possessions.


The state Medicaid agency will typically send a notice to the executor or administrator of the deceased Medicaid recipient's estate, informing them of the intent to pursue estate recovery. The notice will outline the amount owed and the process for satisfying the debt.

Estate Inventory

The executor or administrator of the estate is responsible for conducting an inventory of the deceased person's assets and liabilities, including any Medicaid liens or claims.

Medicaid Lien 

If the deceased Medicaid recipient received long-term care benefits, the state may have placed a lien on their property during their lifetime. This lien gives the state the right to recover the costs of care from the proceeds of the property sale.

Estate Distribution

Once the debts and expenses of the estate are settled, including any Medicaid claims, the remaining assets can be distributed to the heirs or beneficiaries according to the deceased person's will or state laws of intestacy.

Estate Recovery

If there are insufficient assets in the estate to satisfy the Medicaid debt, the state may pursue alternative methods of recovery. This can include selling assets, such as a home, to generate the funds necessary to reimburse Medicaid.

It's important to note that there may be exemptions or protections in place for certain individuals.

A little white house

Can Medicaid Take My House?

Estate recovery will be paid from the decedent's estate. So when you’ve heard that Medicaid can take your home, it’s because the home was the only remaining asset in the decedent’s estate.

It’s not uncommon for Medicaid to receive reimbursement by selling the decedent's house or placing a lien on the home.

However, Medicaid Estate Recovery cannot apply to the home if any of the following are true:

  • The decedent has a surviving spouse.
  • The decedent has children whose primary residence is the home, and the children are underaged.
  • The decedent has children who are blind or otherwise disabled, at any age, whose primary residence is the home.
  • If the state’s Medicaid agency receives a written request and has demonstrated the presence of undue hardship if the home is used in estate recovery.
  • In some states, if an adult child lived at home with their parents to care for them, for at least two years prior to their parents entrance into a nursing home, the estate may be protected from Medicaid Estate Recovery.
  • A sibling has equity interest in the home and lives there. They must have moved in 1 year prior to the Medicaid recipient’s move into a nursing home, and the equity interest has been properly documented.

What is the Undue Hardship Waiver?

The undue hardship waiver (undue hardship exception) allows the state to waive estate recovery if it would cause undue hardship for individuals who would face significant financial or other hardships if estate recovery was pursued. 

Every state has a different definition of undue hardship, but examples of undue hardship are: 

  1. Severe financial distress
  2. Estate recovery would negatively impact dependent family members who relied on the deceased Medicaid recipient for support, such as surviving spouses, minor children, or disabled children.
  3. Estate's recovery would hinder the ability to afford necessary medical treatments, medications, or ongoing care for a disabling or chronic condition.
  4. Estate has limited assets or income, making it difficult or impossible to maintain a minimal standard of living if recovery is pursued.
  5. Other extraordinary circumstances

Protect Your Estate From Medicaid Estate Recovery!

Understanding Medicaid Estate Recovery will help you take steps to keep your estate safe from the recovery process. And if you find this process overwhelming, you can work with our team at Carolina Family Estate Planning. 

We'll walk you through the estate recovery process, figure out whether it's something that you need to worry about, and help you plan to avoid the effects. You can contact our team today at (919) 899-2602 or schedule a 15-minute case assessment.

Comments are closed.