The Texas Department of Insurance estimates that nursing home care can cost from $30,000 to $50,000 per year. With the high cost of long-term care, it is not uncommon for individuals to deplete their savings and assets to the point that they qualify for Medicaid.  The federal government is by far the largest payer of long-term care, with Medicaid paying for almost half of all long-term care expenses in 2004.  While Medicaid allows individuals to retain certain assets and still qualify for long-term care assistance, the law requires Medicaid and Texas to attempt to recover these assets upon the person’s death in a process known as estate recovery.  Being informed about the estate recovery process can help one make long-term retirement plans. 

What can the state recover? Texas can recover assets of a deceased individual if the person received Medicaid assistance for long-term care and related services.  Typically estate recovery is applied to a person’s home, but also includes other assets, but is limited to only those assets owned by the beneficiary at the time of recovery.

Exemptions from recovery.  Texas cannot attempt to recover an individual’s assets if there is a surviving spouse or child under the age of 21, or surviving children of any age who are blind or meet Social Security requirements for disability.  Texas also cannot make a recovery if 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. Furthermore, Texas can make estates exempt in the event of a hardship. Examples include when the estate has been the site of a family business, or if recovery would make an estate’s heirs eligible for public or medical assistance.  Finally, Texas will only attempt a recovery if it is cost-effective for the state.  Estates valued at $10,000 or less, and Medicaid expenses of less than $3,000 will not be pursued by the state.  Similarly, if the cost of selling the property equals or exceed the property’s value, no recovery will be made. 

Protecting your assets.  Federal laws contain numerous provisions detailing what counts as an “asset” for the purposes of qualifying for Medicaid.  Many individuals have plans for their estates that seek to protect their assets for themselves and their heirs.  Such planning is best done in consultation with an attorney, especially as laws surrounding estate recovery and avenues for protecting assets often change.  The latest changes that affect rules about Medicaid assets protection rules were made in 2005.  

Know Your Rights.  This article is meant to highlight some of the issues and concerns surrounding long-term care and financial planning, including implications of obtaining Medicaid assistance for long-term care expenditures.  The Texas Department of Aging and Disability Services has more information on its website at dads.state.tx.us Making decisions about your financial security in retirements is best done in consultation with a financial advisor or qualified attorney. 

Readers who wish to write to Representative Doggett about estate recovery or federal issue can send a note by mail to 300 E. 8th Street, Suite 763, Austin 78701; via e-mail at lloyd@mail.house.gov or on house.gov/doggett.