San Antonio Express-News
December 21, 2004

MERP Update

copyright 2004, Paul Premack

Texas’ Medicaid Estate Recovery Program (MERP) has moved another step toward going into effect. More than a decade ago Congress required that all states begin recovery programs. Texas avoided and delayed until the end of 2003 when the legislature authorized the Commissioner of Human Services to design a program.

The Commissioner announced a set of proposed regulations in January 2004, then held public hearings in February. They were revised, delayed by a review in Washington, and revised again. The final set of revised regulations was recently published in the Texas Register for public comment.

Texas welcomes your written input on the proposal until January 3, 2005. Comments should be sent to Kathleen Anderson at P.O. Box 13247, Austin, Texas 78711-3247, or by fax to (512) 424-6586. You can read the proposed rules on my website at www.Premack.com by clicking here.

MERP is supposed to go into effect on March 1, 2005. Anyone who is already receiving Medicaid’s long-term-care assistance will be exempt from the program. Any new recipients after March 1, 2005 will be exposed to MERP, including those receiving long-term care, community based assistance or care for the mentally retarded.

An applicant’s homestead is an exempt resource, so a person can legally qualify for Medicaid despite owning a home. However, when the person dies, MERP allows the state to make a claim in probate court that can be paid by selling the home. It is likely that the home will be the only remaining asset that could pass to family, and though MERP can recover some of the taxpayer’s costs, it interferes with the inheritance.

The biggest change in the new proposal is to restrict a family’s ability to claim that "hardship" should exempt them from MERP. Only siblings or lineal descendants can assert a hardship claim, and then only when that person’s family income is below 300% of the federal poverty level. Thus, a married couple must have less than $2,487 income per month. An unmarried heir must have income less then $1,692 per month.

Several exemptions that were in the first MERP proposal are still there. The state cannot make a MERP claim if there is a surviving spouse, an under 21 child or a disabled child living in the house, an unmarried child of any age living in the house (if he/she has lived there at least a year).

Other opportunities to plan around MERP may still exist. If the home can legally be kept out of probate court via rights of survivorship, living trust or life estate, then the state will have no opportunity to bring its claim. These strategies are untested, but the Texas estate recovery program has not yet begun to operate. Read the proposal and express your opinion to the state before the January 3 deadline passes.