By Austin Senior Advisor Care Team · July 22, 2026
MERP does not put a lien on the house and does not arrive while your parent is alive. Here is what actually happens after death, worked through one Round Rock family's paid-off house, with the real deadlines, exemptions, and math.
One house in Round Rock, one letter after the funeral
Picture a common Williamson County situation. A widower has lived in the same Round Rock house for close to forty years. It is paid off. After a stroke at 79 he needs a wheelchair and round-the-clock help, and within a year he qualifies for and moves onto Medicaid nursing facility coverage. He dies at 83. His daughter, the executor, spends the next few weeks on a funeral, a death certificate, and a stack of paperwork. Then a letter arrives from a company she has never heard of, referencing something called MERP.
That letter is real, it is not a scam, and it is also not the end of the story. The Medicaid Estate Recovery Program lets Texas ask the estate of a deceased Medicaid recipient to repay what was spent on certain long-term care services. It is a genuine claim against an estate, filed in probate like any other debt, and it surprises families mainly because almost nobody explains it at the point care begins.
It is worth walking through exactly what happens from here, because the actual mechanics are narrower, slower, and more exception-riddled than the fear that circulates about it. The house is not seized. Nobody shows up with a lien. And in a meaningful share of cases, including ones close to this one, no claim is ultimately collected at all.
What MERP actually is, and what it does not do
MERP affects long-term care services and supports a person received after turning 55, and only if they first applied for those services on or after March 1, 2005. According to Texas Health and Human Services, the affected programs include nursing facility care, Intermediate Care Facility services, and Medicaid waiver programs such as STAR+PLUS long-term care services, Community Attendant Services, and several others. If a parent applied for long-term services before that 2005 date, MERP does not reach those services at all.
It is critical to be precise about timing here, because this is where families conflate two different things. MERP is a claim against the estate after death. It is not a lien against the house during a parent's lifetime, and Texas HHS states plainly that the program does not place liens on assets before or after death. Nobody can force a sale while a Medicaid recipient is alive to satisfy a future MERP claim, and a living Medicaid recipient does not owe MERP anything directly.
There is also a formal ranking that matters. A MERP claim is classified under Texas Estates Code Section 355.102 as a Class 7 claim, which is paid after higher-ranked debts such as funeral expenses, administration costs, and any mortgage or other lien on the property. In the Round Rock scenario, if the house had an outstanding mortgage, that lender would be paid before MERP sees a dollar, regardless of what MERP is separately owed.
The notice, and the clock that actually starts running
The process begins when the state's estate recovery contractor learns of the death, typically from the death certificate or a probate filing. Texas HHS says the contractor sends a Notice of Intent to File a Claim within 30 days of learning of the death, mailed to the estate representative, executor, guardian, power of attorney, or family members known to have acted on the recipient's behalf. That notice includes a questionnaire about the estate and, importantly, an undue hardship waiver request form.
The daughter in this scenario has 60 days from the date of that Notice of Intent to submit an undue hardship waiver request, under 1 Texas Administrative Code Section 373.209. This is not a soft guideline. It is the actual regulatory deadline, and missing it forecloses the homestead-specific protection described below, though it does not necessarily foreclose the automatic exemptions covered next, since those turn on facts about the estate and heirs rather than a waiver application.
Once a complete waiver request and supporting documents are submitted, HHSC has 40 days to make a determination. Nothing about this process happens quickly, and nothing about it happens without paperwork. The single most useful thing a family can do in week one is confirm the date on the notice and count 60 days forward on a calendar, because that date, not the funeral, is the operative deadline.
The exemptions that apply automatically, no waiver needed
Before any hardship analysis, check whether one of the automatic no-claim conditions applies, because these require no application at all. Texas HHS lists them plainly: there is a surviving spouse; there is a child under 21; there is a child of any age who is blind or permanently and totally disabled under Social Security's definition; there is an unmarried adult child who lived full-time in the Medicaid recipient's home for at least one year immediately before the death; the value of the estate is $10,000 or less; total Medicaid costs subject to recovery are $3,000 or less; or the cost of selling the property would exceed what it is worth.
In the Round Rock scenario, if the daughter had lived in her father's house continuously for the year before he died, unmarried, MERP would not pursue the claim at all, full stop, without any hardship application or homestead math. That single fact ends the inquiry. This is the first thing to check, before spending any energy on appraisal values or income calculations, because it is the cleanest and most complete protection available.
None of these exemptions require proving hardship in the sense of showing financial need. They are structural exclusions written into the rule itself. A family that assumes it must fight for a waiver should first rule these out, since several of them are common: a surviving spouse alone ends the matter, and a disabled adult child living anywhere, not just in the home, also ends it.
The homestead hardship waiver: the math that decides an ordinary house
Assume none of the automatic exemptions apply in this family. The daughter is married, does not live in the house, and her father died as a widower. This is where the homestead-specific undue hardship waiver in 1 TAC 373.209(d) matters, and it turns on two separate tests that both have to be satisfied.
The first test is a value cap tied to the county appraisal district, not a sale price or a private appraisal. If the tax appraisal district value of the homestead is under $100,000, the entire home is exempt from recovery on hardship grounds. If it is higher, only the amount above $100,000 is exposed. Say the Round Rock house carries a Williamson Central Appraisal District value of $310,000. Under the rule, the first $100,000 is automatically excluded and only the remaining $210,000 of appraised value is potentially subject to recovery, not the full $310,000.
The second test is about who inherits and what they earn. The waiver is available to lineal heirs, meaning children or grandchildren, whose gross family income falls below 300 percent of the federal poverty level, measured for that heir's own household rather than combined across siblings. If our executor has two adult children as heirs and only one of them qualifies under that income test, the rule sets the outcome in fractions: only the qualifying heir's percentage share of the homestead is protected, and the non-qualifying heir's share of that same $210,000 of exposed equity remains subject to recovery. This example is illustrative of how the formula works, not a description of an actual public case, and the exact income threshold in dollars is republished by HHS annually, so confirm the current figure directly with MERP rather than relying on an old printed number.
The upshot for a family in this position is that the house is very often only partially exposed, and sometimes not exposed at all, once both tests are applied. That is a meaningfully different picture from families are told to expect.
What is not protected, and what can shrink the bill
The homestead hardship waiver is specific to the primary residence. A rental property, a second home, or land the family owns elsewhere does not get the same $100,000 carve-out, and out-of-state property owned by the estate is still part of it and still potentially reachable, according to Texas HHS's own FAQ. Meanwhile, assets that pass directly to a named beneficiary outside of probate, such as life insurance proceeds, retirement accounts, payable-on-death bank accounts, and jointly held accounts with survivorship rights, are not part of the probate estate at all and are never touched by MERP regardless of value.
Two categories of spending can reduce a MERP claim if the family kept records. Reasonable home maintenance costs paid while the recipient was in a nursing facility, things like property taxes, insurance, utilities, and lawn care, can be deducted from the amount owed. So can amounts paid for in-home personal care that genuinely delayed a move into a nursing facility, for services provided after Medicaid eligibility began. Both require receipts and documentation submitted to MERP; nothing is deducted automatically.
It is also worth knowing what never happens. MERP does not offer payment plans. Heirs are never required to pay a shortfall out of their own pockets if the estate's assets do not cover the full claim; recovery is capped at whatever the estate is actually worth. And a will naming an heir to inherit the house does not override the claim, because all debts against an estate, MERP included, are paid or resolved before property distributes under a will, though heirs can choose to pay the claim from other estate funds if they want to keep a specific asset intact.
The mistakes that make this worse, not better
The most common and most costly mistake is transferring the house to an adult child specifically to dodge a future MERP claim, whether by deed, an informal gift, or a hastily drafted document. Under 1 TAC 373.209(b), a hardship created by asset transfers done to avoid estate recovery does not qualify as undue hardship, which closes off the very protection the family was trying to preserve. Separately, that kind of transfer can also trigger Medicaid's own 60-month look-back period for eligibility purposes, a completely different penalty that can jeopardize coverage for care the parent still needs. Late, panicked transfers tend to backfire on both fronts at once.
A second mistake is treating the Notice of Intent as junk mail. Because it arrives weeks after a death, often from a contractor's name the family does not recognize, some families set it aside. The 60-day hardship clock does not pause for grief, travel, or a slow-moving probate case, and a missed deadline forecloses the homestead waiver even where the family would clearly have qualified.
A third is assuming that because a will says the house goes to the children, MERP has no say. It does. The claim is resolved as part of settling the estate's debts, the same as a credit card balance or a hospital bill, before the will's distribution plan is carried out.
What to do this month if a notice has arrived, or might
First, find the actual Notice of Intent and confirm its date, then mark the 60-day hardship deadline on a real calendar, not a mental one. Second, check the automatic exemptions before anything else: surviving spouse, minor child, disabled child of any age, or an unmarried adult child who lived in the home a full year before death. If any apply, say so in writing to MERP with supporting proof.
Third, if none apply, pull the county appraisal district's most recent value for the home, since that figure, not a Zillow estimate or a private appraisal, is what the $100,000 test uses. Fourth, gather each potential heir's household income documentation, since the 300 percent federal poverty level test is applied per heir, not per estate.
For case-specific questions, HHSC's estate recovery contractor, Health Management Systems, can be reached at 800-641-9356. If a complaint about the process itself is not resolved through MERP directly, the HHS Office of the Ombudsman takes calls at 877-787-8999. Before signing anything or transferring any property, talk to a Texas elder law attorney, since the interaction between MERP, the Medicaid eligibility look-back, and probate timing is genuinely fact-specific. Our overview of STAR+PLUS and Medicaid and our guide on what happens when the money runs out cover the planning side of this same question, and our earlier answer on whether Texas will take a house after Medicaid is a shorter starting point if this is the first time you are encountering any of it.
