Medicaid Estate Recovery: What States Can Take After Death

Most Americans never hear of the Medicaid Estate Recovery Program until they are served with a claim against a deceased parent’s house. The mechanism is federal, mandatory, and roughly thirty years old: every state must attempt to recover certain Medicaid costs from the estates of beneficiaries who used long-term care after age 55. In fiscal year 2019, states collectively recovered about $733.4 million — equal to roughly 0.55 percent of total fee-for-service spending on long-term services and supports.^[1] The number is small relative to the program; the bill to an individual family is not.

What surprises most heirs is that the federal mandate is narrower than the recovery letter implies. States have wide latitude to expand the program above the federal floor, and roughly two-thirds of them do. The interesting question for any family with a parent on Medicaid long-term care is not whether estate recovery exists — it does — but which version of it applies in your state and which protected categories block it.

What federal law actually requires

The Medicaid Estate Recovery Program (MERP) is rooted in the Omnibus Budget Reconciliation Act of 1993, codified at 42 U.S.C. § 1396p(b). Federal law requires every state to attempt recovery in two situations:

For beneficiaries age 55 or older who received nursing facility services, home- and community-based services (HCBS), or related hospital and prescription drug services. This is the floor every state must enforce.
For beneficiaries of any age who were permanently institutionalized while on Medicaid.

States may also recover Medicaid managed-care premiums that were paid on behalf of an enrollee who would have been subject to recovery under fee-for-service. They may not recover from the estate while a surviving spouse is alive, while a child under 21 lives, or while a child of any age who is blind or has a disability lives. Those federal prohibitions are absolute and do not depend on state choice.^[1]

The five protected categories that block recovery

Federal law identifies a short list of survivors whose presence in the recipient’s home defers or eliminates recovery. These are the categories that families most often miss when planning. Each requires factual documentation; none is automatic.

Surviving spouse. Recovery is deferred while the spouse is alive. States vary on whether they pursue recovery against the spouse’s own estate after the spouse later dies, but the lifetime protection itself is federal.
Child under 21. Recovery is deferred while a minor child of the deceased Medicaid recipient survives.
Adult child who is blind or has a disability. No age limit applies. A medically documented disability protects the child indefinitely; the protection survives the child’s own residence in the home or elsewhere, depending on state implementation.
Sibling with equity interest in the home. A sibling who held an ownership interest in the home and resided there for at least one year immediately before the recipient’s institutionalization is protected, provided the sibling has continued to live there.
Caregiver child. An adult child who lived in the parent’s home for at least two years immediately before institutionalization and whose care kept the parent out of a nursing facility during that period is protected. States typically require contemporaneous documentation — physician statements, prescription records, dated logs — that the care actually delayed institutionalization.

States are also obligated to maintain a hardship-waiver process under 42 CFR § 433.36(h). Federal law does not define hardship; states do. Forty-nine states report having a hardship waiver pathway, and forty describe additional circumstances under which they will release a claim.^[2]

Where the federal floor ends and state choice begins

Above the floor, states make four separate decisions. Each one increases the size of the recoverable estate.

1. Which Medicaid services count toward recovery

The federal mandate covers long-term services and supports for those 55 and older. States may choose to recover any Medicaid expenditure on those beneficiaries — doctor visits, hospital stays, prescription drugs, anything the program paid for. According to KFF’s September 2024 survey, 32 states recover for all Medicaid benefits for beneficiaries 55 and older, and another five recover for some optional benefits beyond the federal minimum. Twenty-eight states recover from at least some beneficiaries under age 55.^[2]

2. Which assets the state can reach

Federal law tells states to recover from the “estate” without defining what an estate contains. States choose between two regimes:

Probate-only states recover against assets that pass through probate — typically property held solely in the deceased’s name. Joint accounts, life-insurance proceeds payable to a named beneficiary, and assets in a properly funded living trust generally avoid probate and therefore avoid recovery.
Expanded-definition states reach beyond probate. They can recover against jointly held property, life estates, retained interests in trusts, and other arrangements designed to bypass probate. Twenty-seven states use some form of expanded definition.^[2] Minnesota’s statute modifies probate law specifically to subject life-tenant and joint-tenant interests to recovery; Iowa is frequently cited as one of the broadest in scope.

3. Asset-specific treatment

A handful of common assets behave differently than the typical probate analysis suggests:

Joint tenancy with right of survivorship. In probate-only states, JTWROS property typically passes outside the estate. In expanded-definition states, the recipient’s fractional interest is reachable. Adding a joint owner to a deed is itself an asset transfer that can trigger the 60-month Medicaid look-back; see our Medicaid spend-down guide for what counts as a transfer.
Life estates. If a parent retains a life estate while gifting the remainder, the life estate ends at death and the remainder passes outside probate. Probate-only states cannot recover against the remainder; expanded-definition states often can recover the value of the life-estate interest itself, calculated by IRS actuarial tables.
IRAs and retirement accounts. Treatment varies. If a named beneficiary is in place and outside the estate, the account typically passes outside recovery. If the estate is the beneficiary — whether by designation or by default after the named beneficiary predeceases — the account becomes a probate asset and is recoverable.
Properly funded irrevocable trusts. Assets transferred to an irrevocable trust outside the 60-month look-back are generally not part of the estate and not recoverable, provided the recipient retained no income interest or power that would pull the assets back into the estate.
Life insurance. Proceeds paid to a named living beneficiary bypass the estate. Proceeds payable to the estate (because no beneficiary was named, or the named beneficiary predeceased the insured) are estate assets and recoverable.
Irrevocable prepaid funeral contracts. Exempt for eligibility purposes. Most states recover any residual funds in the funeral trust after the funeral is paid for.

4. How aggressive the recovery posture is in practice

MACPAC’s fiscal year 2019 analysis found that five states — Massachusetts, New York, Pennsylvania, Ohio, and Wisconsin — collectively accounted for 38.5 percent of all national MERP collections.^[3] Iowa and Tennessee have historically been cited for broad recovery practices, including pursuit of managed-care premiums and aggressive use of probate claims.

Two state reforms that meaningfully narrowed recovery

Both of the major state reforms of the past decade restrict MERP to the federal mandatory floor rather than expanding it.

California (AB 1763, effective January 1, 2017). For deaths on or after that date, Medi-Cal estate recovery is limited to long-term care services for beneficiaries 55 and older or those permanently institutionalized; recovery applies only to assets that pass through California probate; claims against the estate of a surviving spouse or registered domestic partner are prohibited; and the state must waive claims against homesteads of modest value. The reform converted California from one of the most aggressive recovery states into one of the narrowest.^[2]
Massachusetts (Chapter 197 of the Acts of 2024, effective August 1, 2024). Massachusetts scaled MassHealth recovery back to the federal minimum, limiting it to nursing-home care, HCBS, and related hospital and prescription drug services for beneficiaries aged 55 or older. CommonHealth and personal-care-attendant services are now exempt. Before this reform, Massachusetts ranked among the top five states by absolute recovery dollars.^[4]

The pattern is consistent: states reform MERP downward, not upward. The current trend in state law is contraction, not expansion. Federal legislation has been proposed — the “Stop Unfair Medicaid Recoveries Act” would prohibit recovery when a home is transferred to a Medicaid-eligible or low-income successor — but no federal restriction has cleared Congress as of mid-2026.^[2]

What typically qualifies for a hardship waiver

Hardship waiver criteria differ by state, but the categories that recur are narrow and specific. Anything outside them is rarely waived without litigation.

Heir-occupied homestead. The home is occupied by a survivor in one of the federally protected categories — surviving spouse, minor child, disabled child, sibling with equity interest, or caregiver child — with documentation of the qualifying condition.
Sole income-producing asset. The estate consists primarily of a family farm, small business, or similar asset; recovery would reduce the heir’s income below a state-defined threshold (often 250 percent of the federal poverty guideline).
Heir would become eligible for needs-based assistance. Recovery would push the heir onto Medicaid, TANF, or similar programs — producing no net fiscal benefit to the state.
Home of modest value. Some states automatically waive recovery against homes valued at or below a threshold tied to the county or state median (often roughly half the average local home value).

States typically require the waiver application within a defined window after the recovery notice — commonly 30 to 60 days. Missing the window converts a likely waiver into a litigated claim.

The policy critique most families never hear

MACPAC’s March 2021 report on estate recovery concluded that the program recovers approximately 0.55 percent of fee-for-service LTSS spending while imposing costs that “may exceed the savings.” The commission’s recommendations to Congress include making MERP optional rather than mandatory, allowing states that deliver LTSS through managed care to recover the cost of services used rather than premiums paid, and setting federal minimum standards for hardship waivers — including exemptions for sole income-producing assets, homes of modest value, and estates below a threshold value.^[3]

Justice in Aging, the Center for Medicare Advocacy, and the National Health Law Program have all published analyses arguing that MERP disproportionately recovers from low-income families and families of color, who tend to hold a larger share of their lifetime wealth in a home — the asset most likely to be reached by recovery. The structural critique is not that recovery is unjust as a matter of policy; it is that the federal mandate compels recovery in cases where the math doesn’t work.

What to do if your parent is on Medicaid long-term care

The window for useful planning is mostly before recovery, not after. A small number of steps materially change what is recoverable:

Read your state’s MERP policy in writing. Every state Medicaid agency publishes either a notice or a manual chapter explaining its recovery scope. Whether your state recovers all Medicaid spending or only LTC, and whether it uses an expanded estate definition, is the single piece of information that drives every other decision.
Confirm whether any federally protected survivor is in the home. A surviving spouse, minor child, disabled child, qualifying sibling, or caregiver child blocks recovery while they live there. Documentation of the qualifying status — medical records for a disabled child, school records for a minor, a contemporaneous physician statement of caregiving for a caregiver child — should exist before death, not be assembled afterward.
Understand which assets are estate assets in your state. A non-probate asset in a probate-only state is unreachable; the same asset in an expanded-definition state is not. Beneficiary designations on retirement accounts and life-insurance policies should be reviewed; assets titled in joint tenancy may behave differently than expected depending on state law.
Don’t plan around the 60-month look-back at the last minute. Asset transfers within the 60-month look-back can defeat Medicaid eligibility entirely, not just trigger a partial period of ineligibility — see our Medicaid spend-down guide for how the math works and which transfers are exempt. Recovery planning that depends on transfers within the look-back is generally too late.
If recovery has already been initiated, act within the waiver window. Hardship waiver applications, fair-hearing requests, and inventory disputes all have short windows. The recovery notice will state the deadline; missing it converts the claim from waivable to fixed.

For state-by-state Medicaid eligibility rules — the rules that determine whether a parent qualifies for the long-term care coverage that later triggers recovery — see the Medicaid by state guide. For a related case study of how a single state administers HCBS waivers and the wait times that decide who gets coverage in time, see Florida’s SMMC LTC waitlist explained.

Where to verify everything in this post

MERP rules are federal at the floor and state-specific above it. The federal floor will not change without an act of Congress; the state rules can and do change — California and Massachusetts both narrowed their programs within the past nine years, and several other states have active proposals as of 2026. Before making a planning decision on the basis of any of the figures in this post, confirm the current state of the law with three sources: your state Medicaid agency’s estate-recovery page, the most recent MACPAC report on estate recovery, and KFF’s state-by-state Medicaid eligibility tracker.

Sources

[1] 42 U.S.C. § 1396p(b); 42 CFR § 433.36. Federal Medicaid Estate Recovery Program statutory and regulatory framework. medicaid.gov estate recovery overview.
[2] KFF, “Medicaid Estate Recovery: Improving Policy and Promoting Equity,” September 2024 analysis of state recovery scope, estate definitions, and hardship waiver practice. kff.org.
[3] MACPAC, “Medicaid Estate Recovery: Improving Policy and Promoting Equity,” March 2021 Report to Congress, Chapter 3. National recovery as a share of LTSS spending; state-level collection rankings; recommended federal reforms. macpac.gov.
[4] Massachusetts Executive Office of Health and Human Services, MassHealth Estate Recovery program changes under Chapter 197 of the Acts of 2024, effective for deaths on or after August 1, 2024. mass.gov.