Medicaid Estate Recovery (MERP) Notice — What It Means & What to Do

MERP is a federal program that allows states to recover Medicaid costs from the estate of deceased beneficiaries. When someone receives Medicaid benefits (especially nursing home care, which is expensive), the state pays for it. After they die, the state tries to recover that money from their estate.

This applies to:

• Long-term care services (nursing home, assisted living, home health)
• Hospital stays, medications, medical services
• Sometimes even community-based Medicaid

Key point: It's not optional for the state, but there are legal exemptions. The most important ones:

• Home occupied by surviving spouse: almost always exempt
• Home occupied by disabled child: often exempt
• Small estates: may be exempt (threshold varies $10K-$15K)
• Hardship situations: can be waived

Federal law protects the home if a surviving spouse lives there. This is absolute — the state cannot recover against a home occupied by a surviving spouse, no matter how much Medicaid was paid.

What you need to do:

• Respond to the MERP notice in writing
• State: "My spouse/surviving spouse lives in the home at [address]. Under federal law, this home is exempt from MERP recovery."
• Include: Proof that surviving spouse lives there (lease, deed, utility bill, mail address)

Important note: If the surviving spouse dies later, then the home becomes subject to recovery. But while the spouse is alive and living there, it's protected.

Many states don't pursue recovery on small estates. The threshold varies: some states cap recovery at estates under $10,000, others at $15,000 or $20,000.

What you need to do:

• Find your state's small estate threshold (call your state Medicaid office)
• Calculate total estate value (all assets, cash, property)
• If estate is below threshold, ask state to waive recovery based on small estate rule

Important: Even if you're not below the small estate threshold, it's worth asking. Some states exercise discretion on borderline cases.

Most states allow hardship waivers if recovery would cause undue hardship. This includes situations where surviving family members would suffer.

Hardship examples:

• Surviving spouse needs funds for medical care or living expenses
• Minor children would lose their home if property is sold
• Estate funds are needed for dependent care
• Survivor has significant medical debt or limited income

How to request waiver:

1. Write to your state's MERP recovery office
2. Explain the hardship: "Recovery of [amount] would create the following hardship: [spouse/children would lose home/medical care/dependent support]"
3. Include documentation: surviving spouse's income, dependents, medical needs, asset value
4. Request: "I request a hardship waiver of the MERP recovery based on the hardship this would create for [surviving family member]."

If you've exhausted all exemptions and no hardship waiver applies, you may still be able to negotiate:

• Partial payment or payment plan — If the estate can't pay in full, ask for a payment plan or negotiate a reduced settlement.
• Interest waiver — Some states will waive interest if you pay principal within a certain timeframe.
• Documentation review — Ask the state to detail what services were provided and verify the calculation. Sometimes the amount claimed is inflated.

How to approach:

1. Call the MERP recovery office
2. Say: "I've received the estate recovery notice for [amount]. I want to understand the calculation and discuss payment options."
3. Ask: "Can you break down which services are being charged? Is there a payment plan available?"
4. If interested, consult an elder law attorney — they often negotiate better terms and may cost less than paying the full claim.

[Your Name]
[Address]
[Phone]
[Date]

[State MERP Recovery Office]
[Address from MERP Notice]

RE: Response to MERP Notice — Estate of [Deceased Name], DOD [Date]

I am writing to respond to the MERP recovery notice dated [date] regarding the estate of [deceased name].

[Choose applicable exemption]:

Option 1 — Surviving Spouse: "The home at [address] is occupied by [spouse name], the surviving spouse of the deceased beneficiary. Under federal law, the home is exempt from MERP recovery while the surviving spouse resides there. Enclosed is proof of residency [utility bill/lease/deed]."

Option 2 — Small Estate: "The total estate value is approximately [amount], which is below your state's small estate threshold of [amount]. I request a waiver based on the small estate exemption."

Option 3 — Hardship: "Recovery of [amount] would create undue hardship for [surviving spouse/dependent children] because [reason: limited income, medical expenses, dependent care needs]. I request a hardship waiver. Enclosed are documents supporting this hardship: [list]."

I request written confirmation of your decision within 30 days. Please contact me at [phone] if you need additional information.

Sincerely,
[Your Signature]

Consider consulting an elder law attorney if:

• The MERP claim is $50,000 or more
• The estate has significant assets (real property, investment accounts)
• There's ambiguity about whether an exemption applies
• You've submitted an exemption claim and the state disagreed
• Multiple heirs are involved and there's disagreement about how to handle the claim
• You believe the state's calculation of benefits received is incorrect

How to find an elder law attorney:

• Contact your state bar association for referrals
• Search the National Academy of Elder Law Attorneys (NAELA)
• Ask your local Area Agency on Aging for recommendations

What to expect: An attorney consultation may cost $200-500 but can save thousands by negotiating a lower claim or securing an exemption.