By Chuck Roulet, Estate and Elder Law Attorney | Licensed in Florida and Minnesota
Families who learn that their parent has been approved for Medicaid long-term care benefits often feel a wave of relief. The immediate crisis — how to pay for care — has been resolved. What many families do not know is that the Medicaid program does not simply absorb the cost of that care. After the recipient passes away, the state has the right to seek reimbursement from their estate — including, in many cases, the family home.
This is called Medicaid estate recovery, and understanding how it works is essential for any family that wants to protect the inheritance they are counting on.
What Medicaid Estate Recovery Is
Federal law requires every state to operate a Medicaid Estate Recovery Program, commonly called MERP. After a Medicaid long-term care recipient passes away, the state files a claim against the deceased person's estate to recover the cost of care that Medicaid paid on their behalf.
In practical terms, if your parent received Medicaid long-term care benefits for three years at a cost of $10,000 per month, the state may file a recovery claim of up to $360,000 against the estate. If the primary asset in the estate is the family home — which many families assumed was "safe" because it was exempt during the parent's lifetime — the state can require that the home be sold to satisfy the recovery claim.
The Lifetime Exemption vs. Post-Death Recovery
This is the distinction that surprises families most consistently, and it is worth being very clear about.
While your parent is alive and on Medicaid, the primary residence is generally exempt from Medicaid's asset test — meaning it is not counted as an asset that must be spent down before Medicaid kicks in. The nursing home cannot force a sale of the home while your parent is living.
But after your parent passes away, the home is no longer protected by the lifetime exemption. It becomes part of the estate — and the state's recovery claim attaches to the estate. The same house that could not be touched during your parent's lifetime can be required to be sold after their death to repay Medicaid.
How Estate Recovery Works in Florida
Florida's Medicaid estate recovery program pursues claims against the probate estate of a deceased Medicaid recipient. Assets that pass outside of probate — through a properly structured irrevocable trust, through beneficiary designations, or through other non-probate transfer mechanisms — may not be subject to Florida's estate recovery claim, depending on how they are structured.
Florida also recognizes several hardship exemptions that can sometimes reduce or waive a recovery claim — for example, if enforcement would cause undue hardship to a surviving dependent who lived in the home. These exemptions are narrow and not automatically granted; they must be formally requested and documented.
Florida also recognizes the Lady Bird Deed — an enhanced life estate deed that allows the family home to transfer automatically to named beneficiaries at the parent's death, outside of probate, and currently without triggering an estate recovery claim under Florida's Medicaid program. That being said, for reasons that go beyond the scope of this article, I do not recommend Lady Bird deeds to my clients. Rather, a trust tends to be the better planning tool for most families.
How Estate Recovery Works in Minnesota
Minnesota operates one of the broader Medicaid estate recovery programs in the country. Unlike Florida, which limits recovery to the probate estate, Minnesota's MERP can pursue claims against both probate assets and certain non-probate assets in some circumstances. This broader reach makes advance planning particularly critical for Minnesota families.
Minnesota does recognize hardship waiver applications and allows family members to apply for deferral of recovery in certain situations — such as when a sibling who lived in the home for at least two years prior to the parent's institutionalization wishes to continue living there. However, these waivers are conditional and require timely application.
How to Protect the Family Home From Estate Recovery
The most reliable protection against Medicaid estate recovery — in both Florida and Minnesota — is advance planning that places the home outside of the Medicaid recipient's estate before a claim can arise. The primary tools are:
- A Medicaid Asset Protection Trust: transferring the home into a properly structured irrevocable trust at least five years before a Medicaid application removes it from the estate and from estate recovery. The parent can typically continue to live in the home after the transfer.
- A Lady Bird Deed (Florida only): allows the home to transfer automatically at death outside of probate, and currently outside of Florida's estate recovery program. Again, not recommended.
- Strategic asset planning with an elder law attorney: in some cases, other structural approaches may be available depending on the family's specific circumstances and the state's current MERP rules.
All of these approaches must be implemented in advance — ideally years before care is needed. For the full picture of how estate recovery fits into the inheritance planning conversation, read our complete guide here: Click here to read the article.
Ready to Protect Your Family's Inheritance? Call Us Today.
Whether you are a parent who wants to protect what you have built, or an adult child who wants to make sure your family's plan actually works — a conversation with an experienced estate and elder law attorney is the most important step you can take. Call us today to schedule your consultation at either (941) 909-4644 for our Sarasota County, Florida office or at (763) 420-5087 for our Minnetonka, MN office.
Or fill out the contact form on this page and a member of our team will reach out to schedule your consultation.
If you would like to discover more, here are some additional resources for you:
Free Resource: Download "Save Our Home"
Our free guide walks through exactly how families use legal planning to protect their home and savings from long-term care and nursing home costs. Click here to download your copy.
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Register for our free estate planning masterclass — learn the strategies I use with my private clients to avoid probate, protect assets, and build a plan that actually works. Click here to register.
Chuck Roulet is an estate and elder law planning attorney at Roulet Law Firm, P.A., with offices in Minnetonka, Minnesota and Venice, Florida. He is licensed in both states and has nearly 30 years of experience helping families protect their homes, life savings, and legacies.
This page is for informational purposes only and does not constitute legal advice. Please consult a licensed attorney about your specific situation.
