Texas has rewritten the rules governing when the state bills a dead person’s estate for the long-term care Medicaid paid for, and the changes take effect Aug. 27. Three dollar figures move in families’ favor, and a fourth change makes it more likely heirs find out a claim is coming at all.
The program is the Medicaid Estate Recovery Program, run by the Health and Human Services Commission through its Office of Inspector General. Federal law requires every state to operate one. When someone 55 or older receives Medicaid-paid long-term care — a nursing facility stay, or care at home under a waiver — the state may file a claim against that person’s estate after death to recover what it spent. In Texas the claim enters probate as a Class 7 claim, which means it is paid only after funeral costs, secured debts, taxes and several other categories, if anything is left.
The amendments were published in the Aug. 21 Texas Register and rewrite 17 sections of the program’s rules. They were adopted exactly as proposed in the March 20 Texas Register. Under the heading, the agency wrote: “The 31-day comment period ended April 20, 2026. During this period, HHSC did not receive any comments regarding the proposed rules.”
The most consequential change is to the hardship waiver that protects a family home. Under the old rule, an heir could ask the state to waive its claim on undue hardship grounds if the appraisal district valued the homestead at less than $100,000. That ceiling rises to $150,000. Where the home is worth more, the rule now shields the first $150,000 of appraised value rather than the first $100,000. In counties where a modest house has drifted past six figures, that difference decides whether a claim reaches the house at all.
Two more thresholds move. The state will not file a claim at all if “the value of the recoverable estate is $15,000 or less,” up from $10,000, or if “the recoverable amount of Medicaid costs is $5,000 or less,” up from $3,000. Both sit in a section titled Recovery Not Cost-Effective, which also bars a claim when selling the property would cost as much as the property is worth. Together the two increases pull a band of small estates out of the program entirely.
The fourth change is about notice, and it came from Washington. The commission asked the federal Centers for Medicare and Medicaid Services for permission to send recovery notices to the last address the state had for the person who died, rather than relying on the estate’s representative to surface. The agency’s own account is that it “submitted a proposed State Plan Amendment (SPA) to the Centers for Medicare & Medicaid Services seeking approval to send MERP notices to the last known address of the Medicaid recipient upon their death to ensure the decedent’s heirs are aware of a possible MERP claim.” It adds: “The SPA was approved on July 31, 2026, with an effective date of July 2, 2026.” That approval had not previously been reported.
The exemptions that block a claim outright are unchanged in substance but restated in plainer terms. The state may not recover where the person who died leaves a surviving spouse; a surviving child under 21; a surviving child of any age who is blind or disabled under federal law; or an adult child who lived in the homestead continuously as an unmarried individual for at least twelve consecutive months immediately before the death.
The rest of the rewrite is cleanup with real edges. Claim procedures now cite the Texas Estates Code rather than the Probate Code it replaced. Contractors who file the state’s claims get more time to do it. The mailing address for challenging a hardship denial comes out of the rule text, which the agency said lets it update the address without a rulemaking.
The commission filed the amendments with the secretary of state Aug. 7 under document numbers TRD-202603326, -202603327 and -202603328. They are signed by Karen Ray, the commission’s chief counsel. The authority cited is Texas Government Code §546.0403, which directs the executive commissioner to make sure Medicaid carries out the federal estate recovery statute at 42 U.S.C. §1396p(b)(1).
The commission is moving on several Medicaid fronts at once. It proposed a separate rule in the same Aug. 21 issue creating “diversion slots” that would let medically fragile children enter a home-care waiver without first entering a nursing facility, as The Texas Dispatch reported. That one is open for comment until roughly Sept. 21. The estate recovery changes are not open for comment. They were adopted with no comments at all, and on Aug. 27 they become the rules that decide what the state can take from a Texas family after a death.