After She Dies on Medicaid, the State Will Send Her Estate a $140,000 Bill and Name the House. Her Son Has Lived There With Her for Nine Years on $31,000 a Year, and Under the State’s Own Hardship Rule the Claim Will Be Waived
When a parent dies on Medicaid, the state sends the estate a bill for every dollar it spent on care, and the family home is usually first in line. But federal law quietly gives one type of heir a way…
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If your parent gets Medicaid long-term care and you live in the parent’s home, the state will probably file a claim against the estate after the parent dies. Federal law also requires every state to run a Medicaid estate recovery hardship waiver process, which means an adult child who lived in the home and provided care can often use it to keep the house.
Let’s say you have a $140,000 claim that names the family home, and a son who has lived there with his mother for nine years, paying $31,000 a year. Under many state hardship rules, the heir can waive or defer that claim, but only if they file for it.
What the Recovery Notice Leaves Out
Something often left out of this conversation around estate recovery is how states get Medicaid money back from the estates of recipients who have died. If the person was 55 or older when the state provided care, the state must seek repayment for nursing facility services, home and community-based services, and related hospital and prescription drug costs.
The same federal law requires each state to establish procedures for waiving estate recovery when recovery would cause undue hardship. The state’s notice usually opens with the amount owed. You find the waiver in the state’s rules, and the heir must apply for it.
Where the Rule Is Written
The authority comes from Section 1917 of the Social Security Act, which is found at 42 U.S.C. 1396p. Subsection (b)(1)(B) requires recovery for recipients 55 and older.
Subsection (b)(2)(B) protects a home under a Medicaid lien while a son or daughter lives there who meets three tests: the child lived in the home for at least two years immediately before the parent entered a medical institution, provided care that kept the parent at home, and has lawfully resided in such home on a continuous basis since the admission.
Subsection (b)(3) requires states to waive recovery when it would cause undue hardship. Federal guidance gives homesteads of modest value and income-producing property as two examples of property that fits the hardship exception.
Who Qualifies and Who Gets Left Out
Tennessee’s TennCare program closely follows the federal language. Its undue hardship exception covers a son or daughter who lived in the home for at least 2 years immediately before the parent’s admission, gave care during those years that let the parent stay at home instead of in an institution, and has lived there ever since.
TennCare also puts off recovery completely while the recipient has a surviving spouse, a child under 21, or a son or daughter who is blind or disabled. Other states add a means test. For example, Michigan requires hardship applicants to satisfy a Means Test.
In this example, the son is close to the top of the bottom income group. In the Federal Reserve’s distributional accounts, the bottom 20% of households by income runs from $0 to $31,166, and that group held 2.8% of household net worth in 2026 Q2.
The protection does not reach children who moved in after the parent entered care, children who cannot document that they provided care, or heirs who have already left the home.
How to File for the Waiver
- Find the hardship application in the estate recovery notice and note the filing deadline. Deadlines vary by state.
- Gather proof that you lived in the home for the required period: tax returns, a driver’s license, voter registration, and utility bills sent to that address.
- Gather proof of care. A letter from the parent’s physician stating that your care kept the parent out of a facility carries the most weight.
- Gather income records if your state uses a means test. Some states set income limits based on the federal poverty guidelines.
- Send the application to the state’s estate recovery unit. In Tennessee, the heir submits a Request for Release, and the agency then files a release in probate court.
- Ask for a fair hearing if the state turns down your application.
When the Protection Runs Out
In many states, the waiver temporarily pauses recovery. Under TennCare’s rules, the hardship shall be considered to no longer exist once the son or daughter stops living in the home. If the son sells the house or moves out, the state can go after the claim again. Over that time, the home’s value can keep rising. The Case-Shiller national home price index stood at 337.3 in July 2026, up 1.9% from a year earlier.
The state also judges the care evidence, and the federal law requires the child to establish the care to the state’s satisfaction. Missing the filing deadline can end the waiver option.
Rules differ widely by state, and 36 states recover costs beyond what federal law requires, so check your state Medicaid agency’s current estate recovery rules before the parent’s death.
Contact [email protected] for any questions or corrections.
David Beren has been a Flywheel Publishing contributor since 2022. Writing for 24/7 Wall St. since 2023, David loves to write about topics of all shapes and sizes. As a technology expert, David focuses heavily on consumer electronics brands, automobiles, and general technology. He has previously written for LifeWire, formerly About.com. As a part-time freelance writer, David’s “day job” has been working on and leading social media for multiple Fortune 100 brands. David loves the flexibility of this field and its ability to reach customers exactly where they like to spend their time. Additionally, David previously published his own blog, TmoNews.com, which reached 3 million readers in its first year. In addition to freelance and social media work, David loves to spend time with his family and children and relive the glory days of video game consoles by playing any retro game console he can get his hands on.
