Texas Medicaid Estate Recovery and Mobile Homes — What Heirs Need to Know

If you are an heir dealing with the estate of a parent or relative who spent time in a Texas nursing facility, you may receive an unexpected letter from the state demanding repayment for Medicaid-paid long-term care. That letter is a Notice of Intent to File a Claim from the Texas Medicaid Estate Recovery Program — better known as MERP. When the estate includes a mobile or manufactured home, MERP creates a layer of complexity that traditional inheritance guides rarely address. This article walks you through how Texas implements MERP, how the program interacts with personal-property and real-property manufactured homes, which heirs qualify for exemptions and hardship waivers, and how to structure a sale so the claim is handled cleanly without erasing what your family is entitled to keep.

What Is MERP and How Does Texas Implement It?

The Medicaid Estate Recovery Program is a federal mandate under the Omnibus Budget Reconciliation Act of 1993 (OBRA ’93). Every state must attempt to recover certain Medicaid expenditures from the estates of deceased beneficiaries who received long-term care after age 55. How aggressively each state implements the mandate varies widely. Texas has taken a relatively restrained approach compared with states like Iowa or Massachusetts, but Texas MERP is still very real and very much in force.

In Texas, MERP is administered by the Health and Human Services Commission (HHSC) and operated through a contracted vendor (currently Health Management Systems, or HMS). The program recovers costs only for these categories of Medicaid services received on or after March 1, 2005:

• Nursing facility services
• Intermediate Care Facilities for Individuals with an Intellectual Disability (ICF/IID)
• Home and community-based services (STAR+PLUS HCBS, CLASS, DBMD, HCS, and TxHmL waivers)
• Related hospital and prescription drug services received during the above

Critically, Texas MERP does not recover the cost of community Medicaid — meaning basic acute-care Medicaid received by people who never entered long-term care. If your mother received Medicaid only for doctor visits and prescriptions and never entered a nursing home or HCBS waiver, her estate is not subject to MERP. The program also excludes services received before age 55.

This is the single most important thing for heirs to verify first: did the deceased actually receive a MERP-recoverable service? Many families panic over a letter for Medicaid they assumed triggered recovery when in fact it did not.

MERP Claims Only Against the Probate Estate in Texas

Federal law gives states the option to extend MERP beyond the probate estate to non-probate transfers like joint tenancy, life estates, and living trusts. Some states have expanded recovery this way. Texas has not. Texas MERP reaches only assets that are part of the deceased’s probate estate.

This distinction is the single most powerful planning tool families have. If the deceased owned a mobile home jointly with rights of survivorship, the home passes automatically to the survivor and bypasses the probate estate entirely — MERP cannot touch it. If the home was titled to a revocable living trust, it passes to the successor trustee by trust administration rather than through probate, and MERP cannot reach it.

For heirs reading this article after a death has already occurred, the relevant question is simple: is the mobile home going to pass through the county probate court? If it is, MERP applies. If it is not, MERP generally does not.

For aging planners reading this before a death, the implication is larger. Coordinating ownership structures with an elder-law attorney while your family member is still healthy — or even after a nursing-home admission but before death — can lawfully position assets outside the probate estate. That conversation is well worth the consultation fee and sits far outside what a manufactured-home broker can advise on.

Non-Probate Strategies and Their Limits for Mobile Homes

Because MERP in Texas only reaches probate assets, the most common planning tools are designed to keep property out of probate. Each tool interacts with manufactured homes a little differently depending on whether the home is titled as personal property through TDHCA or as real property attached to land.

Transfer on Death Deed (TODD)

Texas has recognized the Transfer on Death Deed since 2015. The owner of real property can record a deed naming one or more beneficiaries who receive the property automatically at death, bypassing probate. It is revocable during the owner’s lifetime and costs little to record.

Important limit for mobile homes: The TODD only applies to real property. A manufactured home titled as personal property through TDHCA is not real property and cannot be transferred by TODD. If the home has been permanently attached and converted to real property — with a recorded Statement of Ownership showing the home as an improvement to the land and a TDHCA SOL indicating the Election of Real Property filed — then the TODD can cover the land plus the affixed home. Absent that conversion, the TODD covers only the land, and the home on top of it remains subject to separate TDHCA transfer rules and, potentially, probate.

Lady Bird Deed (Enhanced Life Estate Deed)

Texas also recognizes the Lady Bird Deed, which functions similarly to a TODD but preserves the owner’s right to sell, mortgage, or otherwise change course during life. Like the TODD, it applies only to real property, not to personal-property manufactured homes. The planning use case for mobile-home families is almost always a Lady Bird Deed on the land paired with separate TDHCA planning on the home itself.

Joint Ownership with Rights of Survivorship

Two or more owners can hold a manufactured home in Texas with rights of survivorship. At the death of one owner, the home passes automatically to the surviving owner and never enters probate. This is relatively simple for personal-property homes: TDHCA can issue the original Statement of Ownership in multiple names with a survivorship designation. Families should work with an attorney to make sure the designation is properly worded — Texas does not presume survivorship from joint ownership alone without an explicit written agreement.

Revocable Living Trust

A revocable living trust remains the most comprehensive non-probate tool. The grantor places the home into the trust during life and names a successor trustee to distribute assets at death. For a personal-property manufactured home, the trust holds the Statement of Ownership in the name of the trust. For a real-property home, the trust holds title to the land and the affixed home together. Because the trust owns the asset and trusts do not die, nothing passes through probate. Texas MERP does not reach trust assets.

Trusts require thoughtful drafting and ongoing maintenance. They are more expensive up front than a TODD or joint-ownership arrangement but provide broader protection and flexibility.

How Property Classification Affects MERP Exposure

Every Texas manufactured home is titled either as personal property (through TDHCA’s Statement of Ownership) or as real property (by filing a Statement of Location and recording the conversion in county deed records). Our Texas Statement of Ownership guide covers the mechanics in full.

For MERP purposes, the classification matters in three practical ways:

• Available planning tools: The TODD and Lady Bird Deed apply only to real property. Personal-property homes have fewer formal non-probate transfer tools and rely more heavily on joint ownership or trusts.
• Probate process: A personal-property home transfers through TDHCA with Form T plus probate documentation. A real-property home transfers through county deed records and possibly through probate, depending on the deed structure.
• Valuation for MERP’s $10,000 threshold: The probate estate value includes both personal-property and real-property assets. A modest personal-property home valued at $8,500 with no other significant probate assets may put the estate under the $10,000 floor entirely.

Classification does not itself make a home immune from MERP. A personal-property mobile home in the probate estate is reachable by MERP just as much as a site-built house in the probate estate. The difference is in the planning tools available to keep the home out of the probate estate in the first place.

Texas MERP Exemptions Heirs Should Know

Even when a mobile home sits squarely inside the probate estate, Texas recognizes several exemptions that can block MERP recovery entirely or defer it until the protected party’s circumstances change.

Surviving Spouse

MERP cannot recover while a surviving spouse is alive. Period. The claim does not disappear — it is deferred. Once the surviving spouse dies, Texas can still attempt recovery from the original Medicaid recipient’s estate if assets remain traceable. In practice, if the spouse sells or transfers the home during life, the MERP claim effectively ends.

Child Under 21

If the deceased is survived by a biological or adopted child under age 21, MERP will not pursue the estate. This exemption does not require the child to live in the home or have received anything specific from the estate.

Blind or Permanently Disabled Child

A child of any age — not limited to minors — who is blind or permanently and totally disabled under Social Security Administration standards triggers an exemption. Documentation of the disability is required, typically an SSA award letter.

Caregiver Child Exemption

A son or daughter who lived in the home for at least two years immediately before the parent’s institutionalization, and who provided care that delayed the need for nursing facility placement, can claim the caregiver child exemption. This exemption is particularly powerful for mobile-home families because the documentation (shared address records, caregiving evidence, a physician’s letter confirming the care delayed institutionalization) is often readily assembled. When a daughter moved in with her mother four years ago to help her manage around the house and extended her mother’s ability to stay home, that caregiver child has a strong claim to the home free of MERP.

Sibling with Equity Interest

A sibling of the deceased who had an equity interest in the home and lived there for at least one year before the deceased’s institutionalization is also exempt. This scenario is less common but real for older mobile-home owners who co-owned with a sibling.

Low-Value Estate Thresholds

Texas does not pursue recovery if the probate estate is valued at less than $10,000, if total Medicaid long-term care costs are less than $3,000, or if the cost of recovery would exceed the amount recoverable. The $10,000 estate threshold quietly closes many mobile-home cases where the home is the primary asset and the home is modest in value.

Exemptions do not apply automatically. An heir or estate representative must claim them in a written response to the Notice of Intent. Failing to respond within the deadline can forfeit an exemption that would otherwise clearly apply.

The Undue Hardship Waiver in Texas

When no statutory exemption applies, Texas still offers an undue hardship waiver for heirs whose circumstances would make recovery unjust or devastating. The waiver is not automatic and is not generous — but it is available and worth pursuing when the facts support it.

Texas recognizes several hardship categories:

• Income-producing property: Recovery would deprive an heir of the primary source of income (such as a working family farm, business, or rental property).
• Homestead of modest value: The estate property is a homestead of modest value occupied as the primary residence by an heir who would be forced onto public assistance if recovery proceeded.
• Severe financial hardship: Documented income, expense, and asset information demonstrates that recovery would cause significant financial harm. This is the catch-all category and requires the strongest documentation.

To apply, the estate representative or heir submits a written request to the MERP contractor within 60 days of the Notice of Intent. Supporting documentation typically includes:

• Tax returns for the past two or three years
• Pay stubs, Social Security award letters, pension statements
• Monthly expense budgets
• A written narrative explaining the hardship
• Appraisal or market analysis of the home

Approval rates improve dramatically when an elder-law attorney prepares the submission. The state is not looking for reasons to grant waivers; applicants must make the case affirmatively and completely.

Can Heirs Sell the Home Before MERP Files?

This is one of the most common questions we get from heirs: if MERP has not yet filed a claim, can we just sell the home and move on? The answer is yes, but with a critical caveat.

Selling the home does not extinguish a MERP claim if the home was part of the probate estate at the time of death. An executor or administrator has a fiduciary duty to address known creditor claims before distributing estate assets to heirs. Cashing out the home and distributing the proceeds to family members without accounting for MERP can expose the estate representative to personal liability and expose heirs to clawback.

The right sequence for a probate-estate mobile home is:

1. Notify HHSC of the death (or confirm HHSC has been notified through the death certificate process) and request a claim figure.
2. Apply any applicable exemptions or hardship waivers.
3. If a claim amount remains owed, arrange the sale so that MERP is paid directly out of closing proceeds via the settlement statement.
4. Obtain a release of lien from HHSC at closing.
5. Distribute the remaining proceeds to heirs per the will or intestate succession.

Handled this way, the sale closes cleanly, MERP is satisfied, and heirs receive whatever remains without risk of later clawback. For a deeper look at the probate side of the transaction, see our guide on selling a mobile home in probate in Texas.

The scenario heirs should not pursue: selling the home for cash, distributing to family members, and then responding to the MERP notice with “we no longer have the home.” HHSC can pursue the estate representative personally and the heirs who received distributions.

Working With an Elder-Law Attorney and a TDHCA Broker Together

MERP cases sit at the intersection of elder law, probate law, and Texas manufactured-home regulation. No single professional covers all three. The strongest outcomes come from a coordinated team.

The elder-law attorney handles the MERP response, exemption claims, hardship waiver if applicable, and coordination with HHSC. They also navigate Texas probate filings, creditor claims, and any complications with the will or intestate succession. For MERP cases specifically, a qualified Texas elder-law attorney typically pays for themselves several times over in reduced recovery.

The TDHCA-licensed broker handles the home itself: title research, Statement of Ownership transfer, lien clearance, valuation, and sale execution. A broker who has worked multiple MERP cases knows how to coordinate with the attorney, structure the closing statement so MERP is paid directly, and hand back a clean release of lien to the estate.

If you are just starting this process, bring in the attorney first. They can assess whether MERP applies, which exemptions fit, and whether the estate will benefit from a hardship waiver. Once the legal strategy is set, they bring in the broker to execute on the sale. For background on the broader inheritance process, read our companion piece on inheriting a mobile home in Texas.

How Mobile Bye Bye Handles MERP-Complicated Estates

Mobile Bye Bye is not a law firm. We are a TDHCA-licensed manufactured home brokerage, and we work with elder-law attorneys regularly to close MERP-involved estates. Here is what our role looks like in practice:

• Title research: We pull the current Statement of Ownership, verify the lien status, and confirm the home’s classification as personal or real property.
• Coordination with the estate attorney: We work off the attorney’s timeline. If a hardship waiver is pending, we hold the sale. If a MERP claim figure is confirmed, we price and close accordingly.
• Transparent offer: Our offer accounts for the MERP claim as a closing-statement line item. Heirs see exactly what goes to MERP, what goes to closing costs, and what comes back to the estate for distribution.
• Flexible closing window: Two to four weeks is typical once title is established and the MERP figure is known. Faster is sometimes possible, and we can delay closing if the attorney needs more time on a waiver application.
• No repairs, no cleanout required: We buy as-is. Families navigating MERP on top of grief do not need another project.
• Release of lien at closing: Our closing process includes confirming HHSC’s release of lien before funds disperse, protecting the estate representative from later clawback risk.

For heirs who are considering whether to sell at all, our complete guide to selling a mobile home in Texas covers valuation, timing, and the market choices you face. For the mechanics of moving title from the deceased to the estate or to a buyer, see how to transfer a mobile home title in Texas.

FAQ: Medicaid Estate Recovery & Mobile Homes in Texas

What is Texas Medicaid Estate Recovery (MERP)?

The Medicaid Estate Recovery Program (MERP) is a federally mandated program that requires each state to seek reimbursement from the estates of deceased Medicaid recipients for certain long-term care benefits they received after age 55. In Texas, MERP is administered by the Health and Human Services Commission (HHSC). Texas only recovers against the probate estate and only for long-term services such as nursing facility care, home and community-based services, and related hospital and prescription drug costs. Community Medicaid (acute care for people who never received long-term care) is not subject to recovery in Texas.

Does MERP apply to a mobile home in Texas?

MERP can apply to a mobile home in Texas if the home is part of the deceased Medicaid recipient’s probate estate and none of the statutory exemptions or hardship waivers apply. The analysis depends on how the home is titled (personal property through TDHCA or real property attached to land), how ownership passes at death (probate versus non-probate), and whether a qualifying heir (surviving spouse, minor child, disabled child, or caregiver child) lives in or has rights to the home.

How do I know if my parent’s mobile home is subject to MERP?

Start by confirming whether the deceased received long-term care Medicaid after age 55. HHSC will typically mail a Notice of Intent to File a Claim to the estate representative within 90 days of receiving notice of death. If no notice has arrived, you can contact the MERP contractor directly. Then determine if the home is part of the probate estate: assets held in a living trust, homes transferred by Transfer on Death Deed for real property, and jointly owned property with rights of survivorship are typically outside the probate estate and not subject to MERP in Texas.

Can MERP take the mobile home if it is personal property rather than real property?

Yes, MERP can assert a claim against a mobile home titled as personal property through TDHCA if it is part of the probate estate. The personal-versus-real-property classification matters more for the mechanics of transfer and for estate-planning tools such as the Transfer on Death Deed, which only applies to real property. A personal-property manufactured home that passes through probate is still a probate asset and can be reached by MERP, subject to exemptions and hardship waivers.

What are the MERP exemptions in Texas?

Texas MERP will not pursue a claim if the deceased is survived by a spouse, a child under age 21, or a child of any age who is blind or permanently and totally disabled. Additional protections include the caregiver child exemption (a son or daughter who lived in the home for at least two years immediately before the Medicaid recipient’s institutionalization and provided care that delayed the need for nursing-home placement) and the sibling exemption (a sibling with an equity interest who lived in the home for at least one year before institutionalization). Texas also does not pursue estates valued under $10,000, estates where recovery cost exceeds recoverable amount, or estates where long-term care benefits totaled under $3,000.

Can heirs sell the mobile home before MERP files a claim?

Heirs can sell the mobile home before MERP files a formal claim, but doing so does not automatically eliminate the claim. If the home was part of the probate estate at the time of death, MERP can still pursue reimbursement from the sale proceeds or from the heirs who received distributions. The right approach is to notify HHSC promptly, request a claim figure, and close the sale with proper accounting for the claim rather than trying to move the asset before MERP can act. See our article on capital gains tax on a mobile home sale in Texas for related tax considerations at closing.

How do I apply for a MERP hardship waiver?

An heir or estate representative applies for an undue hardship waiver by submitting a written request to the MERP contractor (currently HMS) within 60 days of the Notice of Intent to File a Claim. Texas recognizes several hardship categories, including when the estate property is the primary source of income for the heir, when the property is a homestead of modest value occupied by an heir who would be forced onto public assistance, and when recovery would cause severe financial hardship documented by specific income and expense evidence. Include tax returns, income statements, and a written narrative. An elder-law attorney can substantially improve the odds of approval.

How fast can I close a sale to help settle a MERP-complicated estate?

If title can be established and the MERP claim amount has been requested from HHSC, a direct cash sale with Mobile Bye Bye can typically close in two to four weeks. The closing settlement statement pays the MERP claim directly out of proceeds, the heirs receive any remainder, and the estate representative obtains a release of lien from HHSC. This is usually faster and cleaner than listing the home on the retail market, which extends holding costs while the clock ticks on other creditor claims and probate deadlines.

Mobile Bye Bye works with Texas heirs navigating MERP-complicated estates across the state. We partner with your elder-law attorney to close the home sale cleanly and release MERP at closing. Call 737-214-0172 for a free, no-obligation consultation.

Disclaimer: This article is for informational purposes only. Ivan Mills and Mobile Bye Bye are TDHCA-licensed manufactured home brokerage professionals — we are not attorneys, financial advisors, tax professionals, or Medicaid specialists. Medicaid Estate Recovery is complex legal territory governed by federal regulations, Texas statutes, HHSC policy, and case-specific facts that change over time. Nothing in this article constitutes legal, financial, tax, or Medicaid advice. Every family’s situation is different, and the wrong step in a MERP case can cost tens of thousands of dollars or expose heirs and estate representatives to personal liability. Before taking any action on a MERP-involved estate, consult a licensed Texas elder-law attorney. Use this article as background reading to prepare for that conversation — not as a substitute for it.