Medicaid Hardship Waiver in North Carolina – Protecting an Inherited Home from Estate Recovery
Detailed Answer
When a North Carolina Medicaid recipient dies, the State may seek reimbursement for the cost of that person’s care through the Estate Recovery Program (ERP) under N.C. Gen. Stat. § 108A-70.5. The claim attaches to any assets that pass through probate, including the family home you may have just inherited.
If recovering against the property would create an unfair burden, you (or another affected heir) can apply for a Medicaid hardship waiver. A successful waiver prevents or reduces the State’s claim, allowing the property to remain in the family.
1. Who May Apply?
- Any heir, devisee, or personal representative who will be harmed by recovery.
- The applicant must act within the statutory time limits once the ERP notice is mailed.
2. What Qualifies as “Undue Hardship”?
The Division of Health Benefits (DHB) must waive or compromise recovery if it would create one of the hardships listed in § 108A-70.5(c) or the rules at 10A NCAC 21D .0502. Common scenarios include:
- The property is the sole income-producing asset of the heir (e.g., a small family farm).
- The heir has lived in the home continuously for at least 12 months before the decedent’s death and their household income is below 200 % of the federal poverty level.
- Sale would force the heir to become eligible for public assistance.
- The property has little or no equity after valid liens.
3. Step-by-Step Application Process
- Watch for the Notice. After the estate is opened, DHB (through its ERP contractor) sends a written claim. The notice states your 60-day deadline to seek a hardship waiver.
- Download or request Form DMA-5057, “Request for Undue Hardship Waiver.” You can obtain it from the ERP contractor or the NC Medicaid website.
- Gather evidence. Typical documents include:
- Recent tax returns, pay stubs, or benefit statements for each household member.
- A current property tax card or appraisal showing the home’s value.
- Mortgage, lien, or HOA statements proving encumbrances.
- Utility bills, driver’s license, or voter registration showing continuous occupancy.
- Complete the form clearly and attach proof. Inconsistent or missing data is a key reason for denial.
- Submit before the deadline to the address provided in the notice (currently the ERP contractor in Raleigh). Keep proof of mailing.
- DHB Review. The agency must send a written decision. If no decision arrives within 90 days, follow up in writing and keep copies.
- Appeal if denied. You have 30 days to request a contested-case hearing with the N.C. Office of Administrative Hearings under § 150B-23.
- If granted, file the waiver letter in probate court. The personal representative may then close the estate without paying the ERP claim against the home.
Helpful Hints
- Act fast: Missing the 60-day window almost always forfeits your right to a waiver.
- Document everything: Hard copies of bills, IDs, and photos of the home add credibility.
- Partial relief possible: Even if you do not meet every rule, DHB can accept a reduced settlement.
- Keep the home out of probate when possible: Life-estate deeds and Lady Bird deeds recorded before death avoid ERP entirely.
- Get probate court extensions: If the ERP decision is pending, ask the clerk for more time before distributing assets.
Take the Next Step
Medicaid estate recovery rules are strict, but a timely hardship waiver can keep the family home where it belongs. Our North Carolina probate attorneys routinely guide heirs through the waiver process, defend appeals, and explore deed strategies to avoid recovery altogether. Protect what your loved one left you—call us now at (919) 341-7055 for a confidential consultation.
