On July 1, 2026, Indiana law will increase the time the Indiana Medicaid office (FSSA) has to pursue estate recovery after a person’s death from 120 days to 9 months after date of death. This change primarily concerns Indiana Medicaid recipients over age 55.
Example: Sarah owns a small home worth $60,000. Her only income is $1,300 per month from Social Security. At age 90 she goes into the nursing home and qualifies for Medicaid to pay for her care until her death at age 92. Her home is rented to her daughter for fair market value rent of $800 per month, making it an exempt asset under the Indiana Medicaid rules. The home is subject to a transfer on death deed to her daughter. The State of Indiana now has nine (9) months after Sarah’s death to come into the county where the home is located to open an estate and file a claim to recover the funds paid for Sarah’s care. We would advise Sarah’s daughter to wait nine (9) months after Sarah’s death to record an affidavit to formally put the home into her name.
Indiana eliminated the inheritance tax in 2013. An estate is not subject to federal estate tax unless the decedent has more than $15 million as of the date of death. Indiana now has longer to pursue estate recovery from folks that are unfortunate enough to need financial help with their health care after age 55. Welcome to Indiana, where a person who dies with $10 million can leave their entire estate to their heirs, tax free, while Sarah may or may not be able to leave her small home to her daughter.
Respectfully submitted,
Keith P. Huffman
March 2026