What happens when a person was on Medicaid dies, yet still has property? Do you have to have an estate sale and payback Medicaid?

Different states have different provisions, but generally the answer is yes. This is called "Medicaid Estate Recovery." In North Carolina where I live, for example, upon death the State will file a claim against the estate like any other creditor. The estate cannot be closed until the claim is paid.

There are ways around this using retitling and remainder deeds, but these are very complcated and, if done wrong, can impose enormous sanctions. Unfortunately, they require the services of a skilled elder care attorney who specializes in Medicaid spenddowns.