This article by attorney Nicole Wipp at the Family & Aging Law Center about understanding medicaid estate recovery program rules in Michigan is not legal advice. It is for informational purposes only. For legal advice specific to you, don't hesitate to get in touch with our firm at (248)278-1511.

As we age, many seniors depend on Medicaid to help cover the costs of nursing homes and other healthcare expenses.

One of the biggest concerns is whether Medicaid can take your house, either during life or after death.

While Medicaid cannot directly take your house in either instance, there are multiple situations in which you may be forced to give the value of the home to the government.

Getting Medicaid benefits while in a nursing home comes with the risk of estate recovery. In estate recovery, Medicaid can seek reimbursement for the medical expenses covered after a Medicaid recipient dies.

In other words, Michigan Medicaid can put liens on any property the Medicaid recipient owned before passing away. Consequently, Medicaid estate recovery can threaten your assets, including your home. This blog will delve into what Medicaid estate recovery is, how it works, and how a Medicaid planning attorney can help protect your home from Medicaid.

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Your Home And Qualifying For Medicaid

First, let’s talk about qualifying for Medicaid.

In Michigan, Medicaid is a joint federal and state program that provides medical coverage to people with limited income and resources. To qualify, an individual or couple must meet certain eligibility criteria, including income and asset limitations. If you own a home, it is important to understand that Medicaid considers your home an asset.

However, in most cases, the Medicaid program will not count the value of your home if you are living in it and intend to return home if you are currently occupying a nursing home or assisted living facility.

When you apply for Medicaid for nursing home costs, the state will examine your assets to determine if you meet the eligibility requirements. Your home is one of the assets they consider. In Michigan, there is a resource limit for homes, and you may be able to keep your home even if you need Medicaid to pay for nursing home care.

Learn more about Difference Between Medicare and Medicaid in Michigan.

If you're worried about Medicaid taking your home, consult an experienced elder law attorney (like me!) to discuss your options.

(248)278-1511

How You Can Lose Your Home During Your Life If You Access Medicaid Benefits

If you own a home with equity of $713,000 (in 2024) or less, it is an "exempt," or non-countable, asset for Medicaid eligibility purposes.

That seems like a lot, and it is. Most people don't have that much equity in their homes. So, you may think you're safe.

But is that really enough to ensure you don't lose your home during your life? The answer is no.

The reason is that the expenses of maintaining the home continue to be an issue for many people. Medicaid only allows the covered individual to keep $2000 in their bank account, plus $60 a month. So, if the home needs to be sold, it becomes a non-exempt asset...and all that money must be spent.

This is a very common issue we see in our firm.

So even though Medicaid doesn't directly take your house, it can take it indirectly.

What Is Medicaid Estate Recovery?

When a person receives Medicaid benefits, the state has the right to recover expenses from the individual's estate after they pass away. This can include any property, assets, or funds left behind. In Michigan, the program includes a lien on the recipient's home upon death in probate.

This lien can be enforced after the recipient passes away, and the home can be sold to repay Medicaid for their expenses. For single or grown children living in the home, this can be a frightening prospect.

Under Michigan law, the Michigan Department of Health and Human Services (MDHHS) has the authority to pursue estate recovery against deceased Medicaid recipients. Upon a recipient's death, MDHHS can seek repayment of any costs it had incurred for the recipient's long-term care from their estate.

Learn more about how to avoid Medicaid taking your home here.

Medicaid Estate Recovery: How Your Kids Lose Their Inheritance

If Medicaid pays for nursing home care, the state can try to collect reimbursement for these costs after your death. As part of the Medicaid Estate Recovery Program (MERP), the state can place a lien on your home that must be satisfied before your heirs can receive any proceeds from the sale of the property.

While this may sound a little terrifying, understand that they only clump together with what the program has provided the cost to Medicaid recipients when evaluating eligibility.

Even so, many people are wondering if they will lose their home if they Medicaidpays for nursing home care. Generally, a person's home is an exempt asset, and there is no need to sell it to qualify for these benefits.

But if the house goes into probate after Medicaid pays benefits in a nursing home, you could be in trouble.

You CAN Avoid Medicaid Estate Recovery

If you are facing a situation where it seems that Medicaid will take or put a lien on your home during your nursing home care, a seasoned elder law attorney could discuss your alternatives for securely transitioning your property under Medicaid's five-year "look-back policy." Learn more. 

Some options can help you protect your assets. An experienced elder law attorney can be invaluable in navigating the complicated Medicaid program eligibility details for your specific case.

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Medicaid Estate Recovery Program Rules

If a Medicaid recipient receives coverage for long-term nursing home care in Michigan, estate recovery can involve seeking reimbursement for any valuable property transferred on or after the start of the nursing home care.

However, Medicaid also requires estate recovery after the recipient passes away. In Michigan, this means that the state can recover funds from the recipient's estate, including their home. If you are a single or grown child living in the home of a Medicaid recipient, estate recovery can be a serious concern.

If Medicaid Can Take Your Home After Death, Is There Anything I Can Do To Protect It While Still Getting Benefits?

If Medicaid can potentially take my home after death, is there anything I can do to protect my home? The answer is yes.

If the deceased individual has a surviving spouse, they can continue to live in the home without facing any recovery for Medicaid expenses. However, upon the death of the spouse or if the spouse sells the home, Medicaid may recover the funds spent on nursing home care.

The best way to protect your home from Medicaid recovery is through good estate planning by an experienced elder law attorney (yes, there is a difference between a lawyer who only does estate planning and one who is also experienced in elder law!).

An experienced Medicaid attorney can help you develop a plan to protect your home and other assets. While it’s important to plan ahead, it’s never too late to start protecting your assets.

A Medicaid Planning Attorney Can Help Protect Your Home From Medicaid

A Medicaid planning attorney can assist with protecting your home from estate recovery. One option is to transfer ownership of the home to a spouse or child, which can exempt it from estate recovery. However, this strategy needs to be carefully executed to comply with Medicaid regulations. An attorney can also help establish a trust to protect your home and other assets from estate recovery. This can ensure that your property passes to your loved ones and is not sold to repay Medicaid.

There are various strategies that a Medicaid planning attorney can employ to protect your home from Medicaid estate recovery. For instance, they can help you transfer assets to family members or establish a trust that can protect the assets from Medicaid recovery.

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Understanding Probate

Before we go into the details of how to keep your house out of probate, it’s important to understand what probate is and how it works. Probate is a legal process that takes place after someone dies. The process involves proving the validity of the deceased person’s will, identifying and managing their assets, paying off any debts or taxes owed, and distributing the remaining assets to the beneficiaries named in the will. The probate process can be lengthy and expensive, and it can take months or even years to complete.

When an individual passes away, their assets typically go through probate. This is the legal process by which a deceased person's estate is settled and distributed to their heirs.

However, there are techniques you can use to keep assets out of probate. One option is to set up a living trust. A living trust allows you to transfer ownership of your assets to the trust while you're still alive, so that when you pass away, your assets can be distributed to your beneficiaries without going through probate.

If you're married, you can set up a joint living trust that will protect both your and your spouse's assets.

Medicaid And Selling Your Home

If you sell your home while on Medicaid, you may lose the entire amount of the proceeds, because the asset (your home) which was previously exempt (not considered as part of your spend-down) converts to money. This money is now considered an asset, and in almost all cases, will put you in a situation where you are no longer eligible for Medicaid, and/or are required to spend it all to regain your benefits.

Here's the good news.

Our firm has strategies to protect some (and possibly all) of the proceeds. This is a legally complex issue, but it is worth it.

Contact us today to find out how! (248)278-1511

Keeping Your House Out Of Probate

Keeping your home out of probate is key to avoiding estate recovery.

Some of the strategies include creating a revocable living trust with a ladybird deed or an asset protection trust with the house directly funded to the trust.

Each option has its advantages and disadvantages, and it’s important to speak with our office because we can help you understand your options and choose the best course of action for your situation.

What Are The Benefits Of Working With An Attorney For Medicaid Planning?

A Medicaid planning attorney can assist with navigating complex legal issues surrounding Medicaid eligibility, asset protection, and estate planning. In addition to protecting your home from estate recovery, an attorney can help you maximize your benefits and minimize your out-of-pocket expenses.

They can also assist with advance directives and other end-of-life planning issues, ensuring that your wishes are carried out and your loved ones are not left with difficult decisions to make.

Planning For The Future

Planning for nursing home care as a single person in Michigan can feel overwhelming, but it's important to take steps now to protect yourself financially in the future. It's crucial to have your financial and legal affairs in order: create a will, establish a trust, and put a durable power of attorney in place. There are also legal strategies that may help protect your assets from estate claims for long-term care. Talking to an attorney can help you understand the options available to you.

Planning Ahead: While it may be uncomfortable to consider the possibility of needing long-term care, planning ahead can help ease the financial burden.

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We Can Help You Avoid Losing Money: Even More Than You Think!

It's unnerving to think that Medicaid can take your home, but the reality is that programs like these are essential to ensure that senior citizens get the healthcare they deserve. Fortunately, there are ways that you can protect your home while still qualifying for Medicaid benefits, like by setting up an asset protection trust.

It's vital to consult with a skilled estate planning or elder law attorney to explore your alternatives and how the laws apply to your specific circumstances. Don't hesitate to contact our office if you have any concerns about losing your home during your life, or avoiding Medicaid or the Estate Recovery Program's effects on your property.