What Is Medicaid Estate Recovery and How Does It Work in Michigan?
In Michigan, Medicaid Estate Recovery allows the state to recover money spent on long-term care services after a recipient passes away. This program applies to individuals age 55 or older who received benefits on or after September 30, 2007.
How Medicaid Estate Recovery Works
The state seeks repayment from the deceased person’s probate estate.
Target Assets
Michigan recovers funds from assets that pass through probate. These may include:
- A home
- A vehicle
- Bank accounts held solely in the deceased’s name
Excluded Assets
Assets that avoid probate are usually protected. These include:
- Property held in a living trust
- Jointly owned property with survivorship rights
- Accounts with named beneficiaries
Notification Process
When the Michigan Department of Health and Human Services learns of a death, it sends a notice and questionnaire. The estate representative or heirs must return it within two weeks. This step helps determine whether exemptions apply.
Exemptions and Deferrals
The state may delay or stop recovery if certain conditions apply.
Living Relatives
The state delays recovery while any of the following individuals are alive:
- A surviving spouse
- A child under age 21
- A blind or permanently disabled child of any age
Caregiver Exception
The state may defer recovery if a caregiver lived in the home and provided care for at least two years before institutionalization. This care must have helped the recipient remain at home.
Sibling Exception
A sibling may qualify for deferral if they:
- Have an ownership interest in the home
- Lived in the home for at least one year before the recipient entered care
Undue Hardship Waivers
Heirs can request an Undue Hardship Waiver if repayment would create serious financial hardship.
Modest Value Home
A hardship may exist if the home’s value falls below 50% of the county’s average home price.
Financial Eligibility
Applicants must meet strict financial limits, such as:
- Household income below 200% of the poverty level
- Countable resources under $10,000
How to Protect Your Estate from Medicaid Recovery
Planning ahead can help protect your assets.
Key Strategies in Michigan
Lady Bird Deed (Enhanced Life Estate Deed)
This tool allows you to transfer your home directly to beneficiaries. Because the home avoids probate, it also avoids estate recovery.
Trust Planning
You can use revocable or irrevocable trusts to protect assets. Proper structure matters. Poor planning may not prevent recovery.
Joint Ownership and Beneficiary Designations
Assets with survivorship rights or named beneficiaries pass outside probate. This keeps them out of the recovery process.
Spend-Down Strategies
You can reduce countable assets by purchasing exempt items. Examples include:
- Prepaid funeral expenses
- Home repairs
- A vehicle
Caregiver Child Protection
A child who provides qualifying care may help delay or prevent recovery.
Important Considerations
5-Year Look-Back Rule
Medicaid reviews asset transfers made within five years of application. Transfers for less than fair market value may trigger penalties.
Act Early
Early planning gives you more options and better protection. Crisis planning can help, but it often limits your choices.
Tabono Law
Protect What You’ve Built
Medicaid Estate Recovery can impact the assets you planned to leave behind. Without the right strategy, your home and savings may be at risk.
At Tabono Law, we help individuals and families across West Michigan create clear, effective estate plans. We focus on protecting what matters most—your assets, your family, and your future.
Schedule a consultation today to discuss your options. Call (231) 894-0909 or book online to get started.