Medicaid Estate Recovery in Michigan: Can the State Take the House?

Main Michigan programs and routes

This table is not an approval guide. It shows where families often first hear about estate recovery or long-term care Medicaid in Michigan.

What Medicaid estate recovery means

Medicaid estate recovery means the state asks to be paid back from a Medicaid member’s estate after the person dies.

An estate is the money, house, land, car, bank accounts, and other property a person leaves behind. In Michigan estate recovery, the key question is often whether the asset passes through probate court.

Probate is the court process used to handle some property after death. If a house, bank account, vehicle, or other property has to go through probate, it may be part of the estate recovery review.

Michigan’s public estate recovery page says an estate includes property and other assets that pass from the deceased Medicaid beneficiary to heirs through probate. Michigan also says that if the person received an asset disregard because of a long-term care partnership policy, estate recovery can apply to all assets whether or not they are subject to probate administration. That is a special rule. Ask MDHHS or a lawyer if a long-term care partnership policy was involved.

Medicaid will not recover more than Medicaid paid for the person. But the amount can still be large if Medicaid paid for nursing home care, MI Choice, Home Help, PACE, hospice, adult home health, or other long-term care services.

For help understanding Medicaid home and community-based services, see Medicaid HCBS waivers explained. If the issue is Medicaid income or monthly deductible rules, see Medicaid spend-down.

When estate recovery may apply in Michigan

Michigan says estate recovery only applies to Medicaid beneficiaries who meet both of these points:

• They were age 55 or older.
• They received long-term care services anytime on or after September 30, 2007.

Michigan’s estate recovery FAQ says long-term care can include nursing facility care, hospice, and home and community based services. The FAQ gives examples such as adult home help, adult home health, MI Choice Waiver, and PACE services.

The same FAQ says Michigan may pursue all services after the member’s 55th birthday. This can include long-term care, non-long-term care, fee-for-service claims, and capitation payments made for the member. A capitation payment is a set payment Medicaid may pay to a health plan or care organization for coverage, even if the person did not use every service that month.

This is why families should not guess from the name of the program. If your loved one had Medicaid and used any long-term care route, ask MDHHS whether the person is subject to estate recovery.

Is the house at risk?

Sometimes, yes. But the answer depends on the facts.

In Michigan, the house is most at risk when it is part of the deceased Medicaid member’s probate estate and no deferral, exemption, hardship waiver, or other protection applies.

A house may go through probate if the deceased person owned it in a way that did not automatically pass to another person at death. Do not assume. Deeds can be hard to read. A joint owner, life estate, trust, lady bird deed, transfer-on-death plan, mortgage, or unpaid taxes can change what happens. A lawyer can read the deed and explain whether the home is likely to be in probate.

Michigan’s estate recovery questionnaire asks whether the deceased Medicaid member owned a home or other land at death. It also asks for the deed, the home address, approximate market value, and type of ownership. That means the house is one of the first things MDHHS may review.

What about liens?

A lien is a legal claim against property. Federal Medicaid law allows certain liens in limited cases, such as some cases involving a person who is permanently in a medical institution, with protections for a spouse, certain children, and some siblings in the home.

Michigan’s public estate recovery page focuses on the notice and claim process after death. It does not give a simple one-size rule for every lien situation. If someone says there is a Medicaid lien on the home, ask for the lien document, the legal basis, and the appeal or hearing route. Then contact MDHHS Estate Recovery or a Michigan lawyer.

Common protections and exemptions

Michigan uses the word “defer” for many protections. Defer means delay. It does not always mean the claim is gone forever.

Michigan says MDHHS will defer recovery while any of the following people is living:

• The Medicaid beneficiary’s spouse.
• The Medicaid beneficiary’s child who is under age 21.
• The Medicaid beneficiary’s child who is blind or permanently disabled.

Michigan also says MDHHS will defer recovery while one of the following people is living in the home:

• A survivor who lived in the home and provided care that allowed the Medicaid recipient to remain in the home for at least 2 years right before the recipient entered a medical facility.
• A sibling of the Medicaid beneficiary who has an equity interest in the home and lived in the home for at least 1 year right before the beneficiary entered a medical facility.

These rules are fact-specific. Families may need records to prove who lived in the home, when they lived there, what care was given, and whether the care helped the person stay home instead of entering a facility.

Hardship waivers

A hardship waiver is a request asking MDHHS not to collect the estate recovery claim, or to delay collection, because recovery would cause a serious hardship.

Michigan’s hardship waiver application says the application must be submitted within 60 days of the date on the cover letter. If the waiver is denied, the applicant has 60 days to appeal the decision under Michigan’s Administrative Procedures Act.

The same form says a hardship may be based on one of these hardship types:

• The estate asset subject to recovery is the main source of income for a survivor, such as a family farm or business, and the applicant’s income is limited.
• The estate asset subject to recovery is a home of modest value. The form defines this as a home with a value no higher than 50% of the average price of homes in the county where the home is located as of the member’s date of death.

The form also says both of these must be true for hardship waiver eligibility:

• The applicant’s total household resources do not exceed $10,000.
• The applicant’s total household income is less than 200% of the federal poverty level for the same household size.

Do not rely on old income figures. The form says monthly income amounts are updated when new poverty figures are provided. Use the current form and ask MDHHS if you are not sure.

Michigan also says an exception or waiver cannot be granted before an estate is opened in probate court. That means a family may need to wait for the notice or probate step before the waiver route is available.

Who to contact

If there is already an estate recovery notice, start with MDHHS Estate Recovery. If the person is still alive and you are planning care or Medicaid coverage, start with the Michigan Medicaid Beneficiary Help Line, MI Bridges, the local MDHHS office, the MI Choice waiver agency, or the local Area Agency on Aging.

What to do if the first answer is no

Ask the worker to explain the reason in writing. Ask which rule or form applies. Ask whether you can submit more proof. If a hardship waiver is denied, check the denial letter for the appeal deadline. Michigan’s public estate recovery page says appeals of undue hardship waiver denials go through the Michigan Office of Administrative Hearings and Rules.

If the issue involves a house, probate, a deed, a disabled child, a spouse, or a missed deadline, get legal help before you close the estate or sell the property.