Many seniors in our community mistakenly believe that their home, which  they have worked so hard to pay off, will be protected when they pass away, simply because they have placed it in a will.  However, Michigan Medicaid laws allow the state to go back after your homestead when you die to reimburse the state for benefits that they paid out while you are alive. But with careful planning, you can avoid this potential loss. Consulting with an attorney to build a solid estate plan will allow you to comply with the following general requirements, and ultimately benefit from Medicaid during your senior years, while preserving much of your wealth for your loved ones.   

Under Michigan law, in order to qualify for Medicaid in the state of Michigan you must fall under one of the three requirements: you reside in a Medicaid qualified nursing home under a doctor’s order, your medical and nursing home expenses exceed your income, or if your countable assets do not exceed $2,000. Here are some commonly asked questions about Medicaid. 

What assets can I keep and still qualify for Medicaid?  

• You can keep up to $2,000 in countable assets; examples include cash on hand, stocks and bonds, pension, student loans or grants, and income tax returns. 

• You may also keep other assets that are considered excluded and not counted toward your eligibility.  

• Some examples of excluded assets are; a Michigan home or a life estate in a Michigan home, personal belongings and household goods, jewelry and clothing, up to 2,000 in prepaid irrevocable funeral contract, life insurance if the value of all policies for the same insured is $1,500 or less, and the value of income-producing real property if the annual income after expenses yields a 6% return. 

• Assets that you do not have the legal right to use or sell without consent are considered excluded. 

How are assets of a husband and wife counted? 

• Both the husband and wife assets are considered together; therefore the total assets are divided equally between the two. 

Can I give away assets to qualify for Medicaid? 

• Giving away assets is considered divestment and results in ineligibility for a period of time 

• The rules provide for a 36- 60 month look-back period, if you transfer your home for example or any countable asset for less than fair market value during this period, you are now considered ineligible for Medicaid assistance. 

• Transfers between spouses are permitted as long as the receiving spouse does not re-transfer the asset for less than fair market value. 

What planning can be done to obtain Medicaid qualification? 

• Durable power of Attorney: Giving an agent authority to handle your affairs in the event you become incapacitated. It is a tool if it contains a provision that allows the agent to make divestment transfers (including gifts to your spouse) that will result in your qualification for Medicaid. 

• Transfer of Assets: Transferring assets to qualify for Medicaid may be useful for some individuals as long as you retain assets to pay for nursing home costs until the ineligibility period caused by divestment ends. 

• Purchasing Excluded Assets: Purchasing excluded assets like personal items, cars, household goods, and home improvements can be considered. As well as mortgages, land contracts, loans and property taxes can be prepaid.  

• Estate Planning: Review and update spouse estate planning documents, this includes a new will or a trust. 

 

Tarek M. Baydoun is an attorney and counselor at Allen Brothers Law Firm and can be reached at his office phone at 313.962.7777 or by email at tbaydoun@allenbrotherspllc.com.