Life doesn’t always give you time to plan. One moment, your parent is living independently; the next, you’re facing a nursing home bill of $10,000 or more per month. For Michigan families in Washtenaw County and throughout Southeast Michigan, understanding how Medicaid pays for long-term care—and how to protect your family’s assets while qualifying—can mean the difference between financial security and devastating loss.

Medicaid (not Medicare) is the primary payer for nursing home care and many home-based care services for Michigan seniors who meet income and asset requirements. But the rules are complex, the penalties for mistakes are severe, and the planning opportunities are often misunderstood. Many families unknowingly make gifts or transfer assets that trigger penalty periods, leaving their loved ones ineligible for benefits precisely when they need them most.

This guide breaks down Michigan’s 2026 Medicaid eligibility rules, explains how married couples can protect assets for the spouse remaining at home, and outlines proven planning strategies—from Lady Bird Deeds to Medicaid-compliant trusts—that can preserve your family’s financial security. Whether you’re planning years ahead or facing an immediate care crisis, understanding these rules is essential.

How Medicaid Pays for Long-Term Care in Michigan

Many families assume Medicare covers nursing home stays, but Medicare only pays for short-term rehabilitation—typically up to 100 days following a qualifying hospital stay. For ongoing long-term care, Medicaid is the program that pays.

Michigan administers Medicaid through the Michigan Department of Health and Human Services (MDHHS), with eligibility rules detailed in the Bridges Eligibility Manual (BEM). The financial requirements for long-term care applicants are found primarily in BEM 400 (general asset and income rules) and BEM 402 (special rules for long-term care and spousal impoverishment protections).

Two Main Tracks for Elder Care Coverage

• Institutional (Nursing Home) Medicaid covers care in licensed skilled nursing facilities. This is what most families think of when they hear “Medicaid for nursing homes.”

• Home and Community-Based Services (HCBS) Waiver Programs allow eligible seniors to receive care at home or in assisted living facilities rather than in a nursing home. These programs often have waiting lists but can be a valuable alternative for families who want to keep a loved one at home.

Both tracks have similar financial eligibility requirements, though some details differ. The key is understanding what assets and income Michigan considers when determining eligibility.

Michigan Medicaid Eligibility: 2026 Income and Asset Limits

Income Requirements

For 2026, Michigan’s institutional and HCBS Medicaid programs use an income cap of approximately $2,982 per month for a single applicant before deductions. However, income rules work differently than asset rules—having income above this cap doesn’t necessarily disqualify you.

Once approved for Medicaid, most of the applicant’s income goes to the nursing facility as their “patient pay amount,” with a small personal needs allowance retained (typically around $60 per month). Married couples have additional income protections discussed below.

Asset Limits for Single Applicants

A single person applying for nursing home Medicaid in Michigan can have no more than approximately $9,950 in countable assets as of 2026. This limit is strict—even a few hundred dollars over can result in a denial.

Countable assets include:

• Cash and bank accounts
• Stocks, bonds, and investment accounts
• Non-homestead real estate
• Cash value of life insurance policies above certain limits
• Additional vehicles beyond the primary one

Non-countable (exempt) assets include:

• Primary residence (within equity limits, currently around $752,000 for 2026)
• One vehicle regardless of value
• Personal belongings and household goods
• Properly structured prepaid burial contracts and burial plots
• Certain retirement accounts in limited circumstances

Married Couples: Community Spouse Resource Allowance (CSRA)

When one spouse needs nursing home care and the other remains at home (the “community spouse”), federal spousal impoverishment protections—implemented in Michigan through BEM 402—allow the community spouse to keep a significant portion of the couple’s combined assets.

For 2026, Michigan’s spousal protections work as follows:

The community spouse can generally retain 50% of the couple’s total countable assets, up to a maximum of $162,660. If their half of assets is below the minimum protection amount, they can keep at least $32,532.

This means a married couple with $300,000 in countable assets would calculate the community spouse’s share as 50% ($150,000), which falls within the maximum. The community spouse keeps $150,000, and the remaining $150,000 must be “spent down” before the applicant qualifies.

Spousal Income Protections (MMMNA)

The community spouse also receives income protections. For the period of July 1, 2025 through June 30, 2026, Michigan’s Minimum Monthly Maintenance Needs Allowance (MMMNA) is $2,643.75 per month. If the community spouse’s own income falls below this amount, they may be entitled to a portion of the nursing home spouse’s income.

When housing costs are high, the maximum spousal income allowance can increase to $4,066.50 per month. These protections ensure the at-home spouse isn’t impoverished while their partner receives care.

Medicaid Planning Strategies: Protecting Assets Legally

Michigan families have several legal strategies available to protect assets while still qualifying for Medicaid. The key is proper planning—ideally beginning five or more years before care is needed, though crisis planning options exist as well.

Spend-Down Strategies

When assets exceed Medicaid limits, “spending down” on allowable items is often the first step. Permissible spend-down purchases include:

• Paying off mortgages, car loans, or credit card debt
• Home repairs and accessibility modifications (ramps, grab bars, wheelchair-accessible bathrooms)
• Purchasing or upgrading an exempt vehicle
• Prepaying funeral and burial expenses through irrevocable burial contracts
• Paying for legal and financial planning services

What you cannot do is simply give assets away. Under Michigan’s Medicaid rules, any transfer made for less than fair market value within the five-year lookback period triggers a transfer penalty.

The Five-Year Lookback and Transfer Penalties

When you apply for Medicaid, MDHHS reviews all asset transfers made during the previous 60 months (five years). Any gifts, transfers to family members, or below-market-value sales are considered “divestment” and create a penalty period during which you’re ineligible for Medicaid coverage.

The penalty calculation is straightforward: Total uncompensated transfers ÷ Michigan’s average monthly nursing home cost = Months of ineligibility.

MDHHS publishes the average monthly nursing home cost annually. With current costs exceeding $10,000 per month, even a modest gift of $50,000 could create a five-month penalty period during which your family must pay privately for care.

Irrevocable Medicaid Asset Protection Trusts

For families regardless of planning five or more years ahead or in a crisis scenario, an irrevocable Medicaid trust can move assets out of the applicant’s name while still allowing them to benefit from the trust in limited ways. Once the five-year lookback period passes, assets in a properly drafted irrevocable trust are not counted for Medicaid eligibility under BEM 401 and BEM 402.

The trust must be carefully structured so that the principal is not considered “available” to the grantor. This requires specific drafting by an attorney experienced in Michigan Medicaid law—generic or DIY trusts often fail to provide protection.

Revocable Living Trusts: What They Don’t Do

Many Michigan residents have revocable living trusts for probate avoidance purposes. It’s critical to understand that revocable living trusts provide zero Medicaid asset protection. Because the grantor retains the power to revoke the trust and access the assets at any time, Medicaid considers all trust assets fully countable.

Revocable trusts are valuable estate planning tools, but they are not Medicaid planning tools.

Lady Bird Deeds (Enhanced Life Estate Deeds)

Michigan is one of a handful of states that recognizes the Lady Bird Deed (also called an enhanced life estate deed). This powerful tool allows a homeowner to retain full control of their property during their lifetime—including the right to sell, mortgage, or transfer it—while naming beneficiaries who automatically receive the property at death without probate.

Under Michigan elder law practice, properly drafted Lady Bird Deeds generally do not trigger Medicaid transfer penalties because the homeowner retains complete control. Additionally, because the property passes outside of probate, it typically avoids Medicaid Estate Recovery—the state’s ability to seek reimbursement from a deceased Medicaid recipient’s estate.

Lady Bird Deeds are particularly valuable for protecting the family home, which is often a family’s largest asset.

Medicaid-Compliant Annuities for Crisis Planning

When a family faces an immediate care need with excess assets, Medicaid-compliant annuities can convert countable assets into an income stream for the nursing home applicant to pay for the penalty period caused by other divestments as part of an overall strategy. To qualify, the annuity must be:

• Irrevocable
• Non-assignable
• Actuarially sound (based on the annuitant’s life expectancy)
• Named with the State of Michigan as remainder beneficiary

This strategy is most useful for use with a Medicaid Asset Protection Trust in crisis planning. The annuity removes the asset from the countable total while providing income to the nursing home applicant to pay for the divestment penalty period.

Applying for Medicaid in Washtenaw County

Where and How to Apply

Washtenaw County residents apply for Medicaid through the local MDHHS office or online through the MI Bridges portal. The application uses the standard Assistance Application along with supplemental forms specific to long-term care.

Documentation Requirements

Medicaid applications require extensive documentation, including:

• Proof of identity and U.S. citizenship
• Three to five years of bank statements and financial records
• Property deeds and tax bills
• Life insurance and annuity contracts
• Any trust documents, Lady Bird Deeds, or other legal instruments

Incomplete applications are a leading cause of delays and denials. Gathering these documents before applying—or working with an elder law attorney who can help—significantly improves the process.

Timeline and Retroactive Coverage

Long-term care Medicaid applications typically take 45 to 90 days to process, though complex cases can take longer. If approved, coverage can be retroactive to the first day of the month in which the application was filed, provided eligibility requirements were met.

Denials or transfer penalty determinations can be appealed through MDHHS’s administrative hearing process. Appeals have strict deadlines, so prompt action is essential.

Common Medicaid Planning Mistakes Michigan Families Make

Making Gifts Within the Lookback Period

The most common and costly mistake is making gifts to children or grandchildren within five years of needing care. Even transfers that seem routine—helping with a down payment, paying for a grandchild’s education, adding a child’s name to a bank account—are treated as divestment and trigger penalties.

Using DIY Documents or Generic Trusts

Non-Michigan or internet-generated trusts often fail to comply with the specific requirements of BEM 401 and BEM 402. Assets in poorly drafted trusts are frequently deemed “available” to the applicant, providing no protection whatsoever.

Adding Children to Deeds or Accounts

Many parents add adult children as joint owners on real estate or bank accounts, thinking this will avoid probate. In reality, this strategy exposes assets to the children’s creditors and divorces, and is generally treated as a present transfer for Medicaid purposes—potentially triggering a penalty.

Failing to Maximize Community Spouse Protections

Couples often spend down far more than required because they don’t understand the CSRA and MMMNA rules. Without proper guidance, the community spouse may be left with far fewer assets and less income than the law allows, creating unnecessary financial hardship.

Frequently Asked Questions About Michigan Medicaid Planning

How much can a community spouse keep in assets in 2026?

A community spouse can keep up to 50% of the couple’s combined countable assets, with a maximum of $162,660 and a minimum protection of $32,532. Assets in the community spouse’s name alone are still counted as part of the couple’s total—Medicaid looks at combined resources regardless of whose name is on the account.

Can the community spouse keep the family home?

Yes. The entire value of the primary residence is generally exempt from Medicaid’s asset count as long as the community spouse continues to live there. However, the home is subject to federal home equity limits (approximately $752,000 for 2026) if the Medicaid applicant is single and may be subject to Medicaid Estate Recovery after the applicant passes away unless proper planning is implemented.

Will Medicaid take our house when we die?

Michigan’s Estate Recovery Program can seek reimbursement from a deceased Medicaid recipient’s probate estate. However, assets that pass outside of probate—such as property transferred through a Lady Bird Deed or assets in certain trusts—are generally not subject to estate recovery. Proper planning can protect the family home for heirs.

Can we transfer everything to the community spouse to qualify?

No. Medicaid looks at the total assets of both spouses regardless of title or ownership, then applies the Community Spouse Resource Allowance rules. Simply moving assets into the community spouse’s name does not reduce countable resources.

How far back does Medicaid look at financial transactions?

Michigan Medicaid uses a five-year (60-month) lookback period. All transfers made for less than fair market value during this period are reviewed and can result in penalty periods. This is why advance planning—ideally beginning more than five years before anticipated care needs—is so valuable.

What’s the difference between Medicaid and Medicare for nursing home coverage?

Medicare is health insurance that covers short-term skilled nursing care following a hospital stay, typically limited to 100 days. Medicaid is a needs-based program that pays for ongoing long-term care in nursing homes or through home-based waiver programs. Most families paying for extended nursing home stays rely on Medicaid, not Medicare.

Can I protect assets if my loved one already needs care?

Yes, though options are more limited in crisis situations. Strategies such as Medicaid-compliant annuities, properly structured spend-down, and maximizing community spouse protections can still preserve significant assets. An experienced elder law attorney can evaluate your specific situation and identify available options.

Protect Your Family’s Future: Schedule Your Medicaid Planning Consultation

Medicaid planning is not about “hiding assets” or gaming the system—it’s about understanding the rules and using legal strategies to protect your family while ensuring your loved one receives the care they need. Michigan families who plan ahead have far more options than those who wait until a crisis forces difficult decisions.

At Boroja, Bernier & Associates, our elder law attorneys help families throughout Washtenaw County, Macomb County, Oakland County, Wayne County, and Mid-Michigan navigate Medicaid eligibility, asset protection strategies, and the application process. We understand the emotional weight of these decisions and provide clear guidance so you can make informed choices for your family.

To schedule a consultation with the Michigan elder law attorneys at Boroja, Bernier & Associates, call our law offices at (586) 991-7611. With our main office in Shelby Township and satellite offices in Troy, Ann Arbor, and Lansing, we’re here to help protect what you’ve worked a lifetime to build.