Michigan Medicaid estate recovery reaches only probate assets after a recipient dies. That means property passing through a Lady Bird deed, a joint tenancy, or a payable-on-death account generally falls outside the state's reach. Understanding which assets go through probate and which do not can make a significant difference for the families of Michigan Medicaid recipients.
What Federal Law Requires
Every state Medicaid program must run a Medicaid Estate Recovery Program (MERP) under 42 USC § 1396p(b), added by OBRA-93. The federal floor requires recovery from the estates of:
- Medicaid recipients age 55 or older who received nursing facility services, home and community-based services (HCBS), and related hospital and prescription drug services.
- Permanently institutionalized individuals of any age who received Medicaid long-term services and supports (LTSS).
States can go further by adopting an "expanded estate" definition that reaches assets passing outside probate. Michigan does not elect that expansion. Michigan uses the federal-default probate-only definition.
What Michigan Medicaid Estate Recovery Can and Cannot Recover
MDHHS can recover only from assets that pass through the probate process after the Medicaid recipient's death.
| Asset Type | Goes Through Probate? | Subject to Recovery? |
|---|---|---|
| Real property with no transfer deed | Yes | Yes |
| Real property with Lady Bird deed | No | No |
| Joint tenancy with right of survivorship (JTWROS) | No | No |
| Bank account with no POD designation | Yes | Yes |
| Bank account with payable-on-death beneficiary | No | No |
| Brokerage account with TOD designation | No | No |
| Life insurance with named beneficiary | No | No |
| Assets in a properly structured irrevocable trust | No | Generally no |
| Revocable living trust (at death, if no beneficiary designated) | Depends on trust terms | May be reached |
Michigan's probate-only stance means a large portion of a typical family's wealth, including jointly-held property and accounts with beneficiary designations, can pass to heirs without MDHHS involvement.
The Five Categorical Protections
Even when an asset does pass through probate, MDHHS cannot pursue recovery while any of these conditions exist under 42 USC § 1396p(b)(2):
- Surviving spouse is alive. Recovery is deferred, not permanently waived. After the surviving spouse's death, MDHHS may make a claim against assets that passed from the Medicaid recipient's estate to the surviving spouse and then to other heirs.
- Child under age 21 is alive.
- Blind or permanently disabled child of any age is alive.
- Sibling with an equity interest who lived in the home at least one year before the recipient was institutionalized and who continues to reside there.
- Caregiver child who lived in the home for at least two years before institutionalization and provided care that delayed the parent's entry into a nursing facility, and who continues to reside there.
Families relying on the sibling or caregiver-child protection should gather contemporaneous records: utility bills, voter registration, and written statements from physicians or care coordinators documenting the level of care provided.
Lady Bird Deeds in Michigan
Michigan is one of five states (along with Florida, Texas, Vermont, and West Virginia) that recognize Lady Bird deeds (enhanced life estate deeds). A properly executed and recorded Lady Bird deed lets the property owner:
- Retain full control of the home during their lifetime, including the right to sell, mortgage, or revoke the deed without the remainderman's consent.
- Transfer the home automatically at death to named remaindermen, outside probate.
Because the property passes outside probate, MDHHS's estate recovery claim cannot reach it. The home also remains exempt from Michigan's Medicaid asset limit during the owner's lifetime, provided the equity stays at or below $752,000 and the exemption conditions are met.
Lady Bird deeds should be drafted by a Michigan licensed attorney. The Michigan State Bar's Elder Law and Disability Rights Section can help connect families with qualified counsel.
The Caregiver-Child Lifetime Transfer Exception
Under 42 USC § 1396p(c)(2)(A)(iv), a Medicaid applicant may transfer the home to a qualifying caregiver child before entering a nursing facility without triggering the 60-month lookback transfer penalty. To qualify:
- The child must have lived in the home for at least two years immediately before the applicant entered institutional care.
- The child must have provided care that permitted the applicant to remain at home rather than enter a facility earlier.
This lifetime transfer differs from the post-death caregiver-child protection in (b)(2)(B)(iii). The lifetime transfer removes the property from the applicant's estate permanently. The timing matters: the transfer must occur before institutionalization, not after.
Michigan's Transfer Penalty Divisor
If assets are transferred for less than fair market value within the 60-month lookback period, Michigan calculates a penalty using a transfer penalty divisor of $12,216.30 per month (2026 statewide average private-pay nursing facility rate).
A $100,000 uncompensated transfer creates approximately 8.2 months of Medicaid LTSS ineligibility. Planning around the lookback period should occur well in advance of anticipated need.
How the Michigan Medicaid Estate Recovery Process Works
After a Medicaid recipient dies, MDHHS receives a match from vital records. The agency typically sends a Michigan Estate Recovery Questionnaire to the estate. The questionnaire asks the family to identify assets, property titles, and family members who may qualify for categorical protections.
Key steps:
- Family receives the Estate Recovery Questionnaire and documents assets and family circumstances.
- MDHHS calculates total Medicaid LTSS expenditures.
- If probate assets exist, MDHHS files a creditor claim in the probate proceeding.
- Family can challenge the claim and request a hardship waiver.
Families should not distribute estate assets before confirming the MERP status. Contacting an elder law attorney promptly after receiving the questionnaire is advisable, especially for estates involving real property.
Hardship Waivers
Federal law at 42 USC § 1396p(b)(3) requires states to waive recovery in cases of undue hardship. Michigan provides a waiver when:
- The home's value is below 50% of the county average home value (the "modest homestead" standard).
- The property is the sole income-producing asset of the estate.
- Other compelling personal or financial circumstances exist.
To apply for a waiver, submit a written request to MDHHS within the notice period indicated on the MERP communication. Free help is available through Michigan Legal Help (michiganlegalhelp.org) and local legal aid organizations.
Worked Example #1
The figures below are hypothetical and shown only to illustrate how recovery works. They are not a real case and not a prediction of your own result.
A single Michigan man, age 81, spent three years in a nursing facility on Medicaid. Total LTSS expenditures: $150,000. He owned a home worth $175,000 and had executed a Lady Bird deed naming his son as remainderman. His checking account named his son as POD beneficiary.
At death: the home transfers to his son outside probate via the Lady Bird deed. The checking account passes directly to his son via POD. No probate is opened. MDHHS has no probate assets to reach. Recovery: $0.
Worked Example #2
Same scenario, but no Lady Bird deed and no POD designation. Both assets pass through probate. MDHHS files a claim for $150,000 (the full LTSS expenditure). The estate is worth $185,000. After MDHHS's claim and probate costs, the son inherits the remainder.
The difference between these two outcomes depends entirely on paperwork prepared years before any care was needed.
Frequently Asked Questions
MDHHS can file a claim against your home if it passes through probate. If a Lady Bird deed, JTWROS title, or another non-probate mechanism is in place, the home passes to heirs outside MDHHS's reach. Recovery is also deferred while a surviving spouse, minor child, or disabled child lives in the home.
No. Michigan uses probate-only recovery. Assets passing through JTWROS, TOD/POD designations, and properly structured trusts are generally not reachable, unlike in expanded-estate states such as Ohio or Iowa.
A revocable living trust that avoids probate will generally not be reached in Michigan, since Michigan is a probate-only state. However, trust terms matter, and some assets held in trusts may still pass through probate depending on how the trust is structured. An elder law attorney should review the specific trust document.
Michigan MDHHS must file within the probate creditor period under the Revised Probate Code. Once a formal probate estate is opened, the standard creditor notice period begins. Heirs should not distribute estate assets until they have confirmed the MERP status with MDHHS.
No. Estate recovery is a post-death process. It does not affect the recipient's eligibility during their lifetime.
Learn More
- Michigan Medicaid Eligibility and Income Limits
- How to Apply for Michigan Medicaid
- Michigan Medicaid Spousal Impoverishment Protections 2026
- Michigan Medicaid for Nursing Home Care
- Federal Medicaid Estate Recovery Law (42 USC § 1396p)
Find personalized help protecting your home from Michigan Medicaid estate recovery at brevy.com.
The information on Brevy.com is for educational purposes only and is not a substitute for professional legal, financial, or medical advice. Rules vary by state and program and change frequently. Always verify with the relevant agency or a qualified professional. Brevy is not a law firm, financial advisor, or healthcare provider.