Michigan’s Medicaid program cannot take your house while you are alive, and it cannot place a lien on it during your lifetime either. After you die, the Michigan Department of Health and Human Services (MDHHS) can file a claim against your probate estate to recover the cost of long-term care and other Medicaid benefits paid after age 55. That claim reaches only assets that pass through probate court, so a home structured to bypass probate — or one occupied by a protected family member — generally stays out of the state’s hands.1Michigan Legislature. Michigan Code 400.112g – The Social Welfare Act (Excerpt)
No Lien While You Are Alive
Some states place a TEFRA lien on a Medicaid recipient’s home once the person is permanently in a nursing facility. Michigan does not. The state’s Medicaid plan confirms Michigan is not a TEFRA state and does not make permanent institutionalization determinations for lien purposes.2Michigan Department of Health & Human Services. Liens and Adjustments or Recoveries (SPA 16-0005)
That means your home sits untouched during your lifetime, even after years of Medicaid-paid nursing care. Nothing appears on the title. No one can pressure a sale. The state’s ability to reach the house begins only when you die, and only through the probate process.
What Michigan Can Reach After Death
MDHHS runs the Medicaid Estate Recovery Program under the Michigan Social Welfare Act. When a beneficiary dies, the state sends the estate representative or heirs a notice stating the dollar amount it intends to claim, along with a questionnaire that must be returned within two weeks so the state can determine whether exemptions apply.3State of Michigan. Estate Recovery Recoverable benefits include nursing facility care, hospital stays, prescription drugs, and home- and community-based services paid after the recipient turned 55.4Centers for Medicare & Medicaid Services. Estate Recovery
The decisive detail is how Michigan defines “estate.” The state uses the narrow, probate-only definition. Recovery applies only to assets that pass through probate court administration.5State of Michigan: Medicaid Estate Recovery Program. Medicaid Estate Recovery Program – Frequently Asked Questions Property held in joint tenancy with survivorship rights, assets held in a living trust, and property transferred by a Lady Bird deed all pass directly to survivors without touching probate, which puts them beyond MDHHS’s reach.
If the probate estate doesn’t have enough to cover the claim, the estate is insolvent and the state collects only what’s there. MDHHS cannot ask surviving family members to pay from their own money.5State of Michigan: Medicaid Estate Recovery Program. Medicaid Estate Recovery Program – Frequently Asked Questions
One narrow exception: if the deceased held a long-term care partnership insurance policy and received an asset disregard, MDHHS can pursue all assets regardless of probate status.3State of Michigan. Estate Recovery
Family Members Whose Presence Blocks Recovery
Michigan law bars estate recovery against a home for as long as any of these people lawfully live there:1Michigan Legislature. Michigan Code 400.112g – The Social Welfare Act (Excerpt)
- A surviving spouse, for life.
- A surviving child under 21.
- A surviving child of any age who is blind or permanently and totally disabled.
- A relative by blood, marriage, or adoption within the fifth degree of kinship who lived in the home for at least two years immediately before the recipient entered a nursing facility, and who provided care that delayed institutionalization. Children, grandchildren, siblings, nieces, nephews, aunts, uncles, and first cousins all fall inside that degree.
- A sibling with an equity interest in the home who lived there for at least one year before the recipient’s admission to a medical institution.
The caretaker relative exemption is the hardest to prove and where most families run into trouble. MDHHS wants documented evidence that the care was medically necessary and actually kept the recipient out of a facility. A signed statement from the recipient’s physician confirming the need for nursing-home-level care carries real weight. Medical records showing the diagnosis and required care, detailed logs of caregiving duties, and witness statements from people who observed the caregiving all strengthen the claim. Gather this material while the recipient is still alive. Reconstructing it later is far harder.
Hardship Waiver When No Exemption Applies
If no automatic exemption fits, an heir can apply for an undue hardship waiver to reduce or eliminate the claim. Waivers are not granted automatically and must be requested after the estate recovery notice arrives.3State of Michigan. Estate Recovery
MDHHS recognizes two grounds:
- The estate asset is the primary source of income for a survivor, such as a family farm or a rental property that provides the heir’s livelihood.
- The home’s fair market value is 50% or less of the average home price in the county where it sits, measured at the time of the recipient’s death.
Meeting one of those grounds is not enough by itself. The applicant must also pass a means test. Household income has to be below 200% of the federal poverty level for a household of the same size — for 2026, under $31,920 for one person or $43,280 for two6Federal Register. Annual Update of the HHS Poverty Guidelines — and total household resources must be under $10,000.7Michigan Department of Health and Human Services. Application for Hardship Waiver MSA-0008
The form is MDHHS MSA-0008, and it requires supporting documentation of income, assets, and the basis for the hardship claim.8Michigan Department of Health & Human Services. Your Guide to Estate Recovery in Michigan Return the initial questionnaire within the two-week window and request the hardship application right away. Missing deadlines can forfeit the right to a waiver.
Protecting the House With a Lady Bird Deed
Because Michigan recovers only from probate assets, one of the most useful planning tools available is a Lady Bird deed, formally called an enhanced life estate deed. Michigan is one of a handful of states that recognize these deeds.
A Lady Bird deed transfers your home to a named beneficiary while you keep full control during your lifetime. You can continue living there, sell the property, rent it out, or revoke the deed. When you die, the home passes directly to the beneficiary without going through probate.5State of Michigan: Medicaid Estate Recovery Program. Medicaid Estate Recovery Program – Frequently Asked Questions MDHHS cannot reach it.
The difference between a Lady Bird deed and a standard life estate matters enormously. With a regular life estate, you give up the right to sell or mortgage without your beneficiary’s consent, and the transfer may count as a gift for Medicaid purposes. A Lady Bird deed preserves those rights. Because you retain so much control, the transfer isn’t a completed gift during your lifetime, and it generally doesn’t trigger the Medicaid look-back penalty.
The deed itself is fairly simple, but drafting errors can turn it into a standard life estate or an outright gift, either of which creates problems. It has to be recorded with the county register of deeds. This is one area where paying an attorney familiar with Michigan Medicaid rules is worth the cost.
Remember the partnership policy exception. If the recipient held a long-term care partnership insurance policy, the probate-only limit doesn’t apply, and MDHHS can pursue property transferred by Lady Bird deed as well.3State of Michigan. Estate Recovery
Watch the Five-Year Look-Back
Transferring a home to protect it takes careful timing. Michigan follows the federal rule requiring Medicaid to review any asset transfers made within 60 months before an application for long-term care coverage.9Centers for Medicare & Medicaid Services. Transfer of Assets in the Medicaid Program – Important Facts for State Policymakers
If you gave away your home or sold it for less than fair market value during that window, a penalty period follows during which Medicaid won’t pay for nursing facility care. The penalty length equals the uncompensated value of the transfer divided by the average monthly cost of private nursing home care in Michigan, which MDHHS updates twice a year. Give away a $200,000 property when the average monthly cost is $10,000, and you’re locked out of Medicaid coverage for 20 months. You or your family pay the full bill during that stretch.
A Lady Bird deed generally avoids this penalty because it isn’t a completed transfer while you’re alive. Outright gifts and adding a child’s name to the deed as a joint owner can trigger substantial penalties. This is where do-it-yourself planning goes wrong most often, and the consequences are severe: care is needed, no one will pay for it, and Medicaid says no.
Where Medicaid Sits in the Probate Line
Even when a claim proceeds, MDHHS is not first in line. Michigan law ranks claims against a probate estate, and Medicaid recovery sits at the sixth tier — behind administration costs, funeral and burial expenses, the homestead allowance for a surviving spouse or minor children, the family allowance for maintenance during administration, and exempt personal property set aside for the family.10Michigan Legislature. Michigan Code 700.3805 – Estates and Protected Individuals Code In a modest estate, those higher-priority allowances can absorb most of the value before MDHHS collects anything, and the state cannot come after heirs personally for the shortfall.