Long Term Care (Medicaid) Planning in Michigan for Seniors and Families

Planning for long-term care in Michigan can feel overwhelming, especially when nursing home costs easily exceed ten thousand dollars a month. Medicaid is a federal program administered by each state, and Michigan cannot impose rules that are more restrictive than federal law, although the state has attempted to do so on many occasions. The law is extremely complicated, counterintuitive, and often frustrating for families who are suddenly faced with a medical crisis, and the consequences of mistakes can be serious. The good news is that both single individuals and married couples in Michigan have meaningful legal strategies available to them that can protect their home and a significant portion of their savings while still qualifying for Medicaid.

A single person who needs nursing home care may keep a home (if the equity is within federal limits and the home is not titled in a living trust), one vehicle, personal belongings, funeral arrangements and burial space items, and $9,660 in countable assets, changed from $2.000. Medicaid also reviews the previous five years of financial activity to identify gifts or transfers for less than fair value. If a transfer is identified, Medicaid will impose a penalty period during which it will not pay for care. Even well-meaning actions such as paying a family caregiver without a compliant written care contract and a supporting letter from a doctor are treated as gifts under Michigan Medicaid rules. It should be noted for those on SSI the asset limit is still $2,000.

For single applicants, one of the most helpful strategies is known as the half a loaf plan. This approach divides the person’s savings into two parts. One part is gifted to a trust for children or other beneficiaries. The other part is converted into an income stream that is paid back monthly. The gift creates a penalty period. During that time, the income stream, combined with the person’s regular income, is used to pay for their care. When the income is exhausted and the penalty ends, Medicaid begins paying for care and the gifted portion remains protected. The strategy can be used with a wide range of asset levels. This strategy can usually save 50-70%of assets.

For married couples, Medicaid provides additional protections to ensure that the healthier spouse is not left in financial distress. In 2025, the community spouse may keep 50% of the couple’s countable assets, subject to a minimum of $31,584 and a maximum of $157,920. The spouse in the nursing home may keep $9,660. The home usually regardless of its value, one vehicle, personal belongings, funeral arrangements, and burial items remain protected for the couple.

Michigan law also recognizes three advanced planning tools that provide even stronger protection for married couples. The first is the Sole Benefit Trust, affirmed unanimously by the Michigan Supreme Court. This trust allows the community spouse to receive transfers of excess assets. When drafted correctly, the assets in the trust are not counted for Medicaid eligibility and remain available for the community spouse’s needs. Its primary limitation is that it does not protect income and traditionally required the liquidation of retirement accounts, which created substantial tax consequences.

The Name on the Check strategy resolves that concern. Rather than cashing out IRA or qualified retirement accounts, which historically produced an unavoidable tax burden, the retirement asset is annuitized. The monthly annuity payment is directed entirely to the community spouse, and the check is issued in the name of the community spouse. Medicaid has accepted this structure because the annuity is for the sole benefit of the community spouse. Although the monthly payment is taxable income, the well spouse may deposit and regrow those funds. This strategy allows retirement assets to be preserved without triggering a full liquidation, representing a major advancement in Medicaid planning for married couples.

The third tool, though not widely used unless there are sympathetic fact, utilizing a Probate Court Support Order to increase the amount of assets or income the community spouse can keep when fairness requires it. This is especially valuable when IRA assets must be preserved or when the community spouse has higher living expenses.

Although the Medicaid program is governed by a complicated web of federal statutes, Michigan regulations, and agency interpretations, Meeting with an experienced elder law attorney ensures that options are evaluated correctly and opportunities are not lost. In many cases families discover that they are able to protect far more than they expected. Caring for a loved one should not cost the savings of a lifetime.

Families are often surprised to learn how much can be saved with proper planning, even in crisis situations. With proper planning can help families preserve what they have worked for their entire lives. Because Medicaid law involves a complicated web of statutes, regulations, and agency interpretations, it is essential for families to consult with an experienced elder law attorney who understands both the law and its practical application.