Recent reports in the news have highlighted the negative impact of Medicaid estate recovery on families, prompting discussions about the possibility of abolishing this practice.

What is Medicaid?

Medicaid is a U.S. federal government program, administered by the states, that provides health care coverage and pays for nursing home care for Americans. Eligibility for Medicaid in most states is determined by strict income and asset criteria, typically requiring individuals to have no more than $2,000 in countable assets. Some assets are not counted, meaning you can have them and qualify for Medicaid. In Michigan, the major non-countable assets are the home (so long as the equity is below $713,000.00 in 2024), a vehicle, and Medicaid-compliant funeral plans.

Many older Americans depend on Medicaid for long-term care services, as Medicare, another government program, does not cover these expenses.

In 2024, the statewide average cost of a nursing home in Michigan is $10,870.00 per month. With such high costs, most people cannot afford long-term care without depleting their assets to qualify for Medicaid. For example, even if a senior has $250,000 in savings, at $10,870.00 per month, these funds will be depleted in 23 months. As residents of Metro Detroit may know, nursing homes in Oakland County and Macomb County usually cost $12,000.00 to $14,000.00 per month, more than the statewide average of $10,870.00.

What is Medicaid Estate Recovery?

States are federally mandated to recoup Medicaid expenditures for a recipient's medical care incurred during their lifetime. This includes costs for nursing home services, prescription drugs, and other medical or long-term care expenses. The Medicaid Estate Recovery Program predominantly affects those over 55 who received Medicaid long-term care.

States are required, with some exceptions, to reclaim these costs from a deceased person's estate when they pass away. Failure to do so could cause the loss of federal Medicaid funding for the state.

Can Medicaid Take Your Home?

In Michigan, only assets in your probate estate are at risk to Medicaid estate recovery. For example, if you have designated a beneficiary for your life insurance, it may not be subject to recovery. In Michigan, your estate plan can be designed so that title to your home passes outside of the probate court process, thus legally avoiding Michigan's Medicaid estate recovery program.

An End to Estate Recovery?

The Stop Unfair Medicaid Recoveries Act was introduced in Congress earlier this year by a U.S. representative, aiming to abolish the Medicaid estate recovery requirement. The legislation would bar states from imposing liens on the homes of Medicaid beneficiaries, thus enhancing access to long-term care services.

While reports indicate the states do not actually collect that much money from their estate recovery efforts relative to the large amount they spend on Medicaid, the bill's immediate advancement remains uncertain. As a practicing elder law attorney for 27 years, this is what I have observed: the government approves benefits for people who have not worked or contributed to the system readily, but makes people that have worked consistently, lived within their means, and saved jump through hoops before they get any assistance. Since the estate recovery program mainly affects the latter group (the savers), I doubt the government will try to help the savers out by eliminating estate recovery. Moreover, today's high budget deficits and the high amount of government debt does not bode well for a reduction in a revenue generating program, even if estate recovery does not generate that much money.

Be Proactive with Medicaid Planning with a Troy, Michigan Elder Law Attorney

Planning for the future with an elder law attorney is important. It is possible to structure your affairs to legally avoid Medicaid estate recovery through careful, legal Medicaid planning.

The statistics indicate that seven out of ten older Americans will need some form of long-term care so be realistic and acknowledge the likelihood of needing Medicaid long-term care. Your estate plan can include provisions to protect against estate recovery and to avoid having to spend-down to obtain Medicaid eligibility.

The regulations surrounding Medicaid benefits are state-specific and complex. Working with an elder law attorney is advisable to explore potential options and plan strategically for the future. This planning may involve determining the best time to apply for Medicaid and legal estate and long-term care planning to safeguard assets.

I, Andrew Byers, am an estate planning and elder law attorney in Troy, Michigan with 27 years of practical experience you can use to for your benefit. Contact me now by using the online form or call me directly at (248) 469-4261. On this free initial call, I will answer your preliminary questions and get some background information to make sure it is a situation I can help with. After that, you can decide if it makes sense to schedule a more in-depth consultation. I advise clients in Troy, Michigan and surrounding areas including Royal Oak, Clawson, and the rest of Metro Detroit