A Michigan Medicaid planning attorney explains how the Michigan Department of Health and Human Services counts assets and income for nursing-home Medicaid, what a spouse at home keeps, how gifts in the 60-month look-back are penalized, and what the rules allow before and after an application.
Most people facing a nursing-home admission in Michigan reach this question in the middle of something hard: a father's discharge from the hospital to a nursing facility, a wife whose dementia now needs round-the-clock care, or a monthly bill that savings cannot carry for long. The questions come all at once. Will the house be lost? What does the healthy spouse live on? Did the gift to a grandchild a few years ago cause a problem? This page sets out how Michigan's long-term-care Medicaid rules answer those questions, using Michigan's own policy manuals where they state a rule and federal law where it sets the framework.
One framing point applies throughout. MDHHS updates its manuals regularly, and several rules described here (asset limits, specific exclusions, income allowances and estate recovery scope) are set or adjusted by MDHHS rather than fixed in statute. Where this page gives a figure, it is the figure the cited manual or chart states for its effective date; where it does not, the answer turns on the current version of the MDHHS manual item named.
What a Michigan Medicaid Planning Attorney Does
Medicaid planning is the legal work of arranging a person's assets and income, within the rules, so that Medicaid can pay for long-term care without leaving a spouse impoverished or putting the family home at needless risk. This page covers Medicaid for long-term care only. Medicaid is not Medicare, and this page does not cover Medicare.
The Michigan Department of Health and Human Services (MDHHS) runs Michigan Medicaid and publishes its eligibility rules in the Bridges Eligibility Manual. Nursing-home coverage for people who are aged 65 or older, blind or disabled is often decided under the Extended-Care category. BEM 164 makes that category available only to L/H (long-term-care/hospital) and waiver clients, and says gross income cannot exceed 300 percent of the SSI federal benefit rate. The federal chart from CMS puts the 300 percent income cap at $2,982 a month for an individual, effective January 1, 2026 (CMS 2026 standards).
BEM 164 also says income eligibility under that category cannot be established with a patient-pay amount or by meeting a deductible. In plain terms, an applicant whose gross income is above the cap does not become income-eligible for Extended-Care simply by paying part of the cost of care; how such a case is handled is a question for other MDHHS categories and rules.
Families usually arrive in one of two situations: a parent or spouse is already in a nursing facility and decisions are needed now, which is often called Medicaid crisis planning, or care is likely in the coming years and there is time to plan. Either way, the rules come from two layers: federal law, mainly 42 U.S.C. § 1396p and 42 U.S.C. § 1396r-5, and Michigan's own program rules as MDHHS applies them.
Michigan's Asset Rules: Countable and Exempt Property
A countable asset is property MDHHS counts toward the asset limit when deciding eligibility. An exempt asset is property it does not count. BEM 164 says countable assets cannot exceed the asset limit in BEM 400, and that countable assets are determined under BEM 400, 401 and 402. A single applicant's countable assets must be at or below Michigan's limit for the category before Medicaid pays; BEM 402 points to BEM 400 for the current asset limits for the AD-Care and Extended Care categories.
The home has its own rule. Federal law, in 42 U.S.C. § 1396p, bars long-term-care coverage when home equity is above a limit, unless certain family members live in the home. Michigan's BEM 400 sets that home equity limit at $752,000 effective January 1, 2026 (it was $730,000 effective January 1, 2025), and says the limit is not applied if the person's spouse, child under 21, or blind or disabled child is living in the homestead.
BEM 400 also has rules for items including funeral plans, long-term-care insurance policies, life estates and promissory notes. For a promissory note, one condition it lists is an actuarially sound repayment schedule; when a person buys a life estate in someone else's home, the value of the life estate is used to decide whether the price was fair market value. Whether a vehicle, personal belongings or other property is excluded is governed by those BEM 400 manual items.
Spousal Protections: What the Community Spouse Keeps in Michigan
For a husband or wife still living at home, this is often the heaviest question, and the rules here were written with that spouse in mind. The community spouse is the spouse who remains at home while the other spouse receives nursing-home or other institutional-level care. Federal law, 42 U.S.C. § 1396r-5, sets the framework: at application, all resources held by either spouse are counted as available to the spouse in care, except the amount protected for the community spouse, called the community spouse resource allowance.
Michigan calls this the protected spousal amount. BEM 402 describes it as the amount of the couple's assets protected for the community spouse, the greatest of several calculated amounts, and lists figures of $32,532 and $162,660 effective January 1, 2026 in that calculation. BEM 402 also describes a presumed asset eligible period that allows time to transfer assets to the community spouse; the transfer is not required, but if it is not made the person in care may become ineligible after that period. A spouse remains a spouse for this purpose until a Judgment of Divorce.
Income has a separate floor, the minimum monthly maintenance needs allowance. Federally it is adjusted each July 1, while the maximum income allowance and the resource figures change each January (CMS 2026 standards). Michigan's own income allowance figure is set by MDHHS. A transfer to one's own spouse carries no transfer penalty under federal law (42 U.S.C. § 1396p). This page does not address whether Michigan allows spousal refusal. Couples in later marriages face added questions, covered in Medicaid planning in second marriages.
The Look-Back Period and How Transfer Penalties Work
The look-back period is the window before an application in which transfers are reviewed. Federally it is 60 months for transfers made on or after February 8, 2006 (42 U.S.C. § 1396p), and states set their own application of it; Michigan's BEM 405 says the look-back period is 60 months before the person's baseline date. A divestment is a transfer for less than fair market value.
A penalty period is a stretch of time in which Medicaid will not pay for long-term care. BEM 405 calculates it by dividing the total uncompensated value of the transfers by the average monthly private long-term-care cost in Michigan for the client's baseline date; the leftover fraction is multiplied by 30 to give days. BEM 405 says there is no maximum penalty and no minimum transfer amount: even a one-day penalty is imposed.
Federally, the penalty starts on the later of the month of the transfer and the date the person is eligible and would otherwise receive institutional-level care (42 U.S.C. § 1396p). BEM 405 states Michigan's start date as the date the person is eligible for Medicaid and would otherwise be receiving institutional-level care and is not already in a penalty period. BEM 405 lists institutional-level care as including long-term care, the MI Choice waiver, PACE, home help and home health services, so the penalty rules reach care at home and in the community as well as nursing-facility care. A gift made four years ago inside the look-back is penalized the same way as a gift made last month. Not every transfer is penalized: the federal statute lists exceptions, including transfers to a spouse, and each exception has its own conditions in the statute and in BEM 405.