Michigan’s Medicaid asset limits for long-term care are now $9,430 for a single applicant and $14,130 for a married couple, up from the longstanding $2,000 and $3,000 that governed eligibility for decades. The Michigan Department of Health and Human Services (MDHHS) raised the thresholds to match the Medicare Savings Program levels, with the change rolling out in stages beginning January 1, 2025.1State of Michigan. Michigan DHHS Notice of Proposed Policy – Asset Limit Increase If you’re applying for nursing home Medicaid or another long-term care program, those are the numbers that matter.
These limits apply to the asset-tested categories of Medicaid, which cover people who are aged 65 or older, blind, or disabled. The Healthy Michigan Plan and other income-based (MAGI) programs don’t impose an asset test, so if that’s your pathway, the dollar figures above are not your concern.
What Counts and What Doesn’t
MDHHS looks at anything you own that could be turned into cash. Checking and savings accounts, certificates of deposit, stocks, bonds, mutual funds, investment accounts, and real estate other than your home all count toward the limit. The rules on what gets counted did not change when the dollar thresholds went up.
Several categories are exempt:
- Your primary residence, as long as you, your spouse, or a dependent relative lives there, or you state an intent to return.
- One vehicle, with no cap on value.
- Personal belongings, including clothing, furniture, and household goods.
- Irrevocable burial trusts and prepaid funeral contracts. A revocable burial fund of up to $1,500 is also typically excluded under SSI-related rules.
- Life insurance policies with a combined face value of $1,500 or less. If the total face value exceeds that amount, the cash surrender value of every policy becomes countable.
The life insurance rule surprises people. A $10,000 whole life policy with $3,000 of cash value adds that full $3,000 to your countable assets. Term life policies with no cash value are never counted, regardless of face value.
Home Equity Cap for Nursing Home Coverage
Your home is exempt from the asset count, but if you’re applying for long-term care Medicaid there is a separate ceiling on how much equity it can hold. Federal law sets a range, and for 2026 that range runs from $752,000 to $1,130,000, with each state picking its own figure.2Centers for Medicare & Medicaid Services. 2026 SSI and Spousal Impoverishment Standards
If your equity exceeds the applicable cap and no spouse or dependent relative lives in the home, you won’t qualify for long-term care Medicaid until the equity is brought down. Paying off a mortgage or making home improvements are common ways to do it.
The home exemption also depends on occupancy. If you enter a nursing facility, you keep the exemption as long as you state an intent to return. Federal guidance says that intent can be stated in a simple letter or affidavit, and a family member can make the statement on your behalf if you can’t communicate.3U.S. Department of Health and Human Services – ASPE. Medicaid Treatment of the Home: Determining Eligibility and Repayment for Long-Term Care There’s no requirement that a return be medically likely. The standard is subjective.
Protections When Only One Spouse Needs Care
When one spouse enters a nursing home and the other stays in the community, federal spousal impoverishment rules let the community spouse keep a larger share of the couple’s combined assets. This is called the Community Spouse Resource Allowance (CSRA), and for 2026 the maximum CSRA is $162,660.2Centers for Medicare & Medicaid Services. 2026 SSI and Spousal Impoverishment Standards Assets held up to that amount by the community spouse don’t affect the institutionalized spouse’s eligibility.
Income is protected too. The community spouse is entitled to a Monthly Maintenance Needs Allowance (MMMNA) drawn from the institutionalized spouse’s income if their own income falls short. For 2026, the minimum MMMNA is $2,643.75 per month and the maximum is $4,066.50.2Centers for Medicare & Medicaid Services. 2026 SSI and Spousal Impoverishment Standards If housing costs are unusually high, the allowance may be increased toward the maximum through an excess shelter allowance calculation or a fair hearing.
Bringing Countable Assets Down
If you’re over the limit, the cleanest approach is to convert countable assets into exempt ones. Paying off a mortgage, making home repairs, buying a replacement vehicle, or prepaying funeral and burial expenses all move money from the countable column to the exempt column without triggering a transfer penalty, because you receive fair value in return.
Medicaid-Compliant Annuities
An annuity can turn a lump sum into a stream of income, but it has to meet strict rules to avoid being treated as a gift. According to Michigan’s Department of Insurance and Financial Services, a Medicaid-compliant annuity must be irrevocable, commercially issued by a licensed company, and actuarially sound, meaning it will return all principal and interest within the annuitant’s life expectancy. Payments must be substantially equal monthly installments with no balloon or lump-sum payouts. The State of Michigan must be named as the remainder beneficiary in the first position, or in the second position after a community spouse or a minor or disabled child, for an amount equal to the Medicaid benefits paid.4State of Michigan – Department of Insurance and Financial Services. Medicaid Annuities Bulletin 2020-36-INS
An annuity that fails any of these tests is treated as a transfer for less than fair market value, triggering a penalty period. This is not a do-it-yourself strategy.
Irrevocable Trusts
Irrevocable trusts come up often in Medicaid planning conversations, but Michigan applies them narrowly. Under BEM 401, if any portion of the trust principal or income can still be paid to you or for your benefit, that portion counts as your asset. Only the portion from which no payment can reach you is treated as transferred, and that transfer is subject to the five-year look-back.5Michigan Department of Health & Human Services. BEM 401 – Trusts
Special needs trusts established by a parent, grandparent, guardian, or court for a disabled person under age 65 are an exception. These are exempt from transfer penalties as long as the state is named as a remainder beneficiary to recover Medicaid costs upon the beneficiary’s death.5Michigan Department of Health & Human Services. BEM 401 – Trusts
One boundary worth flagging for anyone reading general Medicaid planning advice: Michigan does not recognize Qualified Income Trusts, often called Miller Trusts.6State of Michigan. HCEP 05-04 – Financial Factors – Trusts If your income exceeds Medicaid’s threshold, the medically needy spend-down pathway is the primary alternative here.
The Five-Year Look-Back
MDHHS reviews every asset transfer you made in the 60 months before your Medicaid application. If you gave assets away or sold them for less than fair market value during that window, the agency imposes a penalty period during which Medicaid won’t pay for your long-term care.7Michigan Department of Health & Human Services. BEM 405 – MA Divestment
The penalty is calculated by dividing the uncompensated value of the transfers by Michigan’s average monthly private nursing home cost. For applications with a baseline date in 2026, that divisor is $12,216.30 per month.7Michigan Department of Health & Human Services. BEM 405 – MA Divestment Give away $122,163 and the penalty runs 10 months. Any fractional remainder converts to days by multiplying by 30.
The timing is the trap. The penalty doesn’t start when you make the transfer. It starts on the date you would otherwise have become eligible for Medicaid, meaning you’ve applied, met every other requirement, and need coverage now. You can’t give money away and quietly wait out the clock while paying privately. Giving $200,000 away five years before applying works. Giving it away 18 months before applying leaves you with roughly 16 months of nursing home bills Medicaid won’t touch.
Some transfers don’t trigger a penalty: transfers to a spouse, to a trust for a disabled child, or transfers of a home to a child under 21, to a blind or disabled child, to a sibling with an equity interest, or to a caretaker child who lived in the home for at least two years before the applicant’s institutionalization.7Michigan Department of Health & Human Services. BEM 405 – MA Divestment
Estate Recovery After Death
Michigan runs a Medicaid Estate Recovery Program as required by federal law. After a Medicaid beneficiary dies, the state can seek reimbursement from the estate for long-term care costs Medicaid paid.8Michigan Legislature. Michigan Code 400 – The Social Welfare Act, Section 112g
Michigan defines “estate” for recovery purposes as property that passes through probate. That is narrower than some states. Assets that transfer outside probate, such as those held in a properly structured trust, jointly owned property that passes by right of survivorship, or accounts with named beneficiaries, may fall outside the scope of recovery.9State of Michigan. Estate Recovery
There is one significant exception. If you received an asset disregard through a long-term care partnership insurance policy, estate recovery applies to all assets, whether or not they pass through probate.9State of Michigan. Estate Recovery Recovery can never exceed the actual cost of services Medicaid paid, and any settlement must account for surviving spouses and heirs.
Applying and Appealing
You can apply through the MI Bridges portal online, in person at a local MDHHS office, by mail, or by fax. Federal rules require most applications to be processed within 45 calendar days; applications based on disability get up to 90 days because of the added medical review.10eCFR. 42 CFR 435.912 – Timely Determination and Redetermination of Eligibility
If your application is denied, or your benefits are reduced or terminated, you have up to 90 days from the date of the adverse notice to request a fair hearing.11eCFR. Subpart E – Fair Hearings for Applicants and Beneficiaries If you file the request before the effective date of the action, benefits generally continue at the current level until a decision is issued. Bank statements, property records, and proof of exempt assets make the strongest file.
The pieces of this system interact. Asset limits, trust rules, annuity requirements, the look-back, and estate recovery can each cost you tens of thousands if handled wrong. Starting at least five years before you expect to need long-term care gives you the most room, because transfers made outside the look-back window carry no penalty. Waiting for a health crisis sharply narrows the options.