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The Hardship Waivers Michigan Medicaid Recovery Must Offer
Most writing about protecting assets from Medicaid concerns what a family does in advance. Less is written about what Michigan protects after the fact, for a family that did no planning at all, and the statute that created the estate recovery program contains a list. The list is not generous, but it is specific, and it applies whether or not anyone thought about it in time.
MCL 400.112g(3)(e) directed the department to define hardship for purposes of exempting an estate from recovery, and it named what the definition had to include at a minimum. It also required the department to give every individual enrolling in Medicaid for long-term care written materials explaining how to apply for a hardship waiver, which is a document most families never see because nobody points to it.
Homestead Value Up to Half the County Average
The first required category is a portion of the recipient’s homestead. The exemption reaches the portion of the homestead’s value that is equal to or less than 50 percent of the average price of a home in the county where the homestead is located, as of the date of the recipient’s death.
The measure is local rather than statewide, and the date is the date of death. A modest house in a county with a high average home price may fall entirely within the exemption, while the same house in a county with a low average may not. The comparison is to the county’s average, not to the state’s or to the house’s own assessed value.
The exemption applies to a portion of value rather than to the property as a whole. Where the home is worth more than half the county average, the excess remains within reach, and the family’s position depends on what else is in the estate and on the other categories below. Our Michigan Medicaid planning page covers the eligibility rules that operate before any of this.
A Family Farm or Business Counts on Its Own Terms
The second required category is the portion of an estate that is the primary income-producing asset of the survivors. The statute names a family farm or business as examples rather than as the whole category, so the question is whether the asset is what the survivors live on.
That framing matters in a region where a cherry orchard, a small marina, or a seasonal rental operation is both the estate’s largest asset and the household’s income. An asset that fits the description is exempt as a hardship category without any showing beyond that fact.
The department was also directed to establish circumstances under which it may review requests for exemption in cases that do not meet the hardship definition at all, and to implement the federal requirement that heirs not be unreasonably harmed by the program. Those are discretionary avenues rather than entitlements, but they exist in the statute and a request may be made under them.
The Presumption Against Planned Diversion
The same subsection carries the provision that cuts the other way, and it is worth reading before relying on any of the above. The hardship definition must include a rebuttable presumption that no hardship exists if the hardship resulted from estate planning methods under which assets were diverted in order to avoid estate recovery.
The presumption is rebuttable, so it can be answered, and it attaches to hardship that resulted from diversion rather than to every family that ever consulted a lawyer. A family whose hardship arises from ordinary circumstances is not within it. A family that moved assets out of reach and then claims the remainder is a hardship is exactly who it was written for.
The presumption operates on waivers. It does not enlarge what the program can reach in the first place, which under MCL 400.112h(a) is the estate subject to probate administration under Article III of the Estates and Protected Individuals Code. Property that passes outside probate, by deed or by beneficiary designation, is not in the recoverable estate and does not need a waiver to stay out of it.
Two Limits That Are Not Waivers
Subsection (4) places a floor under the program that operates without any application. The department shall not seek recovery if the costs of recovery exceed the amount of recovery available, or if the recovery is not in the best economic interest of the state. A small estate may be outside the program’s reach on economics alone.
Subsection (2)(b) caps what may be recovered. Amounts subject to recovery shall not exceed the cost of providing the medical services, and settlements are to take into account the best interests of the recipient’s survivors. The program collects what it paid, not the value of the estate.
Those two provisions, together with the probate-estate definition, describe the actual outer boundary of Michigan’s recovery. The hardship categories operate inside that boundary, for estates the program can otherwise reach. Which of the two a family is dealing with is the first thing to establish when a recovery notice arrives, and it is a question the notice itself will not answer. We are glad to look at it with you before anything is filed. Call us at (800) 525-6386.
If a Recovery Notice Has Already Arrived
A notice from the recovery program is the beginning of a process with categories, presumptions, and economic limits written into it, and a family that reads it as a bill has skipped every one of them. At Neumann Law Group, we handle recovery questions alongside our Michigan estate planning practice for families across Northern Michigan and statewide, including the Michigan probate administration the program attaches to. We are happy to talk it through with you. Call (800) 525-6386 or contact our office.