When a loved one needs nursing home care, the emotional weight of that moment is already enormous. Families in East Lansing, Okemos, Mason, and communities throughout Ingham County are suddenly navigating medical decisions, care transitions, and financial concerns all at once. In the middle of that stress, selling the family home can feel like the obvious and responsible thing to do. We want you to know, gently but clearly, that it may not be necessary, and it may actually cause more harm than good.
At Leydorf Law Firm, we sit with families through these conversations regularly. Understanding how Michigan’s Medicaid rules treat the family home, and what Medicaid crisis planning options may be available to you, can genuinely change the outcome for your family. You may have more choices than you realize.
The Home May Already Be Protected Under Michigan Law
One of the most common and understandable misconceptions we hear is that a family must sell the house to qualify for Medicaid nursing home coverage. In most situations, that is simply not true.
Under Michigan’s Medicaid rules, a primary residence is generally treated as an exempt asset when determining eligibility.
Your primary residence is an exempt resource, though for long-term care Medicaid, there is a limit on the amount of home equity that can be exempt.
For most Michigan families, the home’s equity falls well within that range, meaning the house does not need to be sold for your loved one to qualify for coverage.
The protection can be even stronger in certain family situations.
The primary home will automatically be exempt if the applicant’s spouse, child under 21 years old, or permanently blind or disabled child of any age lives in it.
If a spouse is still living in the family home near Meridian Township or anywhere in the greater Lansing area, selling that home does not help with Medicaid eligibility. It simply turns a protected asset into cash that Medicaid may count against you.
Selling the Home Can Actually Create New Challenges
This is something families often do not anticipate. The family home, while it remains your residence, is shielded from Medicaid’s asset calculations. The moment you sell it, the proceeds from that sale become countable assets. That money must then be spent down on care before Medicaid will begin covering costs.
The cost of that spend-down can be substantial.
The Michigan Department of Health and Human Services estimates the average monthly cost for private long-term care in Michigan to be approximately $11,842 per month for 2025. These statistics demonstrate the harsh reality of the ruinous cost of long-term nursing home care for an incapacitated adult.
So a family sells the home with the hope of covering care and protecting what remains. Instead, they watch those proceeds go directly to nursing home bills month after month. By the time Medicaid steps in, the asset that might have been preserved for the family, or passed down as part of a loved one’s legacy, is gone. It is a painful outcome, and it happens more often than it should.
Transferring the Home Has Its Own Risks
Sometimes families consider a different approach: instead of selling the home, they transfer it to children or other relatives to get it out of the picture before applying for Medicaid. This is understandable, but it carries serious risks under Michigan law.
It is important that one does not give away assets or sell them under fair market value within 60 months of applying for Nursing Home Medicaid or a Medicaid Waiver. Michigan’s Medicaid agency will assume it was done in order to reach the Medicaid asset limit, and violating Medicaid’s five-year look-back rule results in a penalty period of Medicaid disqualification.
The penalty period is calculated based on the value of what was transferred divided by the average monthly cost of nursing home care in Michigan.
For 2026, the average cost of nursing home care in Michigan is $12,216.30 per month.
That number determines how many months of Medicaid coverage will be withheld.
What makes this particularly difficult is the timing.
The penalty period does not start to run until the individual is in a skilled nursing facility and meets the Medicaid eligibility criteria. In short, the individual is in a nursing home and has no money but has to somehow privately pay for their care during the penalty period.
That is an incredibly stressful position for any family to be in, and we want to help you avoid it.
There is also a common misunderstanding about gift tax rules.
The federal gift tax rule does not extend to Medicaid eligibility. This rule, in 2026, allows individuals to gift up to $19,000 per recipient without filing a gift tax return. Gifting under this rule violates Medicaid’s look-back period.
Many families believe that staying within the annual gift tax exclusion protects them for Medicaid purposes. Unfortunately, it does not.
There Are Meaningful Exceptions That May Apply to Your Family
Michigan law does recognize certain circumstances where transferring the home will not trigger a penalty. These exceptions are specific and require careful documentation, but they can be genuinely meaningful for qualifying families.
If an adult child has been living with and caring for the parent, there may be a path forward.
You are permitted to transfer your home to a child who is your caregiver and who has resided in the house with you for two years or more prior to your Medicaid application. Their care must have permitted you to avoid the need for nursing home care.
This is known as the caregiver child exemption, and for families where this situation exists, it can be a meaningful way to protect the home.
There is also a sibling exception worth knowing about.
The transfer of your home to a sibling who has equity in the house and has lived in it for at least one year before you fill out an application for Medicaid may be an exception to the look-back rule.
For married couples, there are additional protections.
When one spouse needs nursing home care, Michigan has special rules to protect the healthy spouse still living at home. The Community Spouse Resource Allowance lets the at-home spouse keep a portion of joint assets without affecting the nursing home spouse’s Medicaid eligibility.
These spousal protections exist precisely because Michigan law recognizes that the healthy spouse at home should not be left without resources.
Estate Recovery Is Something Families Should Understand Early
Even when a family successfully navigates Medicaid eligibility while keeping the home, there is one more layer that is important to understand: Michigan’s Medicaid Estate Recovery Program. We share this not to frighten anyone, but because knowing about it early creates more options.
While one’s home is generally exempt from Medicaid’s asset limit, it is not exempt from Medicaid’s Estate Recovery Program. Following a long-term care Medicaid beneficiary’s death, Michigan’s Medicaid agency attempts reimbursement of care costs through whatever estate of the deceased still remains. This is often the home. Without proper planning strategies in place, the home will be used to reimburse Medicaid for providing care rather than going to family as inheritance.
The federal government requires state Medicaid programs to seek recovery from the estates of certain deceased beneficiaries who have received benefits from a state Medicaid program. Under the Estate Recovery Program, the Michigan Department of Health and Human Services will seek repayment of benefits received from Medicaid.
There are protections built into the law.
States may not recover from the estate of a deceased Medicaid enrollee who is survived by a spouse, child under age 21, or blind or disabled child of any age.
And Michigan’s status as a probate-only state for estate recovery purposes means that assets structured to pass outside of probate may be shielded from recovery entirely. This is an area where thoughtful legal planning can make a real difference for the family members your loved one wants to provide for.
Planning Ahead Offers the Most Options
The families who tend to have the most choices are those who began thinking about these issues before a health crisis arrived. A Medicaid Asset Protection Trust, established and funded well before care is needed, can protect the home and other assets while preserving a path to Medicaid eligibility.
You cannot access the principal, and you must plan at least five years before needing care. This makes early planning critical, ideally when you’re healthy and in your 60s or 70s.
That said, we understand that many families come to us when a crisis is already underway. Even then, options often exist that families do not know about.
Planning ahead to protect your assets can allow you to become eligible for Medicaid help when you need it, without sacrificing all you have worked for to the nursing home.
And even in urgent situations, a conversation with an elder law attorney before selling the home or transferring it can reveal paths that were not visible before.
We are here for exactly these moments. At Leydorf Law Firm in East Lansing, we work with families throughout Ingham County and the greater Lansing area who are facing nursing home transitions and trying to do right by their loved ones. If your family is in this situation right now, we warmly encourage you to reach out before making any major decisions about the family home. The right guidance at the right time can protect far more than most families expect.