Michigan Estate Recovery: What Medicaid Can Claim After Death
A family we know got a letter from the State of Michigan about seven weeks after their mother's funeral. It came with a questionnaire, a short deadline, and a sentence saying the department intended to file a claim against her estate. Nobody in that family had ever heard the words estate recovery. They assumed it was a scam. Then they assumed it was a mistake. By the time they understood it was neither, the response window had nearly closed.
That is the part worth fixing. Estate recovery is not a scandal and it is not a surprise tax. Every state is required by federal law to run one, and Michigan has had one on the books since 2007. But it reaches families in the worst week of their lives, written in the flattest possible language, and most people meet it for the first time as an envelope rather than as a fact they planned around.
Here is what it is, what it can reach in Michigan, and the fairly large amount that it cannot.
What estate recovery actually is
When someone receives Medicaid for long term care, the state pays for that care while they are living. After they die, federal law requires the state to try to recover what it spent, from that person's estate.
Michigan runs this under MCL 400.112g. Michigan was the last state in the country to adopt a recovery program, which is why so many families here have a relative who went through this era without ever encountering it. The law passed in 2007, the program did not begin operating until July 1, 2011, and the state can only recover for long term care services received on or after July 1, 2010. Care received before that date sits outside the program entirely.
Who it applies to
Two things both have to be true. The person was 55 or older when they received the care, and the care was long term care paid for by Medicaid.
That second half is where families get lost, so it is worth being exact. Recovery reaches nursing facility services, home and community based waiver services, which in Michigan means the MI Choice waiver, and the hospital and prescription drug costs connected to that care.
It does not reach ordinary Medicaid. A parent who had Medicaid coverage for regular doctor visits and never received long term care is not in this program at all.
It also does not reach private pay care. A family paying privately for an adult foster care home is not building a claim against anything, because no Medicaid dollars are involved. We say this plainly because families ask us, and the answer really is that simple.
The Michigan rule that matters most
Some states define the word estate broadly and pursue nearly everything a person touched. Michigan did not do that.
Michigan reaches the probate estate only. That means assets a person died owning in their own name, which pass through probate court. Property that transfers outside probate is generally beyond reach.
In practice that covers a home that passes under a properly drafted lady bird deed, property held jointly with rights of survivorship, accounts carrying a transfer on death or payable on death designation, and life insurance or retirement accounts with a living named beneficiary.
This is why Michigan estate recovery so often collects nothing at all. Not because anyone outmaneuvered the state, but because ordinary estate planning that people do for entirely unrelated reasons happens to move assets out of probate.
The reverse is the sad version, and we see it more often. A parent who never got around to any of it, who simply owned a house in their own name, leaves behind the one asset the program was built to find.
What the law protects
Even when there is a probate estate, several situations are protected outright.
The state cannot recover while there is a surviving spouse. It cannot recover while there is a child under 21, or a child of any age who is blind or has a disability.
The homestead carries its own protections. The home is exempt while it is occupied by the spouse, by a minor or disabled child, or by a sibling who holds an ownership interest and lives there. It is also exempt if a relative lived in the home and provided care for two years or more that postponed the parent's entry into a nursing home. That one deserves a second reading, because a great many Michigan families did precisely that without knowing it had a legal name and a legal consequence.
There is a value based protection as well. The portion of the homestead's value equal to or less than half the average home price in that county, measured as of the date of death, is exempt. Because the figure is tied to the county rather than the state, the same house is treated differently depending on where it sits. In a county where the average is modest, half of it can cover an entire home. In a higher priced county like Oakland, which is where Troy and both of our homes are, half the county average covers a smaller share of any given house, so more of the value stays exposed.
Income producing property, including farms and small businesses, is exempt when it is the primary source of income for the survivors.
Beyond those categories there is a hardship waiver, for situations where recovery would leave survivors without means. It has to be requested. Nothing about it happens automatically, and one detail is worth knowing before you start asking around: the decision belongs to the Michigan Department of Health and Human Services and to no one else. Not the county, not the probate court, not the nursing home's business office. MDHHS said so directly in an April 2026 policy bulletin that took effect that May, written because its own manual had only implied it. If someone tells you a waiver has to go through another office, ask them to point you to the department anyway.
What the letter looks like, and the deadline inside it
When the department learns of a death, it sends notice to the estate's personal representative or to the heirs, saying it intends to file a claim. A questionnaire arrives with that notice, and the questionnaire is where the protections above get raised.
The window to respond is short, roughly two weeks. This is the most common way families lose ground, and it is worth naming clearly: usually not because they owed the money, but because the envelope sat unopened on a counter during the exact fortnight when nobody in the house could think straight.
Open it. Answer it. If any exemption might apply, the questionnaire is where you say so, in writing, on time.
One reassurance that belongs here: the amount claimed cannot exceed what Medicaid actually spent on that person's care. This is a reimbursement, not a penalty, and not a share of the estate.
What to do with any of this
If a parent is already receiving MI Choice or nursing facility Medicaid, the planning window is narrow but not shut, and the work belongs with a Michigan elder law attorney rather than a form downloaded off the internet. Transfers made late create their own trouble with the Medicaid look back, which is a separate rule that regularly catches people trying to solve this alone.
If a parent is not on Medicaid yet, then this is simply the ordinary estate planning conversation, the one worth having for half a dozen reasons that have nothing to do with Medicaid at all. Recovery is only one of them, and not the largest.
And if the letter has already arrived, the order that helps is short. Read it. Write down the deadline. Find out whether one of the exemptions fits your family. Get a Michigan attorney looking at it inside the two weeks rather than after.
The families who fare worst under estate recovery are almost never the ones who owed the most. They are the ones who learned the phrase seven weeks after a funeral, from an envelope that nobody opened.