The Four Ways You Can Lose Your Home Under Medicaid

The home is supposed to be exempt if you enter a nursing home and apply for Medicaid. In reality, the Medicaid program has four ways which can result in the loss of your home:

1. Placing Home in a Living Trust Makes Home Countable In Michigan, if your home is in a Revocable Living Trust, it loses its exempt status and becomes countable. When countable assets exceed your asset limit, Medicaid is denied. Wisconsin Estate Recovery goes against homes in a Revocable Living Trust after your passing.

2. Transfer Home Within The Five Year Look-Back Period Under the Deficit Reduction Act (DRA), the transfer of a home within five years of applying for Medicaid results in a divestment penalty of Medicaid disqualification in both Michigan and Wisconsin.

3. The Value of the Home Exceeds $540,000 Under the Deficit Reduction Act, a home value which exceeds $540,000 in Michigan will cause the home to lose its exempt status. Wisconsin allows an exempt value of $756,000.

4. Medicaid Estate Recovery Under Estate Recovery, unless the home has a protective deed in place, the state will take the home after the Medicaid recipient dies. The state will then sell it and apply the home’s sale proceeds to recover the State’s Medicaid payments.

   • Michigan adopted probate-only Estate Recovery on July 1, 2011.

   • Wisconsin adopted expanded estate recovery on August 1, 2014, which recovers against a life estate, Lady Bird, joint tenancy, and a revocable trust deed. An irrevocable Legacy Trust avoids Wisconsin Estate Recovery.

   
   
   
   

Deed Solutions

• In Michigan, the best strategy is the Lady Bird life estate deed.

• In Wisconsin, the only strategy that works is an irrevocable trust which we call a Legacy Trust (subject to a five-year lookback)