Spouses of Medicaid Applicants, You DO have rights: the right to keep your life savings; the right to keep your income; the right to support.
• Congress considered and rejected the proposition that our elders should be bankrupted by the cost of long term care.
• Congress gave community spouses of the Medicaid nursing home patients special rights to preserve their money and property. A needy spouse may retain ALL savings and income.
• As with the income tax, the community spouse must hire a professional advisor to secure all credits, deductions and exemptions that Medicaid allows.
Medicaid Asset Terms and Allowances
Medicaid divides assets into two groups: exempt and countable. Your home, your vehicle and burial space items such as a grave site or a niche. The home equity limit is $752,000 effective January 1, 2026. Note this is equity. If your home is mortgaged your equity is: the market value minus the amount owing on your mortgage. For example your home has a market value of $900,,000. You have a mortgage of $200,000. Your equity is $700,000. There is no stated limit on the value of your vehicle, except that it must be realistic. For example: A purchase of a new Rolls Royce would be disallowed. A purchase of a $60,000 SUV is allowable.
Federal Medicaid Law Protects Community Spouses
Back in 1988 Congress passed the Medicare Catastrophic Coverage Act. (MCCA) to protect community spouses from complete financial ruin. You must hire an attorney to enforce your rights. That is to say there are two problems with MCCA. First, it is not automatic, you must take steps protect yourself. Second, you have to know your rights to protect them! Nobody tells community spouses about the income and asset protection Medicaid allows. Most spouses never learn about their rights and are financially ruined by the staggering cost of nursing homes. You must hire an Elder Law attorney who is expert and up to date on Medicaid Medicaid provisions.. If you don’t take steps to protect yourself, nobody else will.
What is the Community Spouse “Resource Allowance”?
The Community Spouse is allowed at least half of the “countable” assets up to a maximum. In 2026 it is $162,660. For couples who have very little in countable assets the spouse is allowed a minimum of $32,532.
Special note: The Community Souse Sole Benefit Trust
We have detailed below the complicated questions about “spend down.” It can be avoided without exhausting your life savings by establishing a “Community Spouse Sole Benefit Trust.” (CSBT) You can avoid Medicaid spend down completely by transferring the countable assets to your CSBT. The particular section of the MCCA is codified at 42 USC 1396p and many lawyers do not know about it. You can spend down on anything you want and the transfer the remainder to your CSBT. For years Michigan did not recognize the this trust and many states still don’t. The Michigan Elder Law Bar filed a case in court to force the state to recognize what the Medicaid law allows. Yours truly participated in that case. Finally the Michigan Supreme Court ruled in the 2019 case Hegadorn v. DHS. that the state must recognize the CSBT.
Court Order Option
The Community Spouse has the option avoiding all spend down by a Court order of support. This provision applies in all 50 states. You will need to hire an Elder Law attorney who will file a petition the circuit court for a “Court order of support.” The court can order you a greater share of assets than the “CSRA” thus eliminating the need to “spend down” any assets. The judge could award you all “excess assets.” The court process is written into the federal Medicaid law, which says the Medicaid department must allow the community spouse the share of assets specified in a court order of support. There is no guarantee the judge will grant your petition or the amount you request. In fact, some courts in Michigan are stingy in their allowance to the community spouse. The Order from the court must be presented to the Medicaid Department and the department may appeal the Order. See an Elder Law attorney to handle the court work.
On what can I spend the amount over the CSRA?
Anything. Pay off bills, buy a new car, update your home, get a new kitchen – anything. You need not spend the money on the nursing home. If you already have a nursing home bill you may be able to get Medicaid to cover it for the three months before your Medicaid application is submitted. Of course, the application must ultimately be approved to have those three months covered.
What is the Michigan Maximum Home Equity?
In 2026 the Maximum equity is $$752,000. Note this is equity, Example: your residence would sell for $900,000 but it has a mortgage of $750,000. Your equity is $150,000. There is NO problem with a home equity loan made after you enter the nursing home. The money could be used for spend down.
“Can I save our house that took 30 years to pay for, our lifetime of savings and our income?”
Yes. When we say everything we mean it. You can have Medicaid pay the nursing home for your spouse and you, the community spouse, can save the rest for your needs and for your family when you pass on. Everything. And, your family home will not go through probate and the government will not get everything. However this will not happen automatically. You must take action as we lay out below.
Annuity Income Option
You may take the “excess assets” over your CSRA and purchase an annuity. The Michigan Medicaid policy concerning annuities is very complicated and such annuities should only be purchased through an agent intimately familiar with the Medicaid rules. The policy application varies depending on whether the applicant or spouse purchases the annuity and whether or not IRA/401k tax deferred funds are used to purchase the annuity. Having said that, annuities can be used to save substantial sums of money. Talk with your Elder Law attorney to determine if an annuity is the best option in your case. Please note if you use the annuity option your income will be so high that all that all your spouse’s income will be paid the nursing home as the “patient pay amount.”
The Community Spouse Right to Income Protection
The Community Spouse is allowed a Minimum Monthly Maintenance Needs Allowance (MMMNA) which is a calculation of how much of the applicant’s income will be allowed to the spouse. In the Michigan Medicaid program this allowance is known as the Community Spouse Income Allowance (CSIA). The calculation will also add an “excess shelter allowance” which is calculated by the community spouse’s housing costs (rent, mortgage, taxes, insurance, utilities) to the extent they exceed the shelter standard In 2026 the shelter standard is$794/month. In 2026 the minimum MMMNA is $2,643.75 and the maximum of $4,066.50 per month.
Medicaid Estate Recovery
It is a big surprise to many that Medicaid is a “loan” in that the mount the Medicaid program paid for the recipients benefits must be paid back! In Michigan Medicaid Estate Recovery applies to only property that goes through probate. Avoid probate and you have avoided Medicaid Estate Recovery.
Conclusion
You need not fear financial ruin from nursing home bills. You do not have to give away your property years in advance in contemplation of a long term stay in a nursing home. In fact the opposite is true. You can act after your spouse has entered the nursing home. As a community spouse you have special rights.
These special rights do not guarantee your independence. As we have observed the rights are not self operating. You must act. You must exercise that option, nobody will do it for you. You must seek professional advice to access all the protections Congress granted. You can have the dignity and independence you worked so hard for. Just give us a call for a referral to a good Elder Law attorney at 248-356-3500.
Jim Schuster