Medicaid Asset Allowances for all Applicants
Countable assets must be “spent down.” Exempt assets do not. The subjects are covered below.
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.
Hello, I’m Jim Schuster, Certified Elder Law Attorney. This page is for the spouse who has a husband or wife in the nursing home and is worried about financial ruin. Worry no more. We have helped hundreds of families maintain their financial security and get good care in the nursing home. Spouse in a Michigan nursing home? You can save everything. Period
A Little Known Federal 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 the spousal protection law. 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 a lawyer who is expert and up to date on Medicaid’s interpretation of your rights. If you don’t take steps to protect yourself, nobody else will.
Medicaid Asset 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,,00. 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.
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.” The particular section of the MCCA is codified at 42 USC 1396p and many lawyers do not know about it. Your “excess assets” that Medicaid requires to be spent down can be transferred to the trust. Of course you can spend down on anything you want and the transfer the remainder to your sole benefit trust.
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.
Medicaid Asset Spend Down
There are two kinds of assets: exempt and countable. Exempt assets need not be spent down. These include your home, a vehicle and funeral preparations. There is a limit home exemption,
What is the Spouse Resource Allowance?
The Community Spouse is allowed at least half of the assets that have to be spent down, from aminimum
In 2026 the Community Spouse Resource Allowance” (CSRA) ranges from a minimum is $32,532 to the maximum $162,660, will be less if the couple has less than two times $137,400. For example if a couple has $150,000 in total savings, then the CSRA is half or $75,000. Amounts over the CSRA must be spent or protected. In 2026, the maximum Medicaid Community Spouse Resource Allowance (CSRA) is $162,660, while the minimum is $32,532.
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 do not need to use the money on the nursing home. If you already have a nursing home bill you may be able to get it covered for the three months before the Medicaid application is submitted. Of course, the application must ultimately be approved to have those three months covered.
What options do you have besides spending? Here is what the law provides:
Court Order Option
You may hire a lawyer and petition the probate 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. You must hire an elder law attorney since other lawyers don’t know Medicaid and probate courts don’t have an in-depth understanding of the Medicaid law. 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.
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 rules. The policy application varies depending on whether the applicant or spouse purchase 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.
Medicaid Asset Protection Trust for the Community Spouse
For years Michigan recognized the community spouse asset protection trust called a “sole benefit trust.” It is recognized by the federal “State Medicaid Manual” published by CMS and the Michigan Supreme Court in Hegadorn v. DHS. Under this trust the applicant can transfer all assets that would have to be cashed out or sold and spent but instead transfer those assets to the sole benefit trust for the community spouse. They would not have to be spent once that is done.
The Community Spouse Right to Income Protection
The income rules of Medicaid are in a way, the opposite of the asset rules. All the couple’s countable assets, including for example the community spouse’s IRA, are considered available to pay the nursing home. However, the spouse’s income is not.
The income of most community spouses is not sufficient for their needs. This was addressed by Congress in the MCCA. The community spouse has the right to a Minimum Monthly Maintenance Needs Allowance (MMMNA). In the Michigan Medicaid program this allowance is known as the Community Spouse Income Allowance (CSIA). In 2026 the minimum is $2,643.75 and the maximum of $4,066.50 per month.
What if you and your spouse combined do not have at least $2,643.75 in monthly income? You are allowed to receive a supplement from the income of the nursing home spouse to reach the CSIA. The nursing home spouse’s remaining income goes to the nursing home.
Here’s an example Mr. Smith is in the nursing home and his income is Social Security $1,700 and pension of $800. Mrs. Smith’s Social Security is $500. Under the Medicaid rules her income is $1,677.50 short of the $2,177.50 minimum CSIA. So Medicaid will allow her to have $1,677.50 of her husband’s income. What about the rest, $822.50, of his income? Mr. Smith’s remaining income will be spent as follows. He gets $60 personal needs allowance and funds to pay his health insurance premium such as Blue Cross Medicare Supplemental insurance. The rest will go to the nursing home. He or his representative, must sign an “Intent to Contribute Income” for the spousal allowance to be effective. What if Mrs. Smith needs the income that would go to the nursing home? Can she get it? Yes, see below.
The Medicaid department will allow the community spouse an increase above the minimum – if there is sufficient resident income – by consideration of whether she needs an “excess shelter allowance.” This allowance will not allow the spouse more than $3,435 in total income, which includes her income and the contribution from the nursing home spouse. It takes a court order for the Medicaid department to allow anything more.
Medicaid Estate Recovey
In Michigan Medicaid Estate Recovery applies to property that goes through probate. Avoid probate and you have avoided Medicaid Estate Recovey.
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