Many families look for an Elder Law attorney after placing a parent in a nursing home, appalled by the poor quality care $12,000+ a month buys. His money is running out and eventually he will have to apply for Medicaid They are looking for options. Often a child asks “What if we took Dad out of the nursing home and to my house where I will care for him? I could provide better and more personal care. And, if he has to return to a good nursing home, will his payments to me be considered “divestment of assets?” The Michigan Medicaid answer to such questions is that there must first be legally binding, written contract supported by a doctor’s recommendation.
For Family Members Who Have Been Paid for Service
Have been paid without a signed notarized contract? Before making a Medicaid application see an Elder Law Attorney. Michigan’s Medicaid program is “SSI Related.” That means its criteria for Medicaid eligibility can be “no more restrictive” than those allowed in the SSI program. The provisions requirements are more restrictive than those allowed in the SSI program. See SI 01150.005 “Determining Fair Market Value.”
The Michigan Medicaid requirements for “Personal Service” Contracts
Michigan Medicaid policy concerning payment for personal services is stated in Bridges Eligibility Manual policy item 405, 1-1-2026 Here is a quick summary.
Written Notarized Contract: Michigan Medicaid policy requires a written legal contract, signed, dated and notarized dated before the services are provided. The contract must spell out the type, frequency and duration of such services being provided and the amount being paid. It further requires the contract/agreement to be signed by the client or legally authorized representative, such as an agent under a power of attorney, or a probate court appointed guardian or conservator. If the agreement is signed by a representative, that representative cannot be the provider. This latter proposition conflicts with general law since competent adults can contract with whomever they may choose.
May not be in an assisted living facility: The Michigan Medicaid policy puts further limits on payment for services provided. It stipulates that at the time of the receipt of the services, the client may not be residing in a nursing facility, adult foster care home, or medical institution. And at that time the client may not be “eligible for home and community based waiver, home health or home help.” This requirement is ambiguous since the person need only be “eligible” for those programs and not actually participating in them.
Doctor Certification The policy also requires that at the time services are received, the services must have been recommended in writing by the client’s physician as necessary to prevent the transfer of the client to a residential care or nursing facility. One could interpret that to mean that a child could not be paid for care until the parent could no longer live in their home.
These requirements clearly exceed what the general Michigan law require for a valid contract and are not required by federal Medicaid law. The question arises these additional requirements are legal. Nonetheless, unless somebody wants to challenge the state Medicaid department in court, it is easier to “do it their way.”
Court Case upheld Department’s Requirements: A Michigan Court of Appeals case interpreted the Michigan programs requirements and its conclusion was as bad as one would imagine. In JENSEN v. DHS, the applicant’s grandson hired a non-relative health aide by an informal contract to help Mrs. Jensen stay in her own home. Over the course of a year he paid $19,000. That ended when her condition became so bad she had to enter a nursing home and apply for Medicaid. The Department denied the application because of the payments were not made under a contract that conformed the the Department’s strict rules. The payments were deemed “divestment of assets.”
Moral: Unless all payments for in-home services were made five years before applying for Medicaid, or were made in accordance with the above requirements, a penalty period of ineligibility will be imposed. The period will be the number of months the state average nursing home could have been paid. In 2026 the state average cost of a month of nursing home care $12,260
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