One of the most common reasons families give up on the Michigan Home Help Program before they've even started is this:
"We checked and we make too much. We have too many assets. We don't qualify for Medicaid."
Sometimes that's true. But often — more often than people realize — it's not the whole picture.
Michigan Medicaid has a process called spend-down that allows people who are over the income or asset limits to still qualify for Medicaid. It also has rules about which assets count toward the limit and which don't. And there are serious pitfalls — like the gifting penalty — that families need to know about before taking action.
This guide explains all of it.
Michigan Medicaid Asset Limits in 2026
For full Michigan Medicaid (the kind required for the Home Help Program), the asset limits as of 2026 are:
- Individual: $2,000 in countable assets
- Couple (both applying): $3,000 in countable assets
These are the limits for the Medicaid category most elderly individuals and people with disabilities apply under.
If you have more than these amounts in countable assets, you technically do not qualify for Medicaid — until you've reduced your countable assets to the limit. That's what "spend-down" means.
Exempt vs. Countable Assets: What Actually Counts
This is where many families are surprised. Not everything you own counts toward the asset limit.
Assets That Are Typically EXEMPT (don't count)
- Your primary home — as long as the Medicaid recipient lives there, or intends to return there, the home is generally exempt. There are some nuances for larger estates.
- One vehicle — one car or truck, regardless of value, is typically exempt
- Prepaid burial arrangements — irrevocable prepaid funeral contracts up to a reasonable limit
- Household goods and personal belongings — furniture, clothing, personal items
- Certain life insurance — term life insurance (no cash value) is generally exempt; whole life or other cash-value policies may count
- Some retirement accounts — IRA and 401(k) rules vary; the treatment depends on whether the account is in "pay status" (receiving distributions)
Assets That ARE Countable
- Bank accounts — checking, savings, money market accounts
- Investment accounts — stocks, bonds, mutual funds (outside of retirement accounts)
- Cash value life insurance — if the cash surrender value exceeds certain limits
- Second vehicles — beyond the one exempt vehicle
- Vacation homes or rental properties — real property beyond the primary residence
- Certificates of deposit (CDs)
- Most savings bonds
The Spend-Down Process
If a person has countable assets over $2,000 (individual) or $3,000 (couple), they need to "spend down" to those limits before Medicaid will approve them.
Legitimate spend-down options include:
Paying for care or medical expenses. If the person needs care, paying for that care out-of-pocket reduces countable assets and may be the most straightforward path.
Paying down debt. Using assets to pay off a mortgage, medical bills, or other legitimate debts reduces countable assets.
Purchasing exempt items. Converting countable assets to exempt assets — for example, paying off a mortgage on the primary home, purchasing an additional vehicle (if needed), or prepaying funeral arrangements.
Making improvements to the home. Home repairs and modifications (ramps, grab bars, modifications for disability) can be appropriate expenditures.
The Gifting Penalty: What You Must NOT Do
Here is one of the most costly mistakes families make — and it happens all the time because people think they're being smart.
Do not give away assets to family members or others in order to qualify for Medicaid.
Michigan follows federal Medicaid rules that impose a look-back period of 60 months (5 years) for most asset transfers. Any assets transferred for less than fair market value within 60 months of a Medicaid application will result in a penalty period — a period of time during which Medicaid will not pay for care.
The penalty period is calculated based on the value of the assets transferred and the average monthly cost of nursing facility care in Michigan.
Example of the Gifting Penalty in Action
Imagine a situation where a parent has $50,000 in savings. In an attempt to qualify for Medicaid, they give $40,000 to their adult children. Eighteen months later, they apply for Michigan Medicaid.
MDHHS will look back 60 months and see the $40,000 transfer. Depending on the calculation, this could result in a penalty period of many months during which Medicaid will not cover care.
The result: The family gave away the money, the parent can't get Medicaid to cover care during the penalty period, and they're worse off than if they had done nothing.
What Is Not a Penalty
Not all transfers create a penalty:
- Transfers between spouses (generally not penalized)
- Transfers to a blind or disabled child
- Transferring the home to certain caregiving children who have lived in the home and provided care (complex rules — requires professional guidance)
- Transfers to a sibling with an equity interest in the home
These exceptions have strict requirements. Don't assume they apply without professional guidance.
Medicaid Planning vs. Spend-Down
If someone has significant assets, there may be legitimate Medicaid planning strategies — beyond simple spend-down — that can be used to protect some assets while still qualifying for Medicaid. This is a specialized area of law, and the rules are complex.
If your situation involves significant assets, a Medicaid planning attorney or a certified elder law attorney (CELA) can be invaluable. They can help you understand what options are available before you take any action that could result in a penalty.
Income Limits and the Spend-Down Process for Income
Michigan also has a spend-down process for income, separate from the asset spend-down.
If a person's monthly income exceeds the Medicaid income limit, they may still qualify for Medicaid through the medically needy program by applying incurred medical expenses against their excess income. This is a different, ongoing process.
Income Limits and the Spend-Down Process for Income
Michigan also has a spend-down process for income, separate from the asset spend-down.
Michigan's Medicaid income limit for an individual varies by program category. For aged, blind, and disabled individuals applying for Medicaid in 2026, the income limit is generally tied to the Federal Benefit Rate (FBR). If a person's income exceeds this limit, they may still qualify for Medicaid through the medically needy program by applying incurred medical expenses against their excess income.
Here's how income spend-down works in practice: if someone has monthly income $200 over the Medicaid limit, they need to incur at least $200 in qualifying medical expenses each month before Medicaid will cover additional costs. Those medical expenses can include doctor's visits, prescriptions, medical equipment, and other qualifying health costs.
Income spend-down is an ongoing monthly process — unlike asset spend-down, which you do once to get under the asset limit. This is why families with chronic medical expenses sometimes find the income spend-down path more manageable than it initially appears.
Spousal Protections: What Happens When One Spouse Needs Care
Michigan and federal Medicaid law include important protections for the spouse who remains at home (the "community spouse") when the other spouse applies for Medicaid. These rules can significantly change what assets need to be spent down.
Under the Community Spouse Resource Allowance (CSRA), the community spouse is generally allowed to keep up to a certain amount of the couple's countable assets — separate from the Medicaid applicant's asset limit. The exact amount is calculated based on the couple's total countable assets at the time of application.
Additionally, the community spouse may be entitled to a Minimum Monthly Maintenance Needs Allowance (MMMNA) — a minimum amount of monthly income to meet living expenses. If the community spouse's own income falls below this amount, they may be entitled to a portion of the institutionalized spouse's income.
These spousal protections mean that a couple with more assets than the $3,000 couple limit may not need to spend down as much as they think, because the community spouse's protected share is carved out before the calculation.
This is complex territory. If one spouse is applying for Medicaid and the other will remain in the community, a Medicaid planning attorney or certified elder law attorney (CELA) is worth consulting before taking any asset transfer steps.
Common Mistakes Families Make — And How to Avoid Them
Beyond the gifting penalty (covered earlier), here are the most frequent mistakes families make when navigating Medicaid spend-down:
Mistake 1: Assuming the home always counts against the limit The primary home is generally exempt from the asset limit while the Medicaid recipient lives there. Families sometimes assume they need to sell the house to qualify — and that's usually wrong.
Mistake 2: Giving money to family "just in case" This is the gifting penalty scenario. Any transfer of assets for less than fair market value within 60 months creates a penalty period. Even gifting $10,000 to a child can create months of Medicaid ineligibility. Don't do it without consulting a professional.
Mistake 3: Not counting retirement accounts correctly IRA and 401(k) accounts are treated differently depending on whether they're in "pay status" (the owner is taking required minimum distributions). An account in pay status may be treated differently than an account that hasn't started distributions. The rules here require careful analysis.
Mistake 4: Ignoring prepaid burial as an option An irrevocable prepaid burial arrangement is generally exempt from the Medicaid asset count. For families with modest excess assets, using some of that money to prepay a funeral is a legitimate way to reduce countable assets — and something that will eventually be needed anyway.
Mistake 5: Waiting too long to apply Some families delay the Medicaid application because they're worried about the spend-down process. But if someone is already in need of care, every month of delay is a month of care costs (or a month of the Home Help benefit) that isn't being received. Get professional guidance early — don't wait until you've already exhausted savings.
How the Home Help Program Connects to the Medicaid Spend-Down
If your family's goal is to access the Michigan Home Help Program, the first step is making sure the care recipient has active Michigan Medicaid. That often means working through the spend-down question first.
At Home Help Navigators, this is frequently the first conversation we have with families. Before we can start the Home Help enrollment process, we confirm Medicaid status. If the care recipient doesn't yet have Medicaid — or if there are questions about assets — we work through that piece first.
In many cases, families think they won't qualify because of asset or income levels, and after walking through the spend-down rules and exemptions with them, they discover that they either already qualify or are closer than they thought.
The key is not to assume you're disqualified without actually checking. The rules are more nuanced than most families realize.
When to Get Help
Medicaid eligibility is not simple. The rules have exceptions, look-back periods, spousal protection provisions, and planning options that can significantly change the picture.
Don't make major financial decisions — especially around giving away assets — without understanding the consequences.
At Home Help Navigators, we help families navigate the Medicaid piece as part of the Home Help Program enrollment process. If there's a question about whether someone qualifies, that's one of the first things we look at. And if the situation is more complex — involving significant assets, recent transfers, or planning questions — we can point you to the right resources, including Medicaid planning attorneys and certified elder law attorneys who specialize in this area.
Summary: Key Numbers for 2026
| | Limit | |---|---| | Individual asset limit | $2,000 countable assets | | Couple asset limit | $3,000 countable assets | | Look-back period for transfers | 60 months (5 years) | | Primary home | Exempt (with conditions) | | One vehicle | Exempt | | Community Spouse Resource Allowance | Varies — calculated at time of application |
Have questions about whether your family member can qualify for Michigan Medicaid? Schedule a free call — we help families sort out the Medicaid piece all the time.
This post is for general informational purposes only and does not constitute legal or financial advice. Medicaid eligibility rules are complex and subject to change. Consult a qualified attorney or eligibility specialist for advice specific to your situation.
Related: Michigan Home Help Program Eligibility · How to Apply for Michigan Home Help · Michigan Home Help FAQ · Michigan Home Help Agency vs. Individual Caregiver
Edward Beyne
Founder of Home Help Navigators. Michigan native, combat veteran, and Michigan Home Help Program specialist.