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Nov 2012
01
November 01, 2012

Estate Planning Tip: New Michigan Medicaid Policy on Annual Redeterminations


The State of Michigan has adopted policy changes to its Medicaid program which became effective earlier this fall.

One of the most important changes is in the treatment of the assets of a married couple in the year immediately after Medicaid qualification.  A married couple is allowed one year to transfer assets from the nursing home spouse (Medicaid applicant) to the community spouse.  This period is called the “presumed asset eligible period”.  Under the new policy, at the end of that year, the Medicaid caseworker must now review each asset that was owned by the couple on the date the Medicaid applicant first entered the nursing home and determine if any divestment has occurred during this first year.  This differs from the prior policy, under which the assets retained by community spouse were treated separately from the assets of the nursing home spouse, and the nursing home spouse was not penalized for any gifts made by the community spouse after Medicaid qualification.   Planners need to advise their clients to be mindful of this review policy and advise the community spouse not to make gifts for one full year after their spouse qualifies for Medicaid.  It is unclear at the present time how the policy will be applied if the community spouse dies during that first year and leaves his or her assets to children or other beneficiaries through a Will or other testamentary instrument.

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