Dreadful Michigan Medicaid Joint Tenancy Rules

Michigan Department of Human Services has promulgated restrictive new policies concerning real estate owned by a Medicaid applicant or recipient jointly with someone else. Prior to April Fool’s Day 2011, real estate owned as a joint tenant with rights of survivorship (JTWROS) with someone outside of the Medicaid asset group (anyone other than a spouse, in most cases) was not considered that person’s asset, as long as the other joint tenant refused to agree to sale or tranfer of the property. New policy that became effective April 1, 2011 is a cruel prank on thousands of frail senior citizens of limited means.

For many years, a joint tenant in a piece of real estate was not prevented from qualifying for Medicaid if another joint tenant who is not the spouse of the Medicaid applicant refused to sell or convey the property. This was consistent with the rules for Supplemental Security Income (SSI), which is federal welfare for senior and disabled persons who have no income and very limited property. The Medicaid asset rules concerning real estate owned as JTWROS stated as follows:

Jointly owned assets are assets that have more than one owner.
Note: For FTW determinations jointly owned assets are considered to belong to the initial person.
An asset is unavailable if an owner cannot sell or spend his share of an asset:
• Without another owner’s consent, and
• The other owner is not in the asset group, and
• The other owner refuses consent. Department of Human Services Bridges Eligibility Manual (BEM) Item 400(7) (April 1, 2011).

This a reasonable policy. Many persons become joint owners of property due to inheritance, by joint purchase of real estate, or through adding names to property for estate planning. Joint owners with rights of survivorship are locked in. They can execute a quitclaim deed and give or sell their interests, but they cannot separate their interests in the property from the other owners without their consent. Under Michigan law, joint owners with rights of survivorship cannot force partition of the property through legal action. However, the April Fool’s Day Medicaid rules were drafted with blatant disregard for this legal principle.

Here is the new Medicaid policy:

Exception: Jointly owned real property is only excludable if it creates a hardship for the other owners; see hardship in this item. BEM Item 400(7) (April 1, 2011).

Note: For jointly owned real property count the individual’s share unless sale of the property would cause undue hardship. Undue hardship for this item is defined as: a co-owner uses the property as his or her principal place of residence and they would have to move if the property were sold and there is no other readily available housing. BEM Item 400(8-9) (April 1, 2011).

This new policy will make it impossible for many deserving Medicaid applicants to get Medicaid through no fault of their own. Often these Medicaid applicants will be rendered ineligible for Medicaid through no act of their own.

Let’s assume that Stymie Stone, an unmarried nursing home inmate who needs Medicaid, inherited a portion of a pig farm known as the Stone Family Sty. Stymie is a joint tenant with rights of survivorship with his three siblings. If the parcel is worth more than $8,000, Stymie cannot get Medicaid because the interest will be valued by DHS at more than $2,000. He cannot force his siblings to buy him out or sell the property and if he gave his interest away, he would be subject to a divestment penalty.

In order to exclude Stymie’s interest in the Stone Family Sty, he would have to demonstrate not only that one of his siblings lives in the pigsty as his or her principal residence, but that there would be “no other readily available housing.” Try to prove that there is no other readily available housing in this real estate market!

(adsbygoogle = window.adsbygoogle || []).push({});

Many applicants with no resources except for interests that they cannot sell will be denied Medicaid. This new policy is dreadfully unfair. It makes no distinction between applicants who put their own real estate in joint tenancy intentionally to qualify for Medicaid and those who inherited or were given a joint interest. It also makes no distinction between property that has ready market value and property that cannot be sold for one reason or another.

To put the legal case for overturning the rule in a nutshell: It is arbitrary and capricious. DHS has carved out a class of applicants who will be denied Medicaid through no fault or action on their part, yet who are as deserving as other applicants who will be granted eligibility.

Many applicants will be able to maneuver around this new rule, with legal help. The simplest is to quitclaim their interests to the other joint tenants, if the applicant is willing to do so. There are ways to create Medicaid eligibility despite gifts within the five-year look-back. It is a cosmic joke that only those applicants with enough money to hire legal counsel will be able to qualify for this welfare program.

The new policy is so unfair that it cannot be upheld as rational rule-making by the courts. However, it will subject many families to dire hardship until it is struck down. If you or family members who may need care in a nursing home own real estate jointly with anyone other than a spouse, consult a competent Michigan Elder Law attorney now.


John B. Payne, Attorney
Garrison LawHouse, PC
Dearborn, Michigan 313.563.4900
Pittsburgh, Pennsylvania 800.220.7200
©2011 John B. Payne, Attorney

3 Comment on "Dreadful Michigan Medicaid Joint Tenancy Rules"

Leave a Reply

Your email address will not be published. Required fields are marked *