A Father’s Nursing-Home Costs Could Trigger a $164,000 Medicaid Lien on the Family Farm. One Form May Let His Son Keep Working It Through Hardship

Imagine a son who has been helping run his father’s farm since his teenage years. After the father’s final years in long-term care were covered by Medicaid, a state notice arrives a few weeks after the funeral: a $164,000 estate-recovery claim. For the son, that farm provides most of the household income.

In Michigan, the family must first send back the questionnaire that comes with the state notice. If they do that, the son can then ask for form MSA-0008, Michigan’s estate recovery hardship waiver application. The request tells the state that collecting the debt would create an undue hardship and threaten a survivor’s livelihood. Michigan’s own guidance cites a family farm or business as an example when it is the survivor’s main source of income.

Why Medicaid Seeks Reimbursement After Death

Medicaid covers many long-term nursing-home bills for people with limited income and assets, but the program can later seek repayment from the estate. This process, known as estate recovery, exists in every state. Claims are usually filed after a Medicaid recipient age 55 or older dies. In Michigan, recovery began on July 1, 2011, and can reach property that passes through probate, including a house, a car, insurance proceeds and bank accounts. The state cannot recover more than Medicaid paid.

Federal law also requires states to provide a way to waive estate recovery when repayment would create an undue hardship. Each state sets its own standards, and that is where family farms often face the hardest test.

The financial stakes are substantial. Households headed by someone 70 or older held 30.4% of all U.S. private unincorporated business wealth in the second quarter of 2026, a category that includes many family farms.

Michigan’s Hardship Rules for a Family Farm

Michigan’s MSA-0008 form requires the son to meet two basic conditions. First, the asset must be the survivor’s primary source of income. A separate option applies to a modest home worth no more than 50% of the county’s average home price at the date of death.

Second, the household must satisfy a means test:

• Household resources of $10,000 or less
• Household income below 200% of the federal poverty level
• The form’s monthly limits: $2,660.00 for one person and $3,606.67 for two

Michigan’s appellate court has upheld the state’s ability to use a means test when reviewing hardship requests, so families cannot simply argue around that requirement. That is the tension for farm families: a business healthy enough to support the household can also push income above the limit. A farm that is barely breaking even may present a stronger case.

There is also another limitation. Michigan says a hardship created by estate planning done specifically to avoid recovery does not qualify. Separate deferrals protect a surviving spouse and a child who is under 21, blind, or permanently disabled.

Other states use different standards. Texas applies its own hardship rules, including a 300%-of-poverty test for some homesteads. Arkansas gives heirs a shorter filing window: they may apply when the estate notice is sent to the state or within 30 days after receiving the recovery notice.

How the MSA-0008 Process Works

In Michigan, the process follows a set sequence.

1. The notice. After the beneficiary dies, the state sends the estate representative or heirs a notice and questionnaire. The questionnaire must be returned within two weeks before the family can request the hardship application.
2. The deadline. Once the family receives form MSA-0008, the completed application must be submitted within 60 days of the cover letter date. A packet left in a farmhouse mail pile during harvest can quickly eat up that time.
3. The proof. The form asks for the will, deeds, tax returns, pay stubs, bank statements and an appraisal. For a farm, the tax returns and business records are especially important because they show how much the operation earns and how much the son relies on it.
4. The mailing. The completed packet goes to Third Party Liability, P.O. Box 30435, Lansing, MI 48909. The state’s question line is 1-844-TPLMDCH.
5. The appeal. If the request is denied, the applicant has 60 days to appeal.

Why the $164,000 Amount Is Not Final

The Michigan Department of Health and Human Services reviews each hardship request individually, so no one can guarantee the $164,000 claim will disappear. The son’s income, savings and farm records will determine whether the state agrees to reduce or waive the recovery effort.

The amount in the notice is only the starting point. If collection would force the heir to sell the land he farms, the state’s rules provide a formal way to explain that hardship. The key is filing the form, with the supporting documents, before the 60-day deadline expires.