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State of Wisconsin |
HISTORY |
The policy on this page is from a previous version of the handbook.
17.5.1 Penalty Period Introduction
17.5.2 Calculating the Penalty Period
17.5.3 Penalty Period Begin Date For Applicants
17.5.4 Penalty Period Begin Date For Recipients
17.5.5 Recalculation of Penalty Periods
17.5.5.2 No Reduction for Partial Refund
17.5.5.3 Divestments During a Penalty Period
If there was a divestment during the lookback period or any time after, and if none of the above exceptions apply, the institutionalized person must be determined ineligible for a period of time.
During this penalty period Medicaid will not pay the institutionalized person's daily care rate in the nursing home. He or she may, however, still be eligible for Medicaid card services (See 17.15 Medicaid Card Services). An individual ineligible for Home and Community-Based Waivers due to a divestment may still be eligible for other non-Long Term Care Medicaid.
For divestments on or after January 1, 2009, the divestment penalties are calculated in days. Use the average daily nursing home private pay rate of $241.78 per day.
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Example 1: Jeff applied for FC on February 5, 2010. In January 2009 Jeff transferred $18,500 in cash to his son. At the time of application Jeff is otherwise eligible for FC. $18,500 divided by $241.78 = 76.51 days. Jeff is ineligible for 76 days. |
Once you have determined the number of days that will constitute the individual’s divestment penalty period, use the following website to establish when the penalty period will end and the exact date on which eligibility for Long Term Care Services can begin:
http://cgi.cs.duke.edu/%7Edes/datecalc/datecalc.cgi.
This website contains two date calculators. Use the one that "calculates the date some number of days from an initial date." Enter the penalty period begin date (17.5.3) and the number of days of the penalty period. When you hit the submit button you will receive the first date the person can be eligible.
For divestments that occurred on or after January 1, 2009, the penalty period for an applicant for a HCBW program or FC begins on the date:
The person applied for a HCBW/FC program and
Meets the appropriate level of care and functional screen criteria and
Meets all other Medicaid non-financial and financial eligibility requirements, regardless of whether or not the waiver funding is actually available
Note: If a person who had excess assets divests those assets during the 3 month backdated period of an application, they are ineligible for excess assets until the date that they divested those assets. The divestment penalty period as well as the potential eligibility for card services would begin on the date of the divestment.
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Example 2: Jeff applied for FC on February 5, 2010. In January 2009 Jeff transferred $18,500 in cash to his son. At the time of application Jeff is otherwise eligible for FC. $18,500 divided by $241.78 = 76 days. Jeff is ineligible for 76 days from the date he applied for Family Care. His penalty period begins on Feb 5, 2010. He will be eligible on April 21, 2010. |
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Example 3: Joan enters a nursing home on March 1, 2010 and applies for Medicaid on March 4, 2010. On her application, Joan reported that on February 2, 2010, she gave her adult daughter a $100,000 cash gift, which is determined to be a divestment. Joan meets all other Medicaid eligibility requirements therefore Joan’s divestment penalty period will begin on March 1, 2010. If Joan had been over the asset limit at the time of application she would not have been "otherwise eligible for Medicaid” so her divestment penalty period would not start until she was under the asset limit. |
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Example 4: John applies for a HCBW program on April 7, 2010. He indicates on his application that he gave his adult son a $60,000 cash gift on February 15, 2010. John meets the community waiver functional screen criteria and all other Medicaid eligibility requirements. He resides in a county that doesn’t have any available waiver slots and he is therefore put on a waiting list. The $60,000 cash gift was determined to be a divestment. John is therefore ineligible for HCBW for the length of the penalty period. His penalty period would begin on April 7, 2010. |
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Example 5: Jeff enters a nursing home on March 1, 2010. He applies for Medicaid on April 15, 2010 and requests that his eligibility be backdated to March 1, 2010. John meets all other Medicaid eligibility requirements in March and April 2010, however he reports transferring $100,000 in stocks and bonds to his brother on February 14, 2010. John’s divestment penalty period begins on March 1, 2010, which is the date he is institutionalized, has applied for Medicaid Long Term Care, and is otherwise eligible for Medicaid except for the imposition of the divestment penalty. |
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Example 6: Sam entered the nursing home in October 1, 2010. He applies on January 3rd and asks for a 3 month backdate. He reports giving away an inheritance on November 23rd. John is denied Medicaid for being over assets until 11/23. Sam’s divestment penalty period begins on November 23, 2010, which is the date that he is institutionalized, has applied for Medicaid Long Term Care, and is otherwise eligible for Medicaid except for the imposition of the divestment penalty. |
Beginning with penalty periods with a start date of November 11, 2013 or later, a recipients penalty period beings on the first of month after timely notice is given.
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Example 7: Joe was determined eligible for Institutional Medicaid effective March 1st. On July 2nd he sold his home and gave the proceeds to his son. Joe reported the divestment on July 12th. The worker entered the divestment in CARES on July 16th and closed Joe’s Institutional Medicaid effective August 1st. The penalty period begin date would be August 1st, the date the worker was able to enter the divestment and give timely notice of the penalty period. If the worker had not entered the divestment in CARES until after Adverse Action in July, the penalty period begin date would be September 1st, the first day we could terminate the benefit with timely notice. |
When a recipient divests, the IM worker must enter the date the divestment was reported as the transfer date on the Transfer/Divestment of Assets page. CARES will close the person using Adverse Action logic. The actual penalty period should be calculated based on the first day of the month of closure. Those dates should be entered in case comments to be adjusted with the monthly Divestment Report completed by the CARES Call Center.
Manual notices must be sent with the correct divestment dates.
When the entire divested resource or equivalent value is returned to the individual, the entire penalty period is nullified. You must then re-evaluate the individual’s Medicaid eligibility for LTC services retroactively, back to the beginning date of the previously imposed penalty period. The individual can then be certified for Medicaid LTC services if s/he met all other eligibility requirements during this retroactive adjustment period. The refunded resources will be counted as available assets beginning with the month in which they were returned.
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Example 8: Scott gave a $10,000 certificate of deposit to his adult son on March 10, 2009. On October 1, 2009, Scott entered a nursing home and applied for Medicaid. Due to his prior divestment, Scott was ineligible for Medicaid coverage for the cost of his institutional care for 41 days. The divestment penalty period started on October 1, 2009 and ended on November 11, 2009. Scott was certified for Medicaid LTC on November 11, 2009.
Scott’s son had already cashed in the CD but on December 5, 2009, he returned $10,000 in cash to Scott as a refund of the prior gift from his father. Since the equivalent value of Scott’s previously transferred asset has been returned, Scott is now potentially eligible for Medicaid LTC services for the period of October 1, 2009 through November 11, 2009. Scott met all other eligibility requirements during that retroactive period and he is certified for Medicaid LTC services for that same period. The $10,000 that Scott received and reported on December 5, 2009 is counted as an asset beginning in December and would make him ineligible for Medicaid, effective January 1, 2010, unless his assets are reduced to program limits prior to January 1, 2010. |
Beginning with penalty periods with a start date of November 11, 2013 or later, the total value of the divested amount must be returned in order to ‘cure’ the divestment. A penalty period will no longer be re-calculated based on a partial repayment. (Wis. Stat. 49.453(8)(a)).
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Example 9: Jerry divested cash to his daughter prior to applying for Institutional Medicaid. He has a 373 day penalty period. His daughter returned ½ of the divested amount. Jerry’s penalty period remains 373 days. If Jerry’s daughter returned the entire amount that was divested, the divestment would be ‘cured’ and Jerry would no longer have a penalty period. |
If another divestment occurs when a penalty period is in effect, another penalty period must be calculated for the most recent divestment. This calculation would use the divestment penalty divisor currently effective. The new penalty period will not begin until the existing period has expired. The penalty periods cannot run concurrently.
Send the member a notice advising him/her that the consequence of the new divestment is an increased penalty period and specify the new penalty dates.
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Example 10: Jeff had a penalty period that lasted until July 25th. In June he transferred another $40,000 to friends. $40,000 divided by 241.78 = 165.43. The divestment penalty period is 165 days. The new divestment period of 165 days begins July 26th, the day after the original divestment penalty period has ended. The new divestment penalty period does not run concurrently with the original divestment period. |
The divestment report doesn’t register divestment penalty changes. If it is necessary to remove a divestment penalty or change an existing penalty period in iChange, update the Transfer/ Divestment of Assets page, run eligibility, and confirm. Then contact HP Enterprise Services (608) 224-6521). Provide HP Enterprise Services with the date that the divestment penalty was removed or the new end date. The level of care will then be revised. Also contact the appropriate individual at the member’s nursing home to submit bills for the period that is now covered by institutional Medicaid.
Reminder: The divestment notices are inaccurate. Send a manual notice explaining eligibility for card services, the reason for service reduction, and the number of months in the penalty period when a case receives a divestment penalty. Include the legal citation [49.453 Wis. Stats.].
This page last updated in Release Number: 15-01
Release Date: 06/10/2015
Effective Date: 06/10/2015
The information concerning the Medicaid program provided in this handbook release is published in accordance with: Titles XI and XIX of the Social Security Act; Parts 430 through 481 of Title 42 of the Code of Federal Regulations; Chapters 46 and 49 of the Wisconsin Statutes; and Chapters HA 3, DHS 2, 10 and 101 through 109 of the Wisconsin Administrative Code.
Notice: The content within this manual is the sole responsibility of the State of Wisconsin's Department of Health Services (DHS). This site will link to sites outside of DHS where appropriate. DHS is in no way responsible for the content of sites outside of DHS.
Publication Number: P-10030