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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 look back 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 Section 17.15 Medicaid Card Services). An individual ineligible for HCBW s due to a divestment may still be eligible for other non- LTC 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 $252.95 per day.
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Example 1: Jeff applied for Family Care. One month earlier, Jeff had transferred $18,500 in cash to his son. At the time of application Jeff is otherwise eligible for Family Care. Since $18,500 divided by $252.95 equals 73.13 days, Jeff is ineligible for 73 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 LTC services can begin: http://cgi.cs.duke.edu/%7Edes/datecalc/datecalc.cgi.
This website contains two date calculators. Use the one titled, "Calculate the date some number of days from an initial date." Enter the penalty period begin date (see Section 17.5.3 Penalty Period Begin Date for Applicants) and the number of days of the penalty period. Click submit to 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 Family Care begins on the date all of the following have occurred:
The person applies for a HCBW program or Family Care.
The person meets the appropriate LOC and functional screen criteria.
The person meets all other Medicaid nonfinancial 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 three month backdated period of an application, he or she is ineligible for excess assets until the date that he or she 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 Family Care on March 5. One month earlier, Jeff had transferred $18,500 in cash to his son. At the time of application Jeff is otherwise eligible for Family Care. Since $18,500 divided by $252.95 equals 73.13 days, Jeff is ineligible for 73 days from the date he applied for Family Care. His penalty period begins on March 5. He will be eligible on May 17. |
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Example 3: Joan enters a nursing home on March 1 and applies for Medicaid on March 4. On her application, Joan reported that, in the previous month, 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. 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. He indicates on his application that he gave his adult son a $60,000 cash gift three months earlier. John meets the community waiver functional screen criteria and all other Medicaid eligibility requirements. He resides in a county that does not 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, the day he applied for the HCBW program. |
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Example 5: Jeff enters a nursing home on March 1. He applies for Medicaid on April 15 and requests that his eligibility be backdated to March 1. John meets all other Medicaid eligibility requirements in March and April; however, he reports transferring $100,000 in stocks and bonds to his brother in February. John’s divestment penalty period begins on March 1, which is the date he was institutionalized, applied for Medicaid LTC, and is otherwise eligible for Medicaid except for the imposition of the divestment penalty. |
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Example 6: Sam entered a nursing home on October 1. He applies for Medicaid on January 3 and asks for a three month backdate. He reports giving away an inheritance on November 23. Sam is denied Medicaid for being over assets until November 23. Sam’s divestment penalty period begins on November 23, which is the date that he is institutionalized, has applied for Medicaid LTC, 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 member's penalty period begins on the first of the month after timely notice is given.
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Example 7: Joe was determined eligible for institutional Medicaid effective March 1. On July 2 he sold his home and gave the proceeds to his son. Joe reported the divestment on July 12. The worker entered the divestment in CARES on July 16 and closed Joe’s institutional Medicaid effective August 1. The penalty period begin date would be August 1, 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 1, the first day the benefit could be terminated with timely notice. |
When a member 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 he or she 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 CD to his adult son on March 10. On October 1, 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 39 days. The divestment penalty period started on October 1 and ended on November 8. Scott was certified for Medicaid LTC on November 9.
Scott’s son had already cashed in the CD, but, on December 5, 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 through November 8. 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 is counted as an asset beginning in December and would make him ineligible for Medicaid, effective January 1, unless his assets are reduced to program limits prior to January 1. |
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 recalculated 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 half 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 or 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 25. In June, he transferred another $40,000 to friends. Since $40,000 divided by $252.95 equals 158.13, the divestment penalty period is 158 days. The new divestment period of 158 days begins July 26, 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 does not register divestment penalty changes. If it is necessary to remove a divestment penalty or change an existing penalty period in interChange, update the Transfer/Divestment of Assets page, run eligibility, and confirm. Then contact the fiscal agent at (608) 224-6521. Provide the fiscal agent with the date that the divestment penalty was removed or the new end date. The LOC 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 Wis. Stat. § 49.453.
This page last updated in Release Number: 15-02
Release Date: 07/30/2015
Effective Date: 07/30/2015
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