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State of Wisconsin |
HISTORY |
The policy on this page is from a previous version of the handbook.
If there was a divestment during the look-back period or any time after and if none of the exceptions in Section 17.4 Exceptions apply, the institutionalized person must be determined ineligible for long-term care services 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).
A person applying for HCBW s would be ineligible for HCBW services for a period of time. A person ineligible for HCBWs due to a divestment may still be eligible for other non-LTC Medicaid, such as SSI-related Medicaid or MAPP, if they meet the eligibility requirements of the non-LTC Medicaid program.
For divestments on or after January 1, 2009, the divestment penalties are calculated in days using the average daily nursing home private pay rate. The rate effective July 1, 2017 is $278.05. This rate may be updated annually (see Section 39.4.3 Institutional Cost of Care Values).
CWW will calculate the penalty period once a worker enters the appropriate information into the Transfer/Divestment of Assets page, runs eligibility, and confirms.
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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 $278.05 equals 66.53 days, CWW will calculate a divestment penalty period of 66 days for Jeff. |
For divestments that occurred on or after January 1, 2009, the penalty period for an applicant begins on the date all of the following have occurred:
The person applies for Institutional LTC Medicaid, HCBW, or Managed LTC/IRIS.
The person enters an institution or meets the appropriate LOC and functional screen criteria.
The person meets all other Medicaid nonfinancial and financial eligibility requirements (for waiver applicants this can be met 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. The worker receives verification of the divestment on March 30. Jeff’s penalty period would begin on March 5, the date he applied for Family Care. |
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Example 3: Joan entered a nursing home on March 1 and applied 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. All requested verification is received on March 27, and Joan meets all other Medicaid eligibility requirements; therefore, Joan’s divestment penalty period would 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 applied for a HCBW program on April 7. He indicated 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. Verification was received on April 20, and 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 entered a nursing home on March 1. He applied for Medicaid on April 15 and requested that his eligibility be backdated to March 1. John meets all other Medicaid eligibility requirements in March and April; however, he reported transferring $100,000 in stocks and bonds to his brother in February. John’s divestment penalty period would begin on March 1, which is the date he was institutionalized, applied for Medicaid LTC, and was 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 applied for Medicaid on January 3 and asked for a three-month backdate. He reported giving away an inheritance on November 23. All necessary verification is received on January 17, and Sam is denied Medicaid for being over assets until November 23. Sam’s divestment penalty period would begin on November 23, which is the date that he was institutionalized, applied for Medicaid LTC, and was otherwise eligible for Medicaid except for the imposition of the divestment penalty. |
A member's penalty period begins on the first of the month after timely notice is given. Timely notice is outlined in the Income Maintenance Manual, Section 3.2 Adverse Action and Appeal Rights.
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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, which impacted 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 the entire divested resource or equivalent value is returned to the individual, the entire penalty period is nullified or cured. 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 CD to his adult son on March 10. On October 1, Scott entered a nursing home and applied for Medicaid. Based on the value of the CD that he divested to his son, Scott was ineligible for Medicaid coverage for the cost of his institutional care for 38 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 the entire value 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 cash that Scott received from his son and reported on December 5 is counted as an asset beginning in December. Because the value of the cash exceeds the program asset limit, it would make him ineligible for Medicaid, effective January 1, unless his assets are reduced to program limits prior to January 1. |
A divestment penalty period resulting from multiple divestments that occurred during the lookback period can be cured when the applicant or member has demonstrated that all of the assets divested during the lookback period, or cash equal to the value of those assets, have been returned (Wis. Stat. § 49.453[8][a][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.
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Example 10: Jeff had a penalty period that lasted until July 25. In June, he transferred a large amount of cash to friends. Based on the verified value of this divestment, Jeff’s additional divestment penalty period is 154 days. The new divestment period of 154 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. |
If it is necessary to change an existing penalty period, IM workers must update the information in CARES and confirm. However, if the divestment penalty period has been shortened or removed (for example, it was cured), IM workers must also notify the fiscal agent. IM workers can email the change to VEDSDivestmentReport@wisconsin.gov or call 608-421-6340. IM workers need to provide the fiscal agent with the new divestment penalty period end date. If the divestment penalty period was completely removed, workers need to provide the effective date of the member’s eligibility for LTC service coverage.
IM workers should also contact the appropriate person at the member’s nursing home or institution, so he or she can submit bills for the period that is now covered by Institutional Medicaid.
This page last updated in Release Number: 17-03
Release Date:11/03/2017
Effective Date: 11/03/2017
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