State of Wisconsin Department of Health Services

Release 24-01 April 03, 2024

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17.1 Divestment Defined

Divestment is the act of transferring ownership of assets or income and receiving less than fair market value FMVFair Market Value. The price for which an item would sell on the open market in a local geographic area. in return. Applicants or members seeking Medicaid-covered long-term care services are subject to a set of special rules about transferring assets and income. Wisconsin refers to these as “divestment rules.”

If someone subject to divestment rules transfers an asset and/or income and is seeking Medicaid coverage of long-term care services (see 17.1.1 Applicable Health Care Programs), the transfer must be evaluated (see 17.2 Evaluation of Transfers for Divestment). Divestment rules do not apply to the applicants or members listed in 17.1.2 Excluded Applicants and Members.

Divestment rules apply even if someone else transfers the applicant or member’s assets or income. Divestments can be made by:

• An institutionalized person.
• An institutionalized person’s spouse.
• A person, including a court or an administrative body, with legal authority to act in place of or on behalf of the institutionalized person or the person's spouse.
• A person, including a court or an administrative body, acting at the direction or upon the request of the institutionalized person or the person's spouse. This includes relatives, friends, volunteers, and authorized representatives.

Note:

An Institutionalized Person is someone who meets one of the following criteria: Participates in a Home and Community-Based Waivers program Has resided in a medical institution for 30 or more consecutive days for a purpose other than receiving residential substance use disorder treatment Is likely to reside in a medical institution for 30 or more consecutive days for a purpose other than receiving residential substance use disorder treatment, as attested to by the medical institution.

An exception to the 30-day period is that a resident of an IMD for a purpose other than receiving residential substance use disorder treatment is considered an institutionalized person until they are discharged.

The 30-day period includes situations in which the person resides in more than one medical institution during 30 or more consecutive days.

Example 1:

Don enters a nursing home and applies for Institutional Medicaid. Don’s daughter, Stacy, donates his boat and all the money in his savings account to charity. Divestment rules apply to this transfer even though Don did not make the gift himself.

17.1.1 Applicable Health Care Programs

Divestment rules apply to long-term care services provided through the following programs:

• Adult Community Waivers programs, regardless of the member’s form of Medicaid.
  • Family Care.
  • Family Care Partnership.
  • PACE.
  • IRIS programs.
• Institutional Medicaid.
• Medicaid Purchase Plan (MAPP) members.
• BadgerCare Plus for institutionalized childless adults.

Example 2:

Henry is enrolled in MAPP and moves into a skilled nursing facility. He is over the asset limit for institutional Medicaid, so he remains enrolled in MAPP, which covers his long-term care services in the nursing home. Henry sells his home and gives the money to his daughter. Even though Henry is not enrolled in institutional Medicaid, divestment rules apply to his gift because Medicaid is paying for his long-term care services.

 

Example 3:

Keisha is enrolled in BadgerCare Plus. She has complications from surgery that impact her motor functions. Keisha enrolls in the Family Care program to get extra services to remain in her home. Keisha’s income and asset transfers are now subject to divestment rules.

17.1.2 Excluded Applicants and Members

Divestment rules do not apply to transfers made by or on behalf of:

• Children under 19 years old.
• Children under 22 years old who are enrolled in the Children’s Long-term Support (CLTS) waiver program.
• A person of any age receiving residential substance use disorder (SUD) treatment in any setting, if the person is only there to receive residential SUD treatment.

Example 4:

Cedric is 22 years old, has a disability determination, and is institutionalized. He applies for institutional Medicaid and reports on his application that he gifted money to his brother. The IM agency requests more information and discovers Cedric was 17 when he gave away the money. Due to his age at the time he gave the money away, this is not a divestment.

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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