State of Wisconsin Department of Health Services

Release 24-03 December 18, 2024

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22.4 Undue Hardship

22.4.1 Application of Policy

Undue hardship may apply only when eligibility for long-term care services is denied or terminated for any of the following situations:

• A community spouse has refused to sign the application or provide required information (see Section 2.5.3 Spousal Impoverishment Medicaid Signatures)
• The applicant’s or member’s home has equity interest of more than $750,000 (see Section 16.8.1.4 Home Equity Over $750,000.00)
• A divestment penalty period has been imposed (see Section 17.2.6.7 Undue Hardship Request is Granted)
• A spousal impoverishment case has excess assets (see Section 18.4.5 Undue Hardship)

Undue hardship occurs if denial or termination of an applicant’s or member’s eligibility for coverage of long-term care services would deprive the person of any of the following:

• Medical care, which then endangers the person’s health or life
• Food
• Clothing
• Shelter
• Other necessities of life

22.4.2 Undue Hardship Waiver Request Process

If an applicant or member is denied long-term care services as a result of any of the situations listed in Section 22.4.1 Application of Policy, the applicant or member must be sent the following:

• Undue hardship letter (F-10187).
• Undue Hardship Waiver Request form (F-10193).

See Process Help Section 11.7 for information on how these forms are sent. If the situation requires an IM worker to manually send these forms, the forms must be mailed the same day or, at the latest, within 24 hours after CWW or the IM worker mails the Notice of Denial of Benefits/Negative Change in Benefits (F-16001) informing the applicant or member that long-term care services will be terminated or denied.

22.4.3 Valid Request

A completed Undue Hardship Waiver Request form (F-10193) must be submitted to the IM agency. A written and signed request that fulfills the minimum request requirements listed in Section 22.4.5 Required Documentation is also acceptable.

The long-term care facility in which the applicant or member is residing may also file an undue hardship request on behalf of the institutionalized person. However, the long-term care facility must have the applicant or member’s, or his or her authorized representative's, power of attorney's, or legal guardian’s written permission, using the Undue Hardship Waiver Request form, to file the undue hardship request.

The long-term care facility can also represent the institutionalized person in any subsequent fair hearing activity involving an undue hardship request or denial, as long as the facility has the applicant's or member's (or his or her authorized representative's, power of attorney's, or legal guardian’s) written permission to do so. This can also include the facility requesting a fair hearing.

Note:

A long-term care facility could include a nursing home, CBRFcommunity-based residential facility. A place in which five or more unrelated adults live and where they receive care, treatment, or services, but not nursing care on any permanent basis, in addition to board and room, or IMDInstitution for Mental Disease (see Section 27.1 Institutions).

22.4.4 Effective Date of Approved Undue Hardship Waivers

IM agencies are required to process any valid request for an undue hardship waiver, whether the request is submitted timely or untimely. Completed requests must be scanned into the ECF and case comments entered documenting the receipt of the undue hardship request.

22.4.4.1 Timely Request—Received Within 20 Calendar Days After Notification Is Mailed

If the valid request for an undue hardship waiver is received by the IM agency within 20 calendar days of the undue hardship letter (F-10187) mailing date, and the request is approved, the effective date of the waiver will be as follows:

• For divestment, the entire divestment penalty period will be waived.
• For all others, the effective date will be the date initial eligibility would have begun, including any requested backdated months.

Example 1:

Amy receives a notice dated February 10 that her January 20 application for HCBWHome and Community-Based Waiver Medicaid is denied and she will have a 100-day divestment penalty period beginning January 20. Amy submits an undue hardship request to the IM agency that is received on February 15. The undue hardship request is approved by the IM agency and Amy’s penalty period is waived. Amy is eligible for HCBW Medicaid beginning on the enrollment date provided to the IM agency by the ADRC.

 

Example 2:

Chris submits an application for institutional Medicaid on April 30. He receives a notice dated May 20 that his application is denied due to his community spouse’s refusal to sign the Medicaid application. He entered the nursing facility on April 5. Chris has been separated from his wife for many years, and she has refused all attempts to make contact to sign Chris’s application. Chris submits an undue hardship request to the IM agency that is received on June 5. The undue hardship request is approved by the IM agency and Chris is eligible for institutional Medicaid beginning April 5.

22.4.4.2 Untimely Request—Received Later Than 20 Calendar Days After Notification Is Mailed

A request may be submitted later than 20 calendar days after the IM agency mails out the undue hardship letter (F-10187), but if approved, the hardship waiver effective date will not be earlier than the date the request is received by the agency. For divestment cases, the remaining penalty period will be waived from the date the request is received by the agency.

Example 3:

Alice applies for Institutional Medicaid on January 20. She receives a notice dated February 10 that her application is denied and that she will have a 350-day divestment penalty period beginning January 20. In June, Alice’s health deteriorates and her monthly income decreases by 60 percent. Alice submits an undue hardship request to the IM agency that is received on June 25. The undue hardship request is approved by the IM agency and Alice’s remaining penalty period is waived. Alice is eligible for Institutional Medicaid beginning June 25.

 

Example 4:

Shane applies for HCBW Medicaid on April 30. He receives a notice dated May 20 that his application is denied due to having more than $750,000 in home equity. Shane lives in his home and has other assets under the asset limit. He is functionally eligible at a nursing home level of care. Shane explores options for selling his home and moving, but the market is poor for his area, and his home has had many modifications that make it easier for Shane to live in the community with his physical disabilities but less likely for the house to sell. Shane’s options for housing that meets his physical needs are limited in his community. Shane submits an undue hardship request that is received by the IM agency on June 30. The agency approves the undue hardship request and the effective date of June 30 is communicated to the Aging and Disability Resource Center (ADRC). Shane is eligible for HCBW Medicaid to begin with the enrollment date provided to the IM agency by the ADRC.

22.4.5 Required Documentation

An applicant or member (or his or her authorized representative, power of attorney, or legal guardian) must submit both of the following verifications of undue hardship (unless otherwise noted):

• A statement signed by the applicant or member (or his or her authorized representative) which describes the following:
  • In cases where a community spouse refuses to cooperate with the application process, documentation of all attempts to get cooperation from the community spouse,
  • In cases of divestment, whether the assets are recoverable, and if so, the attempts that were made to recover the divested assets,
  • In cases when an individual is denied due to having more than $750,000 in home equity, an explanation of why the home equity cannot be accessed
  • In cases where an individual in a spousal impoverishment case is denied due to excess assets, an explanation of why the excess assets cannot be accessed.
• Proof that an undue hardship would exist if eligibility is terminated or denied or the divestment penalty period is applied (required for all four situations to which Undue Hardship policy may apply) as follows:
• If the applicant or member is currently institutionalized, he or she must submit a copy of the notification from the long term care facility which states both of the following:
  • The date of involuntary discharge
  • An alternative placement location
  Or other proof that if the undue hardship waiver is not approved, the applicant or member will:
  • Not receive medical care resulting in his or hers health or life to be endangered
  • He or she will not have food, clothing, shelter, or other necessities of life.
• If the applicant or member is applying for HCBW, including FamilyCare, FamilyCare Partnership, PACE, or IRIS he or she must submit an estimate of the cost of the long term care services needed to meet his or her medical and remedial needs (as determined by the waivers case manager) and an estimate of costs for food, shelter, clothing, and other necessities of life.
  
  These two estimates must be compared to the applicant, member, or couple’s income and assets. If the IM agency determines that the applicant or member does not have enough income and/or assets to pay for his or her long term care and other needs (i.e., food, shelter, etc.), consider the applicant or member’s health to be endangered.

If the required documentation is not submitted with the request for an undue hardship waiver, send a written request for verification to the applicant or member, giving a verification due date of 20 calendar days from the date the request is mailed. If the applicant or member fails to submit the required verification within 20 calendar days after the request is mailed, deny the undue hardship waiver request and notify the applicant or member by sending a Notice of Denial of Benefits/Negative Change in Benefits (F-16001). The deadline to submit the required documentation may be extended for up to 10 calendar days if the individual communicates to the agency a need for additional time or assistance to obtain verification.

22.4.6 Determination Process Time Frame

A decision about whether to approve or deny an undue hardship waiver must be made by the IM agency within 30 calendar days after receipt of the Undue Hardship Waiver Request form (F-10193). Send the applicant or member the appropriate manual Notice of Approval of Benefits/Positive Change in Benefits (F-16015) or Notice of Denial of Benefits/Negative Change in Benefits (F-16001) based on the IM agency’s decision.

If the undue hardship request is denied, the Notice of Denial of Benefits/Negative Change in Benefits (F-16001) must include the agency’s reason for the denial: "You have not provided proof that the denial of long term care services will create an undue hardship for you." The applicant or member has the right to make another subsequent request if and when his or her circumstances change.

If an undue hardship waiver is approved, a new undue hardship request is not required to be completed at renewal unless there has been a change in the circumstances surrounding the original reason for the request.

22.4.7 Bed Hold Payments and Notifications (Divestment Only)

When an undue hardship waiver request is received by an IM agency from an institutionalized individual, the IM agency must inform the institution that the request was received and that a bed hold payment will be made on the client’s behalf for the period of time while the IM agency is making a decision about the hardship waiver request. The period covered begins on the date a written hardship waiver request is received at the IM agency until the date the agency issues its decision on the waiver request, up to a maximum of 30 calendar days.

The IM agency must notify the institution of the agency’s decision about the undue hardship waiver.

If the request for an undue hardship waiver is approved, the divestment penalty period will be waived and the need for a bed hold payment is therefore unnecessary.

If the undue hardship waiver request is denied, the IM agency must indicate the dates for which the state will make the bed hold payments.

Only one bed hold payment will be made for each divestment penalty period. Bed hold payments can only be made on behalf of individuals residing in medical institutions (i.e., nursing homes, etc.) who are requesting an undue hardship waiver. Bed hold payments will not be made for individuals not residing in a medical institution.

See Process Help Section 11.7.2.1 for more information for a bed hold due to undue hardship.

22.4.8 Fair Hearing Rights

If the request for an undue hardship waiver is denied, the individual has the right to appeal the decision through a written request to the DHADivision of Hearings and Appeals. The individual has 45 calendar days from the date of the notice issuance to file the appeal. These same hearing rights are also applicable to the facility in which the individual resides, as long as the facility has the institutionalized individual’s written permission to represent him or her in the appeal process.

22.4.9 Referrals to Adult-at-Risk Agency

If a power of attorney, legal guardian, or other authorized representative transferred the asset, the IM agency must consider making a referral to the local Adult-at-Risk agency for investigation of possible financial exploitation of an elderly, blind, or disabled individual.

 

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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