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Wisconsin Department of Health and Family Services Obsolete Medicaid Eligibility Handbook For the current MEH, see http://www.emhandbooks.wi.gov/meh-ebd/ For the current BC Plus Handbook, see http://www.emhandbooks.wi.gov/bcplus/ |
4.7.2.4 Institutionalized Person
"Divestment" is the transfer of income Income is anything you receive in cash or in kind that you can use to meet your needs for food, clothing, and shelter., non-exempt assets, and homestead property (4.7.2.3.1), which belong to an institutionalized person or his/her spouse or both:
For less than the fair market value of the income or asset by:
An institutionalized person, or
His/her spouse, or
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, or
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.
It is also divestment if a person takes an action to avoid receiving income or assets s/he is entitled to. Actions which would cause income or assets not to be received include:
Irrevocably waiving pension income.
Disclaiming an inheritance.
Not accepting or accessing injury settlements.
Diverting tort settlements into a trust or similar device.
Refusing to take legal action to obtain a court-ordered payment that is not being paid, such as child support or alimony.
Refusing to take action to claim the statutorily required portion of a deceased spouse's or parent's estate. Count the action as a divestment only if:
The value of the abandoned portion is clearly identified, and
There is certainty that a legal claim action will be successful.
This includes situations in which the will of the institutionalized person's spouse precludes any inheritance for the institutionalized person. Under Wisconsin law, a person is entitled to a portion of his/her spouse's estate. If the institutionalized person does not contest his/her spouse's will in this instance, the inaction may be divestment.
"Transfer" is the act of changing the legal title or other right of ownership to another person. Converting an asset from one form to another is not divestment. For example, buying a race horse for $12,000 and keeping the race horse is not divestment.
If the MA client has transferred real property , such as a homestead, the official date of transfer is the date the Quit Claim Deed was signed. It is not the date the transfer was recorded with the county Register of Deeds.
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Example: When Mrs. Puzo entered a nursing home and applied for MA on September 15, 1997, she indicated that she had divested her homestead to a nephew. When questioned about the date, she said it was about three years ago. The IM worker called the county Register of Deeds. She learned that the transfer was recorded on September 1, 1994. This was within the 36 month lookback period. Fearing that Mrs. Puzo might be subject to a divestment penalty, the IM worker asked when the Quit Claim Deed was signed. It was signed August 1, 1994, which was before the 36-month lookback period began. Therefore, Mrs. Puzo was not subject to a divestment penalty. |
"Nonexempt assets" are those that are counted in SSI-related asset tests. Assets that aren't counted in these tests are called exempt assets. An available asset (4.5.1) can be either exempt or nonexempt.
Homestead property, usually an exempt asset, is given special consideration in the MA divestment policy. Homestead divestments are permitted only under the circumstances described in 4.7.4, #7.
See 5.8.4
See 5.10.2.1.
"Fair market value" is an estimate of the prevailing price an asset would have had if it had been sold on the open market at the time it was transferred.
"Divested amount" is the net market value minus the value received.
"Net market value" is the fair market value at the time of the transfer minus any outstanding loans, mortgages, or other encumbrances on the property.
"Value received" is the amount of money or value of any property or services received in return for the person's property. The value received may be in any of the following forms:
Cash.
Other assets such as accounts receivable and promissory notes (both of which must be valid and collectible to be of value), stocks, bonds, and both land contracts and life estates which are evaluated over an extended time period.
Discharge of a debt.
Prepayment of a bona fide and irrevocable contract such as a mortgage, shelter lease, loan, or prepayment of taxes.
Services which shall be assigned a valuation equal to the cost of purchase on the open market. Assume that services and accommodations provided to each other by family members or other relatives were free of charge, unless there exists a written contract (made prior to the date of transfer) for payment.
If an MA client or his/her spouse uses an asset in a way that makes it unavailable and doesn’t receive FMV, treat that asset as divestment. An example is using an asset as collateral for someone else’s loan.
This page last updated in Release Number : 04-03
Release Date:08-02-04
Effective Date: 08-02-04