Carissa Giebel column: Medicaid eligibility, estate recovery policy changes

Nov. 25, 2013 |

Recently there have been quite a few changes to the divestment policies and other Medicaid eligibility policies relating to assets, pursuant to Wisconsin’s 2013-2015 budget.

Most of these changes are to prevent individuals from divesting (transferring assets or income for less than fair market value) without incurring a penalty. I will touch on a few of these policy changes, which are effective for any transfer of assets on or after Sept. 18, 2013. These changes were published mid-November, along with some changes to the estate recovery program.

A significant change is the restrictions put on the community spouse (the spouse not living in a nursing home). There are certain assets the community spouse is allowed to keep when Medicaid eligibility is being determined for the institutionalized spouse (the spouse in a medical institution). The policy changes affect what the community spouse can do with those assets he or she is allowed to keep, restricting any divesting within five years of the institutionalized spouse being eligible for Medicaid.

For example, if the community spouse had a house that he or she was allowed to keep, and then transferred, for less than fair market value, to the children within five years of the institutionalized spouse’s Medicaid eligibility, then there will be a penalty. This also means the institutionalized spouse will likely lose Medicaid eligibility, and then the penalty will be applied.

Community spouses are now required to sign applications for long term care or institutional Medicaid. If a community spouse refuses to sign the application, refuses to disclose the value of assets, or refuses to provide required information on income or resources, eligibility will be denied.

Just as under the old rules, prenuptial agreements have no effect on the eligibility provisions. Unfortunately, I think these changes are going to encourage more divorces.

The Wisconsin Estate Recovery Program seeks repayment for the cost of certain long-term-care services paid for by Medicaid on behalf of recipients. Recovery is made from certain non-probate assets, the estate of Medicaid recipients and from liens placed on real estate. Any assets recovered goes back into the Medicaid program to fund Medicaid benefits.

The assets that will be recoverable under the policy changes include all property the institutionalized spouse had an interest in immediately before death. This includes, but is not limited to, assets transferred to a joint owner, assets in a living trust, life estates, assets paid out to a named beneficiary, and other non-probate assets. Claims can now even be filed on the estates of the surviving spouse.

These are just a few of the policy changes, which can be complicated and could greatly affect whether someone is eligible for Medicaid. They also significantly restrict the community spouse’s options. These changes make pre-planning even more important now, than ever.

If you find these changes concerning, or are seeking options to protect some assets, contact an estate planning attorney to discuss what options may be available for you.

Carissa Giebel is an estate planning attorney and partner at Legacy Law Group LLC. She can be contacted at This email address is being protected from spambots. You need JavaScript enabled to view it., or (920) 560-4651.

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