Medicaid Member Update Clarifies How Wisconsin Will Implement New Estate Recovery Rules, Leaves Members in the Dark on Community Spouse Divestment.

A “Member Update” publication dated June 13, 2014 arrived in the mailboxes of Medicaid recipients last week. We received copies in my office on behalf of some clients. You can read a copy here. 

This update clarifies that Wisconsin’s new and draconian estate recovery provisions will not be applied against beneficiaries until August 1, 2014. It also states that life estates and revocable trusts created prior to August 1, 2014 will not be subject to estate recovery. This resolves a large degree of uncertainty as to whether life estates created many years ago, would now be subject to recovery on the death of the life estate holder. They will not.

It also clarifies that recovery from non-probate assets such as Payable on Death accounts and joint accounts will begin for recipients who die on or after August 1, 2014.

Interestingly, while the state had the opportunity to educate recipients about another critical change in its policies, specifically the rule  that prevents the spouse (“community spouse”) of a person in a nursing home or on Family Care (“institutionalized spouse”), from transferring the community spouse’s assets to anyone else until the institutionalized spouse has been on Medicaid for five years,  and while including this information in an update that went out to all recipients would have been simple, the state chose not to include this. I have already been contacted by community spouses inadvertently caught in this trap. Unlike estate recovery which the state is implementing going forward, the state has chosen to apply the new divestment penalty going back to the effective date of the Joint Finance Committee’s approval of the law, and to do so without warning. When I contacted a DHS employee about this concern a couple months ago, I was told the reason not to provide this information was the cost of sending it to all affected recipients. Well, given that the June Member Update went to everyone, that does not appear to be a valid concern.  It is disappointing that the state chooses to keep couples in the dark about this rule.

Budget

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About Carol J. Wessels

I am an Elder Law Attorney practicing in Wisconsin. I am the owner of Wessels Law Office LLC in Mequon, WI. I handle Medicaid, Long Term Care planning, special needs trusts, guardianship, advance directives, elder abuse and other related issues for elderly and disabled clients and their families. My Mother Velma lived with Alzheimer's for fifteen years until she died on Jan. 24, 2015, which has given me a personal perspective on elder law issues as well.
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