One exception to the usual divestment rule is if the transfer was made without the intent to qualify for Medicaid. In this case, the petitioner transferred about $110,000 to her son over the five-year look-back, but because he had no records he was unable to show that the withdrawals were used on his mother’s behalf. ALJ Brian Schneider concluded this was a classic divestment.
This decision was published with support from the Wisconsin chapter of the National Academy of Elder Law Attorneys and Krause Financial.
Preliminary Recitals
Pursuant to a petition filed December 17, 2025, under Wis. Stat., §49.45(5), to review a decision by the Grant County Dept. of Social Services to deny Medical Assistance (MA), a hearing was held on February 4, 2026, by telephone.
The issue for determination is whether the county agency correctly determined a divestment penalty.
PARTIES IN INTEREST:
Petitioner:
—
Respondent:
Department of Health Services
201 E. Washington Ave.
Madison, WI 53703
By: Briana Kraak
Grant County Dept. of Social Services
PO Box 447
Lancaster, WI 53813
ADMINISTRATIVE LAW JUDGE:
Brian C. Schneider
Division of Hearings and Appeals
Findings of Fact
- Petitioner (CARES # —) is a resident of Grant County.
- An application for nursing home MA was filed for petitioner on October 21, 2025. During the process the agency found a pattern of gifting from petitioner to relatives, primarily her son and daughter-in-law.
- The agency determined that there was a divestment of $110,973.88 in the five years prior to petitioner’s application. Because he had no records, petitioner’s son was unable to show that the withdrawals were used on petitioner’s behalf. By a notice dated December 2, 2025, the agency informed petitioner that although she was eligible for nursing home MA, there was a penalty period from October 1, 2025 through August 21, 2026 due to a $110,973.88 divestment.
Discussion
When an individual, the individual’s spouse, or a person acting on behalf of the individual or his spouse, transfers assets at less than fair market value, the individual is ineligible for MA coverage of nursing facility services. 42 U.S.C. 1396p(c)(1)(A); Wis. Stat., §49.453(2)(a); Wis. Admin. Code, §DHS 103.065(4)(a); MA Handbook, Appendix 17.2.1. Divestment does not impact on eligibility for standard medical services such as physician care, medications, and medical equipment (all of which are known as “MA card services” in the parlance). The penalty period is the number of days determined by dividing the value of property divested by the average daily nursing home cost to a private pay patient ($340.99 in 2025). MA Handbook, App. 17.5.2.
Here there were transfers from petitioner to family members of over $100,000 leading up to her moving into the nursing home. One exception to divestment rules is if the transfers were for reasons exclusive of potential MA eligibility, but it was described here that petitioner began to gift her assets “while she was still alive,” so it is almost assured that her future health care was at least part of the reason for the gifting. Petitioner’s son was given ample opportunity to show that the gifted money was spent on petitioner’s behalf, but he admitted that he had no records of how the money was spent.
The simple conclusion is that this is classic divestment. Petitioner gifted money without receiving value in return, within five years of applying for MA. The amount is based on petitioner’s inability to show how the money was spent; withdrawals that had records of being used on petitioner’s behalf were not counted in the divestment.
Conclusions of Law
The agency correctly determined that petitioner divested $110,973.88 prior to applying for nursing home MA.
THEREFORE, it is
Ordered
That the petition for review is hereby dismissed.
[Request for a rehearing and appeal to court instructions omitted.]
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