MGE 215302 (06/02/2025)
Petitioner disenrolled for failure to verify “verbal” trusts

Preliminary Recitals

Pursuant to a petition filed on October 1, 2024, under Wis. Stat. § 49.45(5), and Wis. Admin. Code § HA 3.03(1), to review a decision by the Door County Department of Social Services regarding Medical Assistance (MA), a hearing was held on April 17, 2025, by telephone. At the request of the Petitioner’s representative, the matter was rescheduled from hearing dates of January 23, 2025; February 20, 2025; March 5; 2025; March 11, 2025; and April 2, 2025.

The issue for determination is whether the agency correctly disenrolled the Petitioner from Nursing Home Long Term Care for failing to provided requested verification.

There appeared at that time the following persons:

PARTIES IN INTEREST:

Petitioner:
—

Petitioner’s Representative:
—

Respondent:
Department of Health Services
1 West Wilson Street, Room 651
Madison, WI 53703
By: Jessica Ingersoll
Door County Department of Social Services
Door County Government Center
421 Nebraska Street
Sturgeon Bay, WI 54235-0670

ADMINISTRATIVE LAW JUDGE:
Jason M. Grace
Division of Hearings and Appeals

Findings of Fact

1. Petitioner (CARES # —) is a resident of Door County. She has been enrolled in Nursing Home Long Term Care-MA as of February 24, 2024, after a divestment penalty period was imposed for August 1, 2023 through February 23, 2024.
2. On July 30, 2024, the Petitioner submitted her annual healthcare renewal.
3. On July 31, 2024, the agency sent notice to the Petitioner requesting proof of the value of her savings and checking account. Due date was indicated to be August 9, 2024.
4. On August 14, 2024, the Petitioner provided the agency a bank statement for her checking and savings account.
5. The agency reviewed the bank statement and noted withdrawals totaling $2,900 from the checking account and $558 for the savings account. As the Petitioner is subject to divestment rules, the agency sought verification of the nature of those withdrawals.
6. On August 14, 2024, the agency attempted to speak to the Petitioner’s authorized representative by telephone. A voice message was left requesting further information about the withdrawals.
7. On August 15, 2024, written notice was issued to the Petitioner that she needed to provide verification of withdrawals from her checking and savings account. As to the checking account, verification of withdrawals were sought for $1100 on July 8, 2024, $500 on July 30, 2024, and $1,300 on August 6, 2024. As to the savings account, the agency requested verification of a $558 withdrawal on July 30, 2024. The notice indicated that verification was due August 23, 2024.
8. On August 20, 2024, the agency received a 28 page packet from the Petitioner. This included insurance, taxes, utilities, and purchases involving clothing and food. Also included was a note indicating that some of the withdrawals from the banks accounts were for gifting for birthdays, holidays, anniversaries, and to the church.
9. On August 23, 2024, written notice was issued to the Petitioner that the verification deadline was extended to September 6, 2024.
10. On August 28, 2024, the agency sent the Petitioner a notice containing the following information:
    

    When you enrolled in Medicaid, we were able to use a portion of the balance owed to — nursing home (June and July 2023, prior to the divestment period, $11,340) to decrease your patient lability to zero. Your portion of the cost of care for Medicaid is $1239 per month at this time. That cost is decreased to zero, until the $11,340 is reduced to zero. The freed up patient liability ($1239) funds are meant to be given to the nursing home, to decrease the bill for that time frame so that it can get to zero. Per discussion with — you owe $44,000 and no payment have been made. We also reviewed you bill with — and you owe a balance of $25081.48, with no payments being made. We will need to verify how you have been spending your social security income for the time period from 8/1/23 to 7/3/24, as you should have been giving at least the equivalent of your patient liability (1239) to the nursing home to pay down the balance owed.

    When someone resides in a nursing home and they express intent to return home, they are allowed a 6 month period where expenses such as rent or mortgage, tax., WPS, etc. are allowed as a deduction form countable income, to decrease patient liability for Medicaid. This period was allowed from Feb 2024-July 2024. Going forward, there is no deduction to maintain the home. Those expenses will not be allowable from your funds going forward. Again, you will need to provide detailed and chronological receipts to verify how her funds have been spent down from 8/1/23-7/31/24. The receipts you provided previously are not all for the time period in question, do not all verify as paid and are not in order.

    Lastly you report birthday and anniversary cards along with $5 gifts in some of the cards, as well as the $200 per month to church. Gifting, including charity, is not allowable and can result in divestment, unless a pattern has been established. You will need to provide proof that the birthday gifting and the charitable donations have been an ongoing expense prior. You will need to show a pattern of gifting in the last 5 years, with no gaps in the time periods in order for this to be allowed, If you have questions, please contact us at the number listed above.

11. On September 9, 2024, notice was issued to the Petitioner that enrollment in Nursing Home LTC would end as of October 1, 2024, as she did not take needed action or give the required proof of your answers to the agency. The notice indicated what was needed was proof of the market value of the transferred liquid assets.
12. On September 11, 2024, the agency received a letter from Petitioner’s authorized representatives (JL and KTR) seeking clarification about the deadlines, as well as requesting further information as to what was needed to demonstrate a pattern of gifting.
13. In response, on September 13, 2024, the agency issued written notice to the Petitioner extending the deadline for verification to September 30, 2024. The agency indicated that it was requesting verification of how the Petitioner’s social security income had been spent for the period of August 1, 2023 through August 31, 2024 as at least a portion should have been used to pay her outstanding nursing home debt but records indicate no payments were made. It was noted that her social security had been spent to keep her under the $2,000.00 asset limit for MA. The agency also requested verification of gifting that occurred between June 2020 and June 2024.
14. On September 24, 2024, the Petitioner submitted a 38 page packet of documents to the agency. Identified were anniversary, birthday, sympathy, and wedding cards; receipts for household bills, goods, and services; notarized statement and supporting documentation regarding funds held in trust under WI. Stats. § 701.0409; and other supporting documentation.
15. The notarized statement in Finding of Fact 14 was from the Petitioner’s authorized representative KTR. It indicated that on or about June 30, 2023, the Petitioner “… did create two separate trusts, each with explicit instructions in accordance with Wis. stats. 701.0409. That I, [] [KTR] am listed as one of the trustees for said trusts and therefore entrusted and obligated by law to carry out the wishes and instructions of [] [the Petitioner] as stated in regard to each individual trust.”
16. The notarized statement in Finding of Fact 14 did not identify the trust property or assets contained in each of the two trusts, indicate the origins of the trust property, or provide any details as to the purpose for which the trust was created.
17. On September 28, 2024, the Petitioner filed an appeal with the Division of Hearings and Appeals, indicating that she was requesting a hearing regarding the letter dated September 9, 2024. She further requested that her benefits continue during the pendency of her appeal.
18. On October 2, 2024, the agency issued written notice to the Petitioner indicating that in order to determine if the trusts are countable or exempt assets, she must provide a copy of the trust documentation for each trust created to determine if it can be modified, revoked or cancelled. The Petitioner was also informed to provide current balance in each trust and what assets have been added to the trust. She was directed to contact the agency if she had any questions. The due date to provide that information was October 11, 2024.
19. On October 8, 2024, the Petitioner’s authorized representatives sent a letter to the agency regarding the trusts. It was indicated that they had already provided the trust information. The letter also indicated that the statements in the letter were made after consulting with an attorney. The letter does not identify any assets in the trust, how the trust is funded, or provide any insight as to the purpose of the trust other than indicating that a trustee had an obligation to insure the trust is being used according to the grantor’s specific instructions.
20. On October 10, 2024, the agency contacted — to determine if there were 1 or 2 burial trusts. — confirmed there was one policy. The agency noted that policy was already found to be an exempt asset.
21. On October 22, 2024, the agency contacted the Petitioner’s authorized representative by telephone. The authorized representative indicated that a lawyer informed them that they did not need to give any further information to the agency about the verbal trusts.
22. The agency reached out to the CARES Problem Resolution Teams (PRT) seeking guidance as to verbal trusts. The PRT instructed the agency to obtain additional information about the verbal trusts to evaluate how they should be treated.
23. On October 23, 2024, notice was issued to the Petitioner. It indicated that while she had provided burial trust information, she had not verified the verbal trust created or the balance in that trust. It was indicated that information was needed in order to determine if the trust principal is considered a countable asset or not. The notice indicated proof was due November 11, 2024.
24. No additional information about the verbal trusts was provided to the agency prior to the hearing on April 7, 2025.

Discussion

The Petitioner was disenrolled from Nursing Home Long Term Care (Nursing Home LTC) MA (also referred to Institutional MA) as of October 1, 2024 for failure to complete her annual healthcare renewal. See Medicaid Eligibility Handbook (MEH), § 3.1 (addressing healthcare renewals). A renewal is a process wherein eligibility factors are reexamined and eligibility is redetermined. MEH, § 3.1.1. The healthcare benefits will close if the renewal is not completed by the end of the certification period. MEH, § 3.1.3. A new MA application is needed if the healthcare renewal and renewal-related verifications are not provided within 3 months of the renewal month. MEH, § 3.1.6.

Verification is part of determining MA eligibility. MEH, § 20.1.1. To verify means “… to establish the accuracy of verbal or written statements made about a group’s circumstances.” Id. While the agency has an obligation to assist the MA applicant/member if requested, the primary responsibility for providing verification and resolving questionable information falls on the member/applicant. MEH, § 20.1.4. The agency is required to verify income, assets, and issues regarding divestments. MEH, § 20.3.1. Such verification is required at application and renewal. MEH, § 20.7.

In the instant case, the agency terminated the Petitioner’s Nursing Home LTC benefits as of October 1, 2024 as the Petitioner failed to timely complete her renewal. It was not completed as the Petitioner, and her authorized representatives (AR), failed to provide requested verification to determine on-going eligibility for the program. Specifically, the AR had disclosed the existence of two “trusts” that were created by the Petitioner in 2023. The agency sought verification of those trusts as they were not previously disclosed.

The MEH provides:

A trust is any arrangement in which a person (the “grantor”) transfers property to another person with the intention that the person (the “trustee”) hold, manage, or administer the property for the benefit of the grantor or of someone designated by the grantor (the “beneficiary”).

The term “trust” includes any legal instrument or device or arrangement, which, even though not called a trust under state law, has the same attributes as a trust. That is, the grantor transfers property to the trustee and the grantor’s intention is that the trustee hold, manage, or administer the property for the benefit of the grantor or of the beneficiary. …

MEH, § 16.6.1 (non-burial trust).

The credible evidence in the record indicates that the existence of the two “trusts” at issue in this case was first made to the agency on September 24, 2024, during the course of the Petitioner’s annual healthcare renewal. It appears the position of the Petitioner’s AR was that the trusts were previously disclosed to the social worker of a nursing home who assisted the Petitioner in submitting her initial MA application in 2023. It further appears that it is the Petitioner’s position that it was the fault of the social worker for not forwarding that information to the agency at that time. Even if that was the case, that did not relieve the Petitioner and her AR from providing the agency the requested verification of those “trusts” during the current renewal. As noted, there is no evidence in the record before me to indicate the two “trusts” were previously disclosed to the agency.

It was not until the hearing in the instant case that the Petitioner or her AR provided the agency any specific information about the nature of the two “trusts” at issue during the renewal. It was not provided to the agency in response to the written notices issued to the Petitioner seeking that information. See Findings of Fact 18 and 23 above. And, it was not provided to the agency during a telephone call with the AR on October 22, 2024. See Find of Fact 21. The AR indicated to the agency that a lawyer told them that they did not need to give any further information to the agency about those “trusts.” Id. The specific details of the “trusts” were also not submitted in any of the Petitioner’s exhibits submitted prior to hearing.

The AR testified at hearing that the two verbal “trusts” were created at the recommendation of the social worker who assisted the Petitioner with her MA application. That was at odds with the information provided about an attorney’s involvement. Regardless, the AR indicated at hearing that the verbal trusts were funded by withdrawals from the Petitioner’s checking account. That checking account had been disclosed to the agency. One trust authorized the withdrawal of money to fund the Petitioner’s gift-giving for special events, such as birthdays, anniversaries, holidays, etc. The second trust authorized the withdrawal of money to fund the continuing maintenance of a home in which Petitioner currently is reported to have a life estate. I am at a loss as to why the Petitioner and her AR refused or failed to provide this information previously when requested by the agency.

My review in this case is of the agency’s action in terminating the Petitioner’s Nursing Home LTC benefits for failing to timely complete her renewal. It was not timely completed as she refused or failed to provide the requested verification about the two “trusts” at issue. As noted above, the Petitioner was required to submit to a renewal to determine continuing eligibility for benefits. That renewal process evaluates financial eligibility. To that end, the agency would need to evaluate the specifics of the two “trusts” (including the nature and value of the trust funds and the origins of the assets that funded the trust) to determine its impact on the Petitioner’s continuing eligibility for Nursing Home LTC. While the Petitioner’s practice of gifting money for special events was disclosed to the agency, there was no indication prior to hearing that such practice had any connection to either of the two “trusts” disclosed by the AR. It is not reasonable to believe that the agency would independently make that connection based on the information or lack thereof that was provided by the Petitioner and her AR.

The above noted MA policy requires the agency to obtain verification of assets, income, and issues surrounding divestments. Thus, it was required to request verification of the two “trusts” disclosed by the AR. The record indicates that such verification was not provided during the certification period. Thus, the agency correctly terminated Nursing Home LTC benefits as of October 1, 2024. Such verification was also not provided within 3 months of the renewal month. Thus, the Petitioner must submit a new application in order to reinstate benefits.

Based on the record before me, the agency correctly terminated the Petitioner’s Nursing Home LTC benefits as of October 1, 2024.

Conclusions of Law

The agency correctly terminated the Petitioner’s Nursing Home Long Term Care benefits for failing to timely provide verification of the two “trusts” disclosed by the Petitioner’s authorized representative during the healthcare renewal.

THEREFORE, it is

Ordered

That Petitioner’s appeal is dismissed.