MGE 215615 (01/06/2025)
Payments to children were divestments, no written, notarized agreement

Preliminary Recitals

Pursuant to a petition filed on October 23, 2024, under Wis. Stat. § 49.45(5), and Wis. Admin. Code § HA 3.03(1), to review a decision by the Brown County Human Services regarding Medical Assistance (MA), a hearing was held on December 3, 2024, by telephone.

The issue for determination is whether the agency correctly assessed a Medicaid divestment penalty against the petitioner and her husband.

There appeared at that time the following persons:

PARTIES IN INTEREST:

Petitioner:
—

Respondent:
Department of Health Services
1 West Wilson Street, Room 651
Madison, WI 53703
By: Matthew Hurst
Brown County Human Services
Economic Support—2nd Floor
111 N. Jefferson St.
Green Bay, WI 54301

ADMINISTRATIVE LAW JUDGE:
Kate J. Schilling
Division of Hearings and Appeals

Findings of Fact

1. Petitioner (CARES # —) and her husband are residents of Shawano County.
2. On June 28, 2024, the petitioner and her husband applied for long-term care Medicaid, specifically community waivers. The application reflected that they had given $20,000 to their adult son for farm supplies and upkeep, and $20,000 to their daughter-in-law for personal care work that she had provided to them.
3. The agency requested verification of these gifts to evaluate for divestments. During the verification process, it was discovered that there were eight checks written out for $10,000 each to the petitioner’s son and/or daughter-in-law, and two checks written out for $15,000 each that stated “gift” in the memo line. The agency also found that the couple did not own any farm land.
4. The agency requested additional documentation about the transfers made to the couple’s son and daughter-in-law. It was determined that some of the money was for upkeep of the farm which the petitioners were maintaining on property they had rented. There was also a purchase made for a new washer and dryer for the couple. The agency determined that funds used for these specific purposes were not a divestment.
5. The petitioner submitted to the agency a notarized statement dated July 30, 2024, that stated that she had given money to the couple’s daughter-in-law “as an allowance” for her assistance with personal care, medication management, laundry, grocery shopping, and housekeeping.
6. The agency ultimately determined that a total of $110,000 had been divested and imposed a divestment penalty. The penalty was split in half and imposed as a divestment penalty of $55,000 against the petitioner and $55,000 against her husband. The penalty period for the divestments ran from June 24, 2024 through December 14, 2024.
7. On an unknown date, the petitioner and her husband requested Undue Hardship Waivers for the divestment penalties. On October 14, 2024, the Undue Hardship Waivers were approved going forward for both the petitioner and her husband. It was not approved retroactively as it had been submitted to the agency late.
8. On November 18, 2024, the petitioner and her husband were both officially enrolled into FamilyCare. There is an outstanding balance of nearly $60,000 for the assisted living facility memory care unit costs incurred between June and November 2024.
9. The county Adult Protective Services (APS) became involved in this case at some point prior to the hearing in regards to the total dollar amount of checks written by the couple prior to becoming eligible for Medicaid. A corporate guardian was appointed by the court to oversee the petitioner’s care and finances.

Discussion

Divestment is the act of transferring ownership of assets or income and receiving less than fair market value in return. Applicants or members seeking Medicaid-covered long-term care services are subject to a set of special rules about transferring assets and income. 42 U.S.C. 1396p(c)(1)(A); Wis. Stat. §49.453(2)(a); Wis. Admin. Code, §DHS 103.065(4)(a); Medicaid Eligibility Handbook §§ 17.1 and 17.2. An applicant for MA programs that has transferred assets and/or income during a five year “lookback” period is subject to having those transfers evaluated for compliance with the divestment rules. Transfers of an applicant’s assets and/or income by someone acting on behalf of the applicant are also subject to divestment rules.

The transfer of income or assets to a relative as payment for care or services provided is an unallowable divestment and results in a penalty period unless it meets the following criteria to be considered an allowed divestment:

• The amount is less than 10 percent of the maximum Community Spouse asset share (CSAS) and meets both of the following:
  • The services directly benefited the institutionalized person.
  • The payment did not exceed reasonable compensation for the services provided.
• The amount is greater than 10 percent of the maximum Community Spouse asset share and meets all of the following:
  • The services directly benefited the institutionalized person
  • The payment did not exceed reasonable compensation for the services provided.
  • The institutionalized person and the relative providing the service have a written, notarized agreement that meets all of the following:
    • Specifies the service being provided to the institutionalized person
    • Specifies the amount to be paid to the relative providing the services
    • Was notarized at the time the relative began to provide the services

(Emphasis added.) Medicaid Eligibility Handbook §17.2.6.10. In 2021, the maximum community spousal asset share was $130,380, and for 2022 it was $137,400. The money that was transferred to the petitioner’s son and daughter-in-law was more than 10% of these figures. Furthermore, the notarized statement that was submitted to the agency and dated July 30, 2024, does not meet the requirements listed above. The notarized statement was not in place at the time the services were provided to the petitioner. Rather, the notarized statement was written after the Medicaid application was submitted and seemingly as a means of explaining the rationale for the previous transfers. However, Medicaid requires that a written and notarized agreement be in place at the time the services begin if there is an expectation of payment to the relative. The petitioner has not produced evidence that a written and notarized agreement was in place at the time services were provided, and the notarized statement that was provided does not meet the requirements listed in the Medicaid Eligibility Handbook. Therefore, I must uphold the agency’s determination of divestment.

Conclusions of Law

The agency correctly imposed a divestment penalty of $110,000 for transfers that occurred during the five year lookback period.

THEREFORE, it is

Ordered

The petitioner’s appeal is dismissed.