For a single person in the Institutional MA program, the items that may be subtracted from income in determining patient liability are limited. In this case, the petitioner asked that his $70/month life insurance premiums be deducted, noting that the proceeds were intended to pay for funeral expenses. ALJ Teresa Perez concluded the life insurance premiums could not be deducted.
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 on June 20, 2025, under Wis. Stat. § 49.45(5), and Wis. Admin. Code § HA 3.03(1), to review a decision by the Milwaukee Enrollment Services regarding Medical Assistance (MA), a hearing was held on August 6, 2025, by telephone. The hearing record was held open for five days to allow Petitioner to submit additional documentation. On August 8, 2025, the Division of Hearings and Appeals received a letter from Petitioner’s representation confirming Petitioner’s life insurance policy premium amounts, a fact of central relevance to the issue in dispute.
The issue for determination is whether the agency is properly excluding Petitioner’s life insurance policy premiums from his patient liability calculation.
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: Lyeshia Griffin
Milwaukee Enrollment Services
1220 W Vliet St
Milwaukee, WI 53205
ADMINISTRATIVE LAW JUDGE:
Teresa A. Perez
Division of Hearings and Appeals
Findings of Fact
- Petitioner (CARES # —) is a 76-year old unmarried resident of Milwaukee County who resides in a skilled nursing facility and receives Institutional Medical Assistance.
- Petitioner’s current patient liability is $0 and includes a $3,100.80 payment towards an outstanding nursing home bill, a $55 personal needs allowance, and a $185 health insurance premium.
- As of March 2025, Petitioner’s nursing home bill had an outstanding balance of approximately $57,000. His patient liability will remain $0 until that bill is paid off, which is expected to happen sometime in 2026.
- Petitioner has two life insurance policies—the proceeds of which are intended to fund his burial expenses. He pays a monthly premium for each of those polices. The premiums total $70.77.
- Petitioner requested that his life insurance policy premiums also be included as a deductible expense when calculating his patient liability. The agency has denied that request. Currently, the agency’s exclusion of that expense makes no difference because his patient liability is $0. If / when Petitioner pays off his nursing home bill, deduction of his life insurance premium amount would decrease his patient liability.
- Petitioner filed an appeal regarding the agency’s refusal to identify his life insurance policy premiums as a deductible expense.
Discussion
Institutionalized individuals who receive Medicaid must generally pay a “cost of care” each month. This amount is referred to as a patient liability. See Medicaid Eligibility Handbook §27.7.1.
The following amounts may be subtracted from an individual’s income when calculating the patient liability.
- $65 and ½ earned income disregard
- Monthly cost for health insurance
- Support payments
- Personal needs allowance (typically $45 per month)
- Home maintenance costs, if applicable
- Expenses for establishing and maintaining a court-ordered guardianship or protective placement, including court-ordered attorney and/or guardian fees
- Medical or remedial expenses.
Id. at 27.7.1.
The agency properly applied this policy in declining to deduct Petitioner’s life insurance policy premiums in the patient liability calculation. Petitioner’s representative, a staff member from the nursing facility where he resides, did not dispute the agency’s calculation of Petitioner’s patient liability; rather, she said that she was aware of times that the Division of Hearings and Appeals has allowed premiums for life insurance policies to be deducted in cost of care calculations. She did not, however, provide any DHA case numbers or copies of decisions so I am not sure what she is referring to. (I suspect that Petitioner’s representative may be thinking of a provision of Medical Assistance spousal impoverishment law which grants the Division of Hearings and Appeals discretion to increase the amount of income that a married institutionalized spouse can make available to their community spouse which, in turn decreases the patient liability amount, under certain circumstances.)
As an administrative law judge, I must apply the relevant legal authority as written and reasonably interpreted and have no discretion to grant exceptions, which is what Petitioner seeks here.
Conclusions of Law
The agency correctly determined that Petitioner’s life insurance policy premiums cannot be deducted when calculating Petitioner’s patient liability.
THEREFORE, it is
Ordered
That Petitioner’s appeal is dismissed.
[Request for a rehearing and appeal to court instructions omitted.]
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