On June 30, 2013, the Wisconsin Legislature passed Wisconsin Act 20. As noted in our fall issue, the new law dramatically changed certain aspects of the State’s Medicaid program for individuals who need long-term care. In general, the changes were aimed at allowing the State broader authority to recover funds paid on behalf of long-term care Medicaid recipients. Wisconsin Act 20 impacted a wide variety of laws, including laws relating to estate recovery, trusts, jointly-held property and life estates. The Act was accompanied by much controversy, and both the Elder Law Section of the State Bar and Wisconsin’s Chapter of the National Academy of Elder Law Attorneys advocated for a repeal or partial repeal of the new law.
As of this past December, the Wisconsin Legislature enacted a partial repeal of Wisconsin Act 20. The partial repeal is contained in Wisconsin Act 92, which adopts a modified version of the Uniform Trust Code and was enacted on December 13, 2013. Below is a summary of the provisions that were repealed.
- Wisconsin Act 20 provided that “exempt” assets (assets that do not impact a person’s eligibility for Medicare) could not be transferred to another person without the imposition of a divestment penalty. This provision has been repealed.
- Section 49.453(4c) of the Wisconsin Statutes, which was enacted under Wisconsin Act 20, imposed a divestment penalty on persons who entered into a promissory note or loan agreement with a “presumptive heir,” such as a child. This provision has been repealed.
- The provision that expanded the definition of what property may be subject to a claim by the State for recovery of funds paid on behalf of a long-term care Medicaid recipient has been amended to include “revocable trusts” rather than “living trusts,” and irrevocable trusts are now specifically excluded.
- Under Wisconsin Act 20, the State was allowed to recover funds paid on behalf of a long-term care Medicaid recipient from the estate of his or her surviving spouse using all real and personal property in which the surviving spouse had an ownership interest at the recipient’s death, including a marital property interest the surviving spouse had at any time within five years before the recipient’s application for benefits. This provision has been repealed.
- Wisconsin Act 20 also precluded the State from issuing undue hardship waivers to prevent recovery from the estate of a non-recipient surviving spouse. This provision has been repealed to allow waivers for hardship.
- The provision that allowed the State to void certain transfers of real property under Wis. Stats., § 49.4962, has been repealed.
- The provision that allowed the State to record a “request for notice” if certain real property in which a long-term care Medicaid recipient has an interest is transferred or encumbered has been repealed.
- Wisconsin Act 20 required trustees to provide the State notice of the death of a living trust settlor if either he or she, or his or her predeceased spouse, was the recipient of long-term care Medicaid benefits. This provision has been repealed.
- The requirement that trustees provide the State notice of the death of a beneficiary of a self-settled special needs or pooled trust if he or she was the recipient of long-term care Medicaid benefits has also been repealed.
- Wisconsin Act 20 held trustees personally liable to the State for any costs incurred in recovering funds paid on behalf of a long-term care Medicaid recipient from property distributed from the trust before any repayment to the State was made, and for any funds that the State was unable to recover from the persons to whom the property was distributed. This provision has been repealed.
- The provision that allowed the trustee of a pooled trust to retain only 30% of the balance of the trust after the death of a beneficiary who was the recipient of long-term care Medicaid has been repealed.
While the above provisions have been repealed, many of the changes that Wisconsin Act 20 made to Wisconsin’s Medicaid laws remain in effect today and have important implications for long-term care planning.