In Wisconsin, there are specific exceptions to the divestment rules for Medicaid qualification, allowing certain asset transfers without incurring a penalty. These exceptions are narrowly defined and strictly enforced. Below are the key exceptions:
- Transfers to a Spouse
Assets transferred to a spouse are not considered divestment. For married couples, the community spouse (the spouse not applying for Medicaid) is entitled to retain a portion of the couple’s assets, known as the Community Spouse Resource Allowance (CSRA). Transferring assets to the community spouse is allowed under Medicaid rules.
- Transfers to a Disabled or Blind Child
Transfers to a child who is legally blind or permanently disabled (as determined by Social Security Administration standards) are exempt from the divestment rules. This exception applies regardless of the child’s age.
- Transfers to a Trust for a Disabled Person
Assets transferred to a trust established for the sole benefit of a disabled person under age 65 are not treated as divestment. This applies to both disabled children and other disabled people.
- Transfer of a Home in Specific Circumstances
Certain transfers of the applicant’s home are exempt from divestment penalties, including:
- To the applicant’s spouse.
- To a child under age 21.
- To a child who lived in the home for at least two years immediately prior to the applicant entering a nursing home, and who provided care that delayed the applicant’s need for long-term care.
- To a sibling with an equity interest in the home who lived there for at least one year before the applicant entered a nursing home.
- Transfers for Fair Market Value
If assets are sold or transferred for their fair market value, it is not considered divestment. For example, selling property at its full appraised value or receiving equivalent compensation for a transfer.
- Transfers Made with No Intent to Qualify for Medicaid
If the applicant can prove that a transfer was made exclusively for reasons unrelated to Medicaid qualification, it may not be considered divestment. However, proving this requires substantial documentation and evidence of intent.
- Hardship Waivers
In rare cases, if a divestment penalty would cause undue hardship—such as putting the applicant at risk of serious harm or endangering their health or life—a hardship waiver may be granted. This is decided on a case-by-case basis by Medicaid administrators.
While these exceptions exist, divestment rules are complex, and mistakes can lead to significant penalties or ineligibility for Medicaid. It is critical to consult with an experienced elder law or Medicaid attorney to navigate the rules and ensure compliance with Wisconsin’s Medicaid regulations. Proper planning can help protect assets and ensure eligibility for benefits. If you have any questions or concerns about divestments and Medicaid eligibility please make an appointment to meet with one of our experienced attorneys.
