For reprint by the GWAAR Legal Services Team
As people get older, many consider transferring assets to their children, grandchildren, or to charity. While intentions behind such a gift are honest and noble, individuals need to be aware of the risk of “divestment” in the event they need long-term care Medicaid.
The Medicaid legal term, divestment, is applied when someone transfers assets – money, possessions, or property – for less than fair market value or when someone refuses to accept an asset to which they are entitled. Wisconsin law includes provisions which imposes a penalty for individuals who have divested, if they are requesting help paying for their long-term care from Wisconsin Medicaid program.
Divestment could result in a penalty period which needs to be served before an individual would be eligible to receive long-term care Medicaid services. The more wealth that has been divested, the longer the penalty period. The penalty period will only apply if an individual divested assets during the 60 months immediately prior to the Medicaid application.
Transfers made more than 60 months prior to the application would not result in a penalty period. Divestment only applies to long-term care Medicaid programs.
It is highly recommended that an individual consult with an elder benefit specialist or an elder law attorney if he or she receives a notice of divestment. There are some exceptions to the normal divestment rules, so it is important to quickly investigate a notice of divestment to determine whether an exception applies and whether to request an undue hardship waiver.
Divestment can prevent an individual from obtaining the long-term care he or she needs, which can be debilitating to an individual and his or her family. For that reason, it is very important to understand the consequences of transferring assets if long-term care may be necessary in the following five years.
Call ADRC of Brown County to speak with a benefit specialist for more information (920) 448-4300.
