The transfer of an exempt asset (except a homestead) is not a divestment. In this case, the petitioner bought a car—though she could not drive herself—that her son used to transport her to medical appointments. About seven months later, she transferred the car to her son. She also paid him $25,000 as a reimbursement for “expenses he incurred to care for her (gas, hotel stays, travel) as well as assisting [her] with moving multiple times.” ALJ Nicole Bjork rejected the agency’s argument that the petitioner’s buying a car when she could not drive was a divestment, concluding that neither the purchase nor the transfer of the car were divestments. She also concluded the $25,000 was a reimbursement, not a payment for services, and was thus not a divestment.
This decision was published with support from the Wisconsin chapter of the National Academy of Elder Law Attorneys.
Preliminary Recitals
Pursuant to a petition filed on July 29, 2024, under Wis. Stat. § 49.45(5), and Wis. Admin. Code § HA 3.03(1), to review a decision by the Washington County Department of Social Services regarding Medical Assistance (MA), a hearing was held on September 4, 2024, by telephone.
The issue for determination is whether the agency correctly imposed a divestment penalty period between August 1, 2024, through May 28, 2025.
There appeared at that time the following persons:
PARTIES IN INTEREST:
Petitioner:
—
Petitioner’s Representative:
Attorney Carol J. Wessels
Wessels & Liebau LLC
11649 N Port Washington Rd # 210
Mequon, WI 53092
Respondent:
Department of Health Services
1 West Wilson Street, Room 651
Madison, WI 53703
By: Mary Swab
Washington County Department of Social Services
333 E. Washington Street
Suite 3100
West Bend, WI 53095
ADMINISTRATIVE LAW JUDGE:
Nicole Bjork
Division of Hearings and Appeals
Findings of Fact
- Petitioner (CARES # —) is a resident of Ozaukee County and is enrolled in nursing home long-term care.
- On April 27, 2022, Petitioner’s son purchased a vehicle on Petitioner’s behalf. The vehicle was titled in Petitioner’s name. Petitioner was not able to drive. However, her son used the vehicle on Petitioner’s behalf to transport Petitioner to and from numerous medical appointments.
- On May 25, 2022, Petitioner transferred $25,008.67 to her son to reimburse him for expenses he incurred to care for her (gas, hotel stays, travel) as well as assisting Petitioner with moving multiple times. Petitioner’s son provided a detailed expense sheet listing each item.
- On November 21, 2022, Petitioner transferred her vehicle to her son.
- On July 19, 2024, the agency sent Petitioner a notice informing her that she had a divestment penalty period between August 1, 2024, through May 28, 2025, due to divesting $95,186.78, which was the cost of the vehicle as well as the May 25, 2022, transfer to her son.
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 MEH §§ 17.1 and 17.2. Transfers of an applicant’s assets and/or income by someone acting on behalf of the applicant are also subject to divestment rules. Id.
In this case, the agency attributed two divestments to Petitioner. First, the agency believed that the purchase of a vehicle for Petitioner when she could not drive was a divestment. That vehicle was then transferred to Petitioner’s son. The agency seemed to imply that Petitioner’s son was actually purchasing the vehicle for himself. However, Petitioner submitted credible evidence establishing that the vehicle was purchased to transport Petitioner to her numerous medical appointments. Further, relevant rules allow for the purchase of one vehicle to transport. The Medicaid Eligibility Handbook (MEH) 16.7.9.2 states, in pertinent part, “One vehicle per eligible individual or couple is excluded regardless of the value if it is used for transportation of the eligible individual or couple or a member of the eligible individual’s or couple’s household. Assume the vehicle is used for transportation, absent evidence to the contrary.” Thus, Petitioner’s son purchasing a vehicle to transport Petitioner is not a divestment.
Subsequently, in November 2022, Petitioner transferred the vehicle to her son. This too is allowed under the rules and does not constitute a divestment:
MEH 17.2.3.2 Transfers of Exempt Income or Assets
Income or assets determined to be exempt (except homestead property per 17.2.7.1 TRANSFER FOR LESS THAN FAIR MARKET VALUE) are not subject to divestment rules.
Example 7: Hattie is eligible for Medicaid and receiving long-term care services. She owns one car. Hattie transfers ownership of the car to her sister. Hattie buys another car, and now once again owns one car. She gives this car to her father. Because one car is an exempt asset, these transfers are not subject to divestment rules
Therefore, the purchase of the vehicle and the transfer of the vehicle should not have been considered divestments under the rules.
Next, the agency alleged that the transfer of funds to Petitioner’s son on May 25, 2022, in the amount of $25,008.67 is a divestment. However, that amount was issued to Petitioner’s son to reimburse him for numerous expenses he incurred caring for Petitioner as well as assisting her with moving. The funds were not for services rendered. Rather, the amount was to reimburse Petitioner’s son for his out-of-pocket expenses that he incurred. Petitioner’s son submitted a detailed spreadsheet itemizing his expenses. Since the $25,008.67 is a reimbursement, it cannot be considered a divestment.
Thus, the evidence established that the agency incorrectly issued a divestment period in this case.
Conclusions of Law
The agency incorrectly issued a divestment period to Petitioner for the period between August 1, 2024 through May 28, 2025.
THEREFORE, it is
Ordered
That within 10 days of the date of this decision, the agency rescind the divestment penalty period.
[Request for a rehearing and appeal to court instructions omitted.]
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