OVERVIEW OF MEDICAL ASSISTANCE LIEN LAW & ESTATE RECOVERY PROGRAM WIS. STATS WIS. ADMIN. CODE HFS (10)-(12)

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1 OVERVIEW OF MEDICAL ASSISTANCE LIEN LAW & ESTATE RECOVERY PROGRAM WIS. STATS WIS. ADMIN. CODE HFS (10)-(12) By Attorneys Mitchell Hagopian and Betsy Abramson Elder Law Center of the Coalition of Wisconsin Aging Groups Updated March, 2011 INTRODUCTION The Medical Assistance Lien and Estate Recovery laws allow the State of Wisconsin, through its Department of Health and Family Services, to attempt to recover correctly paid Medical Assistance (MA) payments. Recovery of correctly paid Medical Assistance payments was initiated in Wisconsin in Since 1991 the recovery programs have been greatly expanded. As of January 2000, Wisconsin has one of the more aggressive and least consumer sensitive recovery programs in the nation. Federal law requires only that Wisconsin have a program to recover from the estates of deceased Medical Assistance recipients. Wisconsin, however, has asked for and received authority to also place liens on the homes of living Medical Assistance recipients. Wisconsin also recovers benefits for four assistance programs that are not even funded with Medical Assistance dollars. These programs are the Community Options Program and the three disease aid programs for people suffering from kidney failure, hemophilia and adult onset cystic fibrosis. Wisconsin had to be sued to stop its illegal practice of recovering from the estates of surviving spouses of deceased Medical Assistance recipients. It also had to be sued to keep it from putting liens on the homes of poor SSI, Medical Assistance and Food Stamp recipients who received title ownership to their homes as bequests from Medical Assistance recipients. Most recently Wisconsin has expanded the types of Medical Assistance benefits that can be included in a lien on a recipient s home. Beginning April 1, 2000 the lien can include all benefits that are recoverable under the estate recovery program. Before April 1, 2000 the lien was limited to the Medical Assistance benefits received after the recipient became a nursing home resident. Now the lien will be for all recoverable services the person has received beginning April 1, 2000, including community based services received before nursing home or hospitalization became necessary. While CWAG believes that recovery of Medical Assistance and other benefits is awful public policy, the primary purpose of this brochure is to explain this very complex law. The law includes a number of provisions which are designed to ensure that the Department cannot enforce a lien or an estate claim during the lifetime of an Medical Assistance recipient, his or her spouse or minor or disabled child. Provisions are also included which ensure that spouses and minor or disabled children will be able to inherit or receive property even if their spouse or parent received Medical Assistance. The first step in combating this onerous law is understanding it. There are two distinct aspects of the recovery laws. It is important to understand the differences between the two methods by which recovery can be made: by placing liens on homes and by recovering assets from estates. This brochure includes a detailed explanation of each part of the law and relevant examples to help illustrate their provisions.

2 PART 1: THE LIEN PROVISIONS WIS. STATS (2) LIEN 1. WHAT IS A LIEN? A lien is a charge, hold or claim on a specific piece of real estate property. When the property is sold, the lien is paid from the proceeds of the sale. A lien may be satisfied either in whole or in part. In the Medical Assistance context, the lien is the amount of Medical Assistance payments made on behalf of a person who is currently receiving care in a nursing home or a hospital and is not likely to return home. LIEN 2. WHICH MEDICAL ASSISTANCE PAYMENTS CAN THE LIEN INCLUDE? Only payments made on behalf of a Medical Assistance recipient after October 1, 1991 are recoverable. Prior to April 1, 2000 the state could include in the lien only Medical Assistance payments made on behalf of a nursing home resident. The state could not include in the lien Medical Assistance benefits the person received in the community. Since April 1, 2000, however, the state may now include in the lien placed on the Medical Assistance nursing home recipient s home, all Medical Assistance benefits that are recoverable. This includes all Medical Assistance benefits discussed in ESTATE RECOVERY, on page 6 of this brochure. A lien may also be filed against the home of a recipient who is hospitalized and is likely to remain there on a permanent basis. EXAMPLE: Harold Winski received Medical Assistance benefits for home health care during the summer of No lien may be placed on his home because he did not receive Medical Assistance benefits for nursing home care. EXAMPLE: Noah Cohn received Community Options Program-Waiver services from August 1, 1999 through April 30, He entered a nursing home on May 1, The community-based services he received from April 1, 2000 through April 30, 2000, as well as all nursing home care he received from May 1, 2000 forward may be subject to the lien. LIEN 3. ON WHAT PROPERTY MAY A LIEN BE PLACED? The Medical Assistance lien may only be placed on the recipient's "home." "Home" is defined in the law as property in which the person had an ownership interest and which used to be the person's dwelling. It includes all lands connected to the property. The lien cannot be placed on non-homestead property or on other non-real estate property such as cars, boats, bank accounts, etc. EXAMPLE: Fred Chang goes into a nursing home. He owns a small home which he immediately puts up for sale. Eighteen months later, the house sells for $21,000. During this time, $35,000 in Medical Assistance payments were paid for Mr. Chang's care at the nursing home. At the time of the sale, the state can satisfy part of its lien of $35,000 out of the sale proceeds. Since the lien is for an amount greater than the proceeds from the sale, no money will remain for Mr. Chang's use after the sale of the property. EXAMPLE: Mildred Morgan places 40 acres of hunting land, upon which there are no buildings, up for sale. She enters the nursing home with no other assets. She receives Medical Assistance for two years before the land is finally sold. She makes $20,000 from the sale. A lien could not be placed on this property because it is not "home" property. No dwelling exists on the land. Mrs. Morgan may use the proceeds from the sale as she pleases. (NOTE: She will lose eligibility for Medical Assistance until the $20,000 is spent down to $2,000.) Overview of Medical Assistance Lien Law & Estate Recovery Program 2

3 LIEN 4. MAY THE STATE OBTAIN LIENS ON THE HOMES OF ALL MEDICAL ASSISTANCE NURSING HOME RESIDENTS? No. In fact, there are many times when the state is prohibited from placing a lien. First, the state cannot place a lien on home property when there is a "reasonable expectation" that the Medical Assistance resident will return to the home. If you think you have a chance to get better and go home, you should challenge the state if it tries to put a lien on your home. Second, the state cannot place a lien on home property if any of the following relatives live in it: (1) the spouse; (2) a child under age 21; (3) a disabled child; or (4) a sibling who has an ownership interest in the home and has lived in the home for one year before the Medical Assistance recipient entered the nursing home. No matter how much Medical Assistance benefits the person receives, the state cannot place the lien while any of these people live in the home. EXAMPLE: Ricardo Rodriguez entered a nursing home for rehabilitation (physical therapy) after a hip fracture January 15, His wife had died six months earlier. His doctor expects him to return home within two months. A lien cannot be placed against his home because he is likely to return home. EXAMPLE: Frank Antonio entered a nursing home October 1, 1997 and his wife Mary lives in their home. A lien cannot be placed against their home because his wife Mary lives in it. EXAMPLE: Georgia Adair entered a nursing home in July Her son, Tom, who is 47 and receives Social Security disability benefits, still lives in her home. A lien cannot be placed on her home because Georgia's disabled son is still living in it. LIEN 5. ONCE A LIEN IS IN PLACE, ARE THERE LIMITS ON WHEN THE STATE MAY COLLECT ON IT? Yes. Even if no one lives in the home, the state is not allowed to collect on the lien so long as the recipient has a living spouse, a child under age 21 or an adult disabled child no matter where the spouse or child lives. EXAMPLE: Lloyd Buchelski has been in a nursing home for two years. Last year, his wife, Marie, moved to a small apartment. When Marie moved out, the state put a lien on the home. Marie sold the home last month. The state could not enforce the lien because Marie is still alive, even though she was not living in the home when it was sold. EXAMPLE: Gus Andropolous entered a nursing home after his wife died. There is no reasonable expectation that Gus will return home and he has no children. He has lowincome and no other resources. He will qualify for Medical Assistance if he puts the house up for sale. In the meantime, the state may put a lien on the home and, if Mr. Andropolous sells the house or dies before it is sold, the state may enforce the lien. EXAMPLE: Viola Blay has been in a nursing home and on Medical Assistance since She has a severely disabled daughter who lives in California with Viola's son. Viola's home finally sells for $80,000 in The state cannot collect on the lien because Viola's daughter is disabled. Viola arranges to put the proceeds of the sale into an irrevocable trust for the benefit of her daughter. The state must let her do this. Overview of Medical Assistance Lien Law & Estate Recovery Program 3

4 In addition, even after the Medical Assistance recipient dies, the lien still may not be enforced if the recipient is survived by a non-disabled adult child who: (1) lived with the parent for two years and provided the parent with care that delayed the parent's nursing home or hospital admission; and (2) is still living in the parent's house. EXAMPLE: Patrick Kelly, a widower, entered the nursing home July 1, 1997 after a sudden stroke which left this formerly healthy man severely paralyzed and unable to speak. He expects the nursing home to be his permanent residence. His adult son, who had moved back home in March 1997, is still living in the home. A lien may be placed on Mr. Kelly's home unless doctors can state that he is expected to return home. After Mr. Kelly dies, the state may enforce the lien, even though his son still lives in the home, because the son had not been providing care that kept him out of a nursing home. EXAMPLE: Suzanne Takamuro entered a nursing home September 1998 after her advanced stage Alzheimer's Disease made it impossible for her to remain at home any longer. In January 1997, her adult daughter, Anne, had given up her teaching job and moved back home in order to provide care approximately 16 hours a day. Anne has remained in the house. A lien could have been placed on the home but it cannot be enforced as long as Anne remains in the house. LIEN 6. HOW DOES THE STATE GET THE LIEN? The state must file a lien claim with the Register of Deeds office in the county where the home is located. It is not placed in the county where the recipient's nursing home is located. LIEN 7. DOES THE STATE EVER HAVE TO RELEASE THE LIEN? Yes. If the recipient leaves the nursing home or hospital and returns home, the state must file a release of lien with the Register of Deeds office. LIEN 8. DO I HAVE ANY RIGHTS TO CHALLENGE A LIEN BY THE STATE TO PREVENT THE LIEN FROM BEING FILED IN THE FIRST PLACE? Yes. The state cannot file a lien without notifying the recipient first and giving him or her the right to challenge it. The state is required to notify the recipient in writing that it has determined that the recipient is not expected to return home and that the state intends to file a lien. The notice is called a "Notice of Intent to File a Lien." The state must also notify the recipient of the recipient's right to a hearing on the issue of whether the conditions for placing the lien have been met. The recipient has 45 days to request a hearing. If the individual requests a hearing, it must be held before the lien may be imposed. EXAMPLE: John Smith has been in a nursing home and on Medical Assistance since Until last July, the doctors expected John to be able to return home. In July, the state sent a "Notice of Intent to File a Lien" to John after consulting with his doctors. John asked for a fair hearing. Before the hearing was held, John sold his house for $60,000. Because John sold the house prior to the hearing, no lien may be placed. LIEN 9. ON WHAT GROUNDS COULD THE IMPOSITION OF A LIEN BE CHALLENGED? The imposition of a lien could be challenged by alleging and proving that: (a) (b) There is a reasonable chance that the Medical Assistance recipient will return home; OR The home is still occupied by the recipient's spouse; OR Overview of Medical Assistance Lien Law & Estate Recovery Program 4

5 (c) (d) (e) (f) The home is still occupied by a recipient's child under the age of 21; OR The home is still occupied by the recipient's adult child who is disabled; OR The home is still occupied by a sister or brother of the recipient who has an ownership interest in the home and who lived in the home for at least one year before the recipient entered the nursing home; OR The property against which the state intends to file a lien is not a home. LIEN 10. HOW DO I CHALLENGE A DECISION TO IMPOSE A LIEN? There are two methods of challenging a decision to file a lien. First, if the Notice of Intent to File a Lien appears to clearly have been issued in error (for example, the spouse is still alive and living in the home), the matter might easily be resolved by contacting the Wisconsin Estate Recovery program staff at Often in these situations, once notified of their error, the department will immediately send a letter withdrawing the Notice of Intent to File a Lien. Even so, you should be mindful of the appeal deadline for a hearing to be sure that it does not expire while waiting for informal resolution. The other method is to request a hearing. LIEN 11. HOW DO I REQUEST A HEARING? You may request a hearing by sending a letter to: Division of Hearings and Appeals, P.O. Box 7895, Madison, WI Your letter should include the following information: The Medical Assistance recipient's name; The recipient's current address; The address of the property against which the state intends to file a lien; and A statement that you disagree with the Department's "Notice of Intent to File a Lien." LIEN 12. DO I NEED A LAWYER TO REQUEST A HEARING? No. While a lawyer experienced with and knowledgeable of these laws will be helpful, you are not required to hire a lawyer to represent you in a hearing. If you are over age 60, you could contact the benefit specialist in your county aging unit for assistance. Or, you may ask a family member, friend or anyone else to attend the hearing with you, whether to provide assistance or just moral support. Or you may simply attend the hearing alone and represent yourself. LIEN 13. WHAT IF I LOSE THE HEARING? If the administrative law judge decides that the state can file the lien and you believe the judge made a mistake, you have two ways to appeal. First, you can request a new hearing. If you want a new hearing (also called a "rehearing"), you have only 20 days from the date of the decision to ask for it. When you request a rehearing, you should explain why you think the judge was wrong. You do not need a lawyer to represent you in a request for a new hearing, although having one would help a great deal. Second, you may appeal the decision directly to your county's circuit court. You almost certainly need a lawyer to help you file your appeal correctly. You have 30 days from the date of the administrative law judge's decision to file the appeal in court. LIEN 14. WHO ARE THE PEOPLE MOST LIKELY TO BE AFFECTED BY THE LIEN PROVISIONS? For the most part, single or widowed nursing home residents who do not have adult disabled children or children under age 21 may be subject to the lien. If a married nursing home or hospital resident has a spouse, a minor child or an adult disabled child living in the home, the lien will either never be filed or, if appropriately filed, will never be enforced at the time that the sale of the property occurs. Overview of Medical Assistance Lien Law & Estate Recovery Program 5

6 PART II: ESTATE RECOVERY PROVISIONS WIS. STATS (3) ESTATE RECOVERY 1. WHAT IS A CLAIM AGAINST AN ESTATE? A claim against an estate is notice to the administrator of a deceased person's estate that someone believes the deceased person owes him or her money. It is also a request for payment from the estate. In the Medical Assistance context, the notice would come from the Department of Health and Family Services and the amount claimed is Medical Assistance payments paid on behalf of the deceased recipient. ESTATE RECOVERY 2. WHICH MEDICAL ASSISTANCE PAYMENTS MAY THE CLAIM AGAINST THE ESTATE INCLUDE? The claim includes all the Medical Assistance payments paid by the state for MA benefits received after October 1, 1991 by a person of any age while in a nursing home. In addition, since July 1, 1995, the state can also pursue estate recovery for Medical Assistance benefits paid on behalf of recipients age 55 and older for: home health skilled nursing services; home health aide services; home health therapy and speech pathology services; private duty nursing services; home and community-based waiver services under programs such as the Medical Assistance Community Options Program and Community Integration Program (also known as Medical Assistance Waiver programs); in-patient hospital services provided during a period of time the recipient was approved to have home and community-based waiver services; and prescription drugs provided during a period of time the recipient was approved to have home and community-based Medical Assistance services. As of January 1, 1996, the state may also recover for benefits under the regular state-funded Community Options Program, also known as "COP Classic" for people age 55 and over, and for benefits under the Disease Aids Programs for Kidney Disease, Cystic Fibrosis and Hemophilia for people of all ages. As of April 1, 2000, the state may also recover for Medical Assistance personal care services for people age 55 and over. As of February 1, 2000 the state may recover for benefits under Family Care for people age 55 or older, as well as prescription drugs received by the Family Care recipient and benefits paid associated with the recipient s inpatient hospital stay. As of March 1, 2009, these rules also apply to Family Care Partnership members who are 55 or older. EXAMPLE: Lydia McCarthy, age 63, received Medical Assistance benefits while on the Community Options Waiver Program from April 1, 1994 to July 1, After Ms. McCarthy dies, the state may recover for benefits paid July 1, 1995 and later. EXAMPLE: John Cavitt, age 68, qualified for Medical Assistance because he was on SSI and was issued a Medical Assistance card. He used it to receive on-going physician services for his diabetes and one hospitalization needed when his insulin had to be readjusted. He was never on a waiver program and never received any home health care or other home nursing or therapy services. None of the benefits Mr. Cavitt received are subject to estate recovery after Mr. Cavitt dies. Overview of Medical Assistance Lien Law & Estate Recovery Program 6

7 EXAMPLE: Natalie Monson, age 57, has cerebral palsy and received significant personal care services which, when combined with her family s assistance, kept her out of a nursing home. Nevertheless, when she dies, the state may pursue estate recovery for the personal care services she received from April 1, 2000, forward. ESTATE RECOVERY 3. WHAT IS INCLUDED IN AN "ESTATE"? An "estate" is all the property of a deceased person that passes by will through probate, or by the "laws of intestacy" if there is no will. Thus, it includes real estate property (land and buildings) and personal property (cars, boats, bank accounts, etc.). Notice that this provision differs from the Medical Assistance lien provisions, which only apply to "home" property. Property that does not pass by will through probate is not part of an estate. The state may not put a claim against most of this "non-probate property," such as life insurance naming a specific beneficiary or real estate held in joint tenancy which automatically passes to the other joint tenant at the first joint tenant's death. However, due to a July 1995 change in the law, the state may attempt to recover from non-probate assets such as joint bank accounts and bank accounts with a "payable on death" (POD) beneficiary designation. (See next section.) ESTATE RECOVERY 4. HOW DOES THE STATE RECOVER FROM NON-PROBATE ASSETS? Effective July 29, 1995, the state may also pursue recovery against accounts that were held in "joint tenancy" or as "payable on death" (POD) accounts at the time of death of the recipient or the surviving spouse. This is permitted under Wisconsin law even though these accounts do not pass through probate. It is unclear how the Department will be able to track and recover from these accounts. ESTATE RECOVERY 5. DOES THE STATE GET EVERYTHING IF ITS CLAIM EXCEEDS THE VALUE OF THE ESTATE? No. The probate court which has jurisdiction over the estate may reduce the state's Medical Assistance claim by up to $5,000 in order to permit the heirs to receive: (1) the deceased's wearing apparel and jewelry; (2) household furnishings and appliances; and (3) other tangible property up to $3,000. Also, for smaller estates (those under $30,000) the state only requests recovery from "cash" assets. ESTATE RECOVERY 6. AGAINST WHOSE ESTATE MAY THE CLAIM BE FILED? For recovery of Medical Assistance benefits, the claim may only be filed against the estate of the deceased Medical Assistance recipient. The state will not succeed on any claims filed at the time the Medical Assistance recipient dies if there is a: (a) surviving spouse; (b) surviving disabled child of any age: or (c) surviving child under age 21. For beneficiaries of the regular Community Options Program (COP) and the Disease Aids Programs, the state can pursue recovery from the estate of a surviving spouse when he or she later dies. EXAMPLE: Joel and Esther Sweet have been married 50 years and have three grown married children. Joel enters a nursing home and $60,000 in Medical Assistance benefits were paid for his care after October 1, Joel dies in Esther lives for another four years. The state could file a claim against Joel's estate, but it would be denied by the court because he is survived by a spouse. The state may not recover against Esther's estate when she later dies. Overview of Medical Assistance Lien Law & Estate Recovery Program 7

8 EXAMPLE: Ronald and Gloria Marsubian, both 79, live in their own home with their 42 year old developmentally disabled son. After Ronald's stroke, in September 1991, he began receiving Medical Assistance-covered services at home. When he died in March 1992, the claim filed against his estate would be denied for two reasons: he had both a surviving spouse and a surviving disabled child. EXAMPLE: Richard and Glenda Bocchio also lived in their own home where Richard received home care services but, unlike Ronald, above, Richard s services were paid for by the Community Options Program (COP). When he dies, the state cannot recover from his estate because he is survived by Glenda, his widow. When Glenda dies a few years later, however, the state may recover the COP benefits the state paid for Richard, from Glenda's (the surviving spouse's) estate. Note that benefits could not be recovered from the estate of a surviving spouse of a Medical Assistance recipient. ESTATE RECOVERY 7. MAY THE PROBATE COURT DENY A MEDICAL ASSISTANCE CLAIM? Yes. If the deceased is survived by a spouse, a child under age 21 or an adult disabled child, the court must deny the claim. ESTATE RECOVERY 8. HOW DOES THE STATE ACTUALLY RECOVER THE FUNDS? The state may recover for benefits paid in several ways both through the probate process and in certain situations, outside the probate process. ESTATE RECOVERY 9. HOW DOES THE STATE RECOVER FROM ESTATES THAT GO THROUGH PROBATE? It is generally the responsibility of the personal representative or other administrator of the estate to notify the state's Department of Health and Family Services of the death of someone who received Medical Assistance. Once notified, the state has rights similar to any other creditor and must comply with all probate procedures relating to proof and timeliness of claims. Evidence of the amount of the claim can be supplied through an affidavit of the Department's representative. In addition, there are certain situations in the probate process where the state will turn an estate claim into a lien. This will happen in situations where a deceased Medical Assistance recipient is survived by a spouse or a disabled or minor child so the estate claim must be denied. However, in those situations, if the estate includes a home, at the recipient's death, the probate court can turn the estate claim into a lien when the home transfers to an heir through probate. This means that whoever inherits the home receives it with a lien on it. If the heir sells the home, the state may then collect on the lien. The same protections against enforcement apply to these liens as discussed in the lien section of this brochure. EXAMPLE: William and Hazel Farley are ages 80 and 78, respectively. William receives Medical Assistance in a nursing home because of his diabetes, Alzheimer's Disease and heart condition. Hazel still lives in their home. When William dies, a claim against his estate will be denied because he has a surviving spouse, Hazel. The probate court could turn the estate claim into a lien on the home, however, if the home transfers to Hazel through probate. If the home had transferred to Hazel through probate and she later sells the home, the state may not collect on the lien at that time because there is still a surviving spouse: Hazel. Even if William had left the house to an adult child or anyone else, the state still could not collect on the lien when the house was sold because there was still the surviving spouse: Hazel. Since the state cannot enforce its lien, it must release it. The sellers may keep the proceeds from the sale of the house. Overview of Medical Assistance Lien Law & Estate Recovery Program 8

9 ESTATE RECOVERY 10. WHAT IF A SIBLING OR CAREGIVING CHILD IS THE HEIR? There is one more situation where the state will take a lien against the portion of an estate that is a home in full or partial settlement of an estate claim. This will happen where the home is left to: (1) an non-disabled adult child still living in the home, who had resided in the home at least 24 months before admission to the nursing home (or hospitalization or receipt of services) and provided care that delayed the admission or receipt of the relevant services; or (2) a sibling of the Medical Assistance recipient, still living in the home, who had resided there for at least 12 months before the recipient's admission to the nursing home or hospital or receipt of relevant services. In those two situations, the lien is then not payable until the earlier of the death of the adult child or sibling or the transfer of the property. Even then, if the child or sibling sells the home against which the Department has taken the lien, and uses the proceeds to buy another home to be used as a primary residence, the Department can either transfer the lien to the second home or recover part of the proceeds and then take a lien for the remainder. EXAMPLE: Sarah Kaufman had left her job in Ohio and moved in with her father, Harold Kaufman, after his stroke. Sarah lived and cared for her father for three years, until his admission to a nursing home in January, Although he had been expected to return home, Mr. Kaufman died in November, 1994, leaving his home to Sarah. The state paid $50,000 in Medical Assistance benefits for his nursing home care. When the home passed to Sarah through probate, the state took a lien on it, rather than forcing the sale and recovering from the estate. In August, 1995, Sarah sold the home, with proceeds totaling $60,000. She used these funds to put a $40,000 down payment on another, smaller home. At that time, the state could recover the $20,000 difference ($60,000 - $40,000) and take a lien for the remaining $30,000 ($50,000 - $20,000) it paid in benefits for Mr. Kaufman's nursing home care. ESTATE RECOVERY 11. HOW DOES THE STATE RECOVER FROM SMALL ESTATES? Typically when an estate is worth less than $50,000, an heir simply goes to the probate court and completes and files an affidavit that allows the person to receive and disperse the deceased person's remaining property. This occurs instead of engaging in the full probate process. A person who receives a small estate this way is responsible for paying any debts the estate may owe, including a Medical Assistance claim. The state sends its claim directly to the person who completed the affidavit and possesses the property. ESTATE RECOVERY 12. WHAT IF THERE ARE NO HEIRS? If a Medical Assistance recipient dies and no petition for administration or summary settlement of the estate is filed within 20 days, the state may collect the decedent's remaining funds (Wis. Stats ). The state must present an affidavit to the custodian of the funds that indicates that all of the following conditions have been met: (a.) (b.) (c.) There is no surviving spouse, disabled child or child under 21 years of age; The decedent's remaining property consists solely of cash; and The value of the property does not exceed $50,000 or the total amount of Medical Assistance payments made on behalf of the decedent after age 65 or admission to a nursing home, whichever is less. Overview of Medical Assistance Lien Law & Estate Recovery Program 9

10 EXAMPLE: James Abdul, a widower with no children, died in a nursing home on August 1, 1995, with no surviving family. He had $1,800 in an account managed by the nursing home. No one initiated any actions to transfer the $1,800. On November 1, 1995, the state presented an affidavit to the nursing home stating that Mr. Abdul had no spouse or children and that the state Medical Assistance program had paid $30,000 for his nursing home care. The nursing home must turn the $1,800 over to the state. ESTATE RECOVERY 13. DO I HAVE ANY RIGHTS TO CHALLENGE AN ESTATE RECOVERY CLAIM BY THE STATE? Yes. There are at least three ways of challenging an estate recovery claim. First, you may try to resolve the problem informally, by contacting the Estate Recovery Program staff at (608) This method may work best when the state has made an obvious mistake (for example, where a spouse or minor or disabled child is still alive). A second method is to raise objections to the claim during the probate process. The third method is to file an application for an "undue hardship" waiver. Any beneficiary or heir of a deceased Medical Assistance recipient (or surviving spouse) may apply to the department for an "undue hardship" waiver of an estate claim. These will be granted in very narrow circumstances where the applicant can prove that he or she meets the state's definition of "undue hardship." ESTATE RECOVERY 14. WHAT IS "UNDUE HARDSHIP"? Under the Department's rules, an applicant will be entitled to waiver of the state's claim against the estate if he or she meets the definition of "undue hardship." This definition will be met only if one of the following applies: (a.) (b.) (c.) The waiver applicant is receiving General Relief, Relief to Needy Indian Persons or Veterans Benefits based on need; or The waiver applicant would become or remain eligible for SSI, Food Stamps, AFDC or Medical Assistance if the Department pursued its claim; or A decedent's real property is used as part of the waiver applicant's business, which may be a working farm, and recovery by the Department would affect the property and would result in the waiver applicant losing his or her means of livelihood. EXAMPLE: Laurie Frost received benefits under the Community Options Medical Assistance Waiver Program which totaled $12,000. When she died, she left her furniture, car, a $2,000 savings account and other personal effects to her daughter, Vickie. Vickie is very low-income herself and had only $500 in a savings account. If she received her mother's property and was able to sell them, she estimates she could make approximately $9,000. Without the inheritance, she would qualify for both Medical Assistance and Food Stamps. She applies to the Department for an "undue hardship waiver," submitting evidence of the property's worth and her bank statement. The waiver must be granted because Vickie would become eligible for Medical Assistance and Food Stamps without the inheritance. ESTATE RECOVERY 15. HOW DOES THE DEPARTMENT MAKE AN INDIVIDUAL AWARE OF THE AVAILABILITY OF "UNDUE HARDSHIP" WAIVERS? The Department must provide written notice of the hardship waiver provisions to the person handling the decedent's estate if that person can be determined from the probate information provided to the Department. If the person handling the estate cannot be determined from probate information provided to the Department, the Department must include the notice with the copy of the claim it files with the probate court. The person Overview of Medical Assistance Lien Law & Estate Recovery Program 10

11 handling the decedent's estate must notify the decedent's beneficiaries and heirs of the hardship waiver provisions. The Department's notice must include: (a.) (b.) (c.) (d.) Individuals eligible to apply for a waiver; Criteria for granting a waiver; A description of the waiver application and waiver application review process; and The waiver applicant's right to a hearing. ESTATE RECOVERY 16. WHO MAY APPLY FOR AN "UNDUE HARDSHIP" WAIVER? A beneficiary or an heir to the decedent s estate may apply to the Department for a waiver of an estate claim filed by the Department. ESTATE RECOVERY 17. HOW DOES AN INDIVIDUAL APPLY FOR AN "UNDUE HARDSHIP" WAIVER? An applicant for an "undue hardship" waiver must mail a written application for a waiver to the Department within 45 days after the date the Department mailed its claim, affidavit or notice (as explained in Estate Recovery 15 above) whichever date is LATER. ESTATE RECOVERY 18. WHAT SHOULD THE WRITTEN APPLICATION FOR AN UNDUE HARDSHIP WAIVER INCLUDE? The application for an undue hardship waiver of the Department s claim should include: (a.) (b.) (c.) The relationship of the waiver applicant to the decedent and copies of documents establishing that relationship; AND The criterion which is the basis for the application (see Estate Recovery 14, above); AND Documentation supporting the waiver applicant's position. ESTATE RECOVERY 19. WHAT IS THE UNDUE HARDSHIP WAIVER APPLICATION REVIEW PROCESS? The Department must review each application and issue a written decision within 90 days after the application was received by the Department. The Department must consider, and base its decision on, all information received within 60 days following receipt of the application. The Department's written decision must include information regarding the waiver applicant's right to a hearing (see below). ESTATE RECOVERY 20. WHAT IF THE UNDUE HARDSHIP WAIVER APPLICATION IS DENIED? If the Department denies an application for the waiver, an applicant may appeal the Department's denial by serving the Department with a request for hearing within 45 days of the date the Department's decision was mailed. The hearing request must be in writing and identify the basis for appealing the decision. The hearing request must be submitted to: Division of Hearings and Appeals, P.O. Box 7895, Madison, WI NOTE: If the waiver applicant wishes to introduce new information at the hearing, he or she must provide the Department with that information by mailing it to the Department with a postmark of at least seven working days prior to the hearing date. The issue for hearing is whether the Department's decision was correct based on the information submitted within the time periods established. NO OTHER INFORMATION may be considered by the hearing examiner unless the state hearing examiner finds "good cause" for the applicant not timely providing the information. The hearing is held according to the provisions of Wis. Stats. ch The hearing decision is the final decision of the Department. Overview of Medical Assistance Lien Law & Estate Recovery Program 11

12 ESTATE RECOVERY 21. DO I NEED A LAWYER TO REQUEST A HEARING? No. While a lawyer experienced with and knowledgeable of these laws will be helpful, a lawyer is not required to represent an individual in a hearing. If you are over age 60, you could contact the benefit specialist in your county aging unit for assistance. Or you can ask a family member, friend or anyone else to attend the hearing with you, either to provide assistance or just moral support. You may also simply attend the hearing alone and represent yourself. ESTATE RECOVERY 22. WHAT IF THE DEPARTMENT CONTINUES TO DENY MY UNDUE HARDSHIP WAIVER APPLICATION? If the hearing decision also denies the waiver application, the waiver applicant may appeal that denial by filing a petition for review in the circuit court of the waiver applicant s county. The petition must be filed within 30 days of the Department's decision. These reviews generally do not involve any court witnesses or testimony. Rather, they are decided solely on the basis of the briefs and other written materials submitted to the court. The waiver applicant will need a lawyer to handle the circuit court appeal. ESTATE RECOVERY 23. ARE THERE ANY OTHER WAYS TO APPEAL AN ESTATE RECOVERY CLAIM? There may be additional appeals to the state's estate recovery claim during the probate procedure. You will need to consult with an attorney about available options. For more information about the Lien Law and Estate Recovery Programs, contact the benefit specialist in your county aging unit or an elder law attorney. For more information about estate planning to avoid the Lien Law and Estate Recovery Claims, contact an elder law attorney. To find an attorney, look in the Yellow Pages, contact your county bar association or call the State Bar of Wisconsin's Statewide Lawyer Referral and Information Service at Produced by the Elder Law Center of the Coalition of Wisconsin Aging Groups with funds from the Dane County Pro Bono Trust Fund and the State Bar of Wisconsin s Elder Law Section. Technical assistance by Meg Schaeffer-Utter. This brochure may be reproduced only in its entirety. Permission to excerpt portions of this brochure must be obtained prior to use. All rights reserved. Overview of Medical Assistance Lien Law & Estate Recovery Program 12