Wisconsin Estate Recovery
Program
Wisconsin Alliance of Information and Referral
Systems Annual Conference
State of Wisconsin
Department of Health Services
Estate Recovery Program Section
October 2014
Agenda
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What is Estate Recovery?
Methods of recovery
Hardships
Liens
Voluntaries
What governs the program changes?
Changes
Questions
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What Is Estate Recovery?
The Wisconsin Medicaid Estate Recovery Program
seeks repayment for certain long-term care services
paid for by Medicaid and BadgerCare Plus on behalf of
members and all services received by the Wisconsin
Chronic Disease Program (WCDP) members.
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Estate Recovery Authority
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Authorized by Social Security Act, Title XIX, Sec.
1917
Authorized by Wis. Stats § 49.496, 49.682 and
49.849
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Estate Recovery Section
Includes 23 staff members:
 Transfer by Affidavit staff
 Estate and Lien staff
 Training and Special Projects staff
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Training and Special Projects
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Internal trainings
External trainings
Website design
Collections process
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Who Is Subject to Recovery?
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Medicaid members of any age who live in nursing homes
Medicaid members of any age who live in inpatient hospitals
and who are required to contribute to their cost of care
Medicaid members age 55 or older may have the cost
recovered for only certain benefits received while they live in
the community
Medicaid members age 55 or older who reside in the
community and receive services through a home and
community-based waiver program or through the Program of
All-Inclusive Care for the Elderly (PACE)
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Who Is Subject to Recovery?
(Continued)
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Wisconsin Chronic Disease Program (WCDP) participants of
any age, for services received on or after September 1, 1995
Community Options Program (COP) participants age 55 or
older for services received on or after January 1, 1996
Non-Medicaid Family Care services provided on or after
February 1, 2000, as reported to the Department for enrollees
age 55 or older and living in the community; or that are any age
and who live in an inpatient hospital and are required to
contribute to their cost of care; or who live in a nursing home
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How Does the State Recover
Benefits?
Transfers by affidavit
 Claims in probated estates
 Liens filed on homes of certain members (pre-death
and post-death)
 Voluntary payments
 Certain non-probate assets
Funds recovered are returned to the Wisconsin
Medicaid program, where they benefit other members.
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What Is a Transfer by
Affidavit?
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Used to close a person’s estate when the deceased
has $50,000 or less in assets (Wis. Stat. § 867.03).
Alternative to a court probate process.
The deceased’s assets may be collected by
submitting an affidavit to the person, bank or other
institution possessing the deceased’s assets.
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Process for Transfer by
Affidavit
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People who want to transfer assets complete a
Transfer by Affidavit form (PR 1831 10/10).
If the decedent ever received benefits from MA,
BadgerCare Plus, Family Care, COP or WCDP, then
notice to the Department is required when
completing a Transfer by Affidavit.
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Notice to DHS
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Person (transferee) completing the Transfer by Affidavit must
provide a copy of the affidavit to the Department. He or she
must send it to the Department by certified mail and request a
return receipt (green card). Address to send copy to the
Department is provided on page 3 of the Transfer by Affidavit
form.
By accepting assets of the decedent, transferee assumes a
duty to apply the property transferred for payment of obligations
according to priorities under Wis. Stat. § 859.25 and to
distribute balance per governing instrument (e.g., will) or,
lacking an instrument, per intestate law.
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Estate and Lien
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Probated estates
Special needs trusts
Revocable trusts
Annuities
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Claims In Probate Court
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Personal representatives or attorneys handling
estates are required to notify the Department of the
estate and timeframes in which claims must be filed.
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“Probate Claims Notice” (Form No. F-13033) is on the DHS
website at: http://www.dhs.wisconsin.gov/forms/index.htm
The Department then calculates its claim, submits
the claim to the court and sends a copy of the claim
to the personal representative or attorney.
Claims must be paid in accordance with Wis. Stat.
§ 859.25 before the Department will release its
claim.
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How and When Will A Claim
Be Paid?
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The Department is paid before most other creditors.
Both the Department and other creditors are paid
before any assets are distributed to heirs or
beneficiaries whether or not there is a will.
Higher priority claims paid before the Department
are:
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The cost of administering the estate.
Reasonable funeral and burial costs.
Costs of the last illness that were not paid by Medicaid
(there should not be any except in unusual circumstances).
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What If the Estate Is Unable to
Repay Medicaid?
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Creditors file claims in estates to ensure payment of
a debt owed them.
Recovery will also be made from the member’s nonprobate assets, including joint property interests,
marital property interests, life estates, revocable
trusts, real estate by transfer on death deed, and the
proceeds of life insurance policies and annuities.
If there are insufficient assets in the estate to pay the
Department’s claim, the Department is paid what is
available and the recovery is ended.
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When Will the Department’s
Claim Not Be Paid or Delayed?
The Department’s claim will not be paid from cash
assets if there are any of the following:
 A surviving spouse
 A disabled or blind child of any age
 A child under age 21
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Estate Liens (Post-Death Liens)
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If there is ownership interest in a home in the estate and there
is a surviving spouse, disabled or blind child of any age or
minor child under the age of 21, the Department will impose a
lien on the home. These are “protected class” individuals. See
Wis. Stat. § 49.496(3)(c). The lien will not be enforced while
any of the above are living.
If the home is sold for fair market value while a protected class
individual is living, the Department releases the lien with no
recovery. See Wis. Stat. § 49.496(3)(d).
If a home is sold after the protected class individual has passed
away, the Department collects the lien amount at the time of the
closing.
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Other Estate Liens
(Post-Death Liens)
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The Department will also determine whether there is
a “caretaker” child who delays the need for certain
services paid by Medicaid or a “sibling” who lived in
the home.
In the above instances, the Department is required
to take a lien per Wis. Admin. Code § DHS
108.02(11)(b).
The Department may take a lien when there were
other joint owners prior to the decedent’s death.
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What If the Home Isn’t
Selling?
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Lower the price
Auction
Allow more time for sale of the home
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Exemptions to Recovery
(Hardships)
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There are standards (Wis. Admin. Code § DHS 108.02(12)) for determining
whether the Department’s recovery would result in an undue hardship for an
heir, beneficiary or co-owner.
An heir, beneficiary or co-owner may apply for a waiver of the Department’s
claim on his or her portion of the estate or property for one of the following
reasons:
– The heir, beneficiary or co-owner would become or remain eligible for
Supplemental Security Income (SSI), FoodShare, Temporary Assistance
for Needy Families (TANF) or Medicaid if the state pursued its claim.
– The deceased’s estate or property contains real estate used as part of the
heir, beneficiary or co-owner’s business, which may be, but is not limited
to, a working farm, and recovery by the Department would affect the
property and would result in the heir or beneficiary losing his or her means
of livelihood.
– The heir, beneficiary or co-owner is receiving general relief or veterans’
benefits based on need under Wis. Stats. § 45.40 (1m).
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Exemptions to Recovery
(Hardships), Continued
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The person handling the estate will be notified of
these rights and how to apply for a hardship when
the estate is being probated through a court or an
affidavit process.
That individual is responsible for notifying the heirs,
beneficiaries or co-owners of these rights. An heir,
beneficiary or co-owner can apply to the Department
for a waiver of the recovery of his or her portion of
the estate or property.
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TEFRA (Pre-Death) Liens
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Must follow rules set out in the federal Tax Equity
and Fiscal Responsibility Act (TEFRA) of 1982.
Pre-death liens are imposed on living member’s
home according to Wis. Stat. § 49.496(2).
A lien is evidence of a debt filed with the Register of
Deeds. It is similar to a mortgage in the sense that it
must be satisfied when the property is sold.
A lien does not affect the ownership of the home.
A lien does not require the member to sell his or her
home.
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When Can a TEFRA Lien Be
Placed?
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A nursing home member (while they are alive) who
is not reasonably expected to return home to live.
An inpatient, institutionalized member who is
required to contribute to the cost of his or her care
and is not reasonably expected to return home to
live.
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When Can a Lien Not Be
Placed?
The State cannot place a lien on the home of a living
member who:
 Resides in the community.
 Is reasonably expected to return home.
 Has a spouse, minor or disabled child who lives in
the home.
 Has a brother or sister who has an ownership
interest in the home and has continuously lived in
the home at least one year prior to the hospital or
nursing home admittance of the member.
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Voluntary Payments
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Members may make a voluntary payment up to the
total amount of Medicaid paid on their behalf.
Contact Consortia.
Voluntary payments reduce any future estate
recovery claim in their estate.
09/2014
Changes Based on Act 20
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Recovery from life estates
Recovery from joint property
Recovery from non-probate property
Recovery from TEFRA liens
Recovery from the estate of surviving spouses
Recovery from revocable trusts (living trusts)
Recovery from life insurance policies
Recovery of all services while participating in a longterm care program
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Capitation payments
Why the Changes?
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The 2013–15 state budget, also referred to as Act 20, made changes
to the Estate Recovery Program to ensure the long-term financial
sustainability of the Medicaid program. Under Act 20, the Department
was given the necessary tools to collect the health care costs that
were funded by taxpayers from the estates of former Medicaid
beneficiaries.
In September 2013, the Wisconsin Legislature’s Joint Committee on
Finance approved the implementation of most of the changes.
On December 14, 2013, Wisconsin Act 92 modified the Estate
Recovery Program provisions included in Act 20 to codify the action
taken by the Joint Committee on Finance.
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Notification to Those Affected
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Medicaid members, WCDP members and members
who were considered institutionalized were mailed a
letter in mid-June informing them of the changes
effective August 1, 2014.
The letter is available on the Estate Recovery
Program website at dhs.wisconsin.gov/medicaid/erp
New members will be made aware of the program
rules when they enroll in Medicaid and reach the age
of 55 or become institutionalized members and will
receive the Estate Recovery Program handbook.
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What Is a Life Estate?
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A life estate is created when a property holder
transfers ownership of the property to someone else
(remainderer) and retains the right to reside in and
benefit from the real estate, such as receiving rent.
The life tenant’s percentage interest is determined
using the life expectancy tables at the time the life
estate is created.
The rest of the interest is owned by the remainderer
(for example, a child or children).
When the life tenant dies, the entire property interest
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passes to the remainderer.
Life Estate
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Prior to August 1, 2014
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The Estate Recovery Program did not pursue recovery from
life estates.
Effective August 1, 2014
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For life estates created on or after August 1, 2014, the
Department will recover only the life tenant’s interest
remaining at the time of death.
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What Are Joint Property
Deeds?
Joint tenancy:
 Under joint tenancy, if two people take title of the property as
joint tenants on a deed, each person has a 100 percent
ownership of that piece of property.
 Regardless of the number of joint tenants on a deed, each
tenant has equal ownership rights and interest.
 When one joint tenant dies, the surviving tenants automatically
own the property.
 Joint tenancy automatically gives each tenant a “right of
survivorship” where the surviving tenants receive 100 percent
of the property.
 When only one joint tenant is left alive, he or she receives the
entire estate and the joint tenancy is dissolved.
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What Are Joint Property
Deeds? (Continued)
Tenancy in common:
 Tenancy in common provides for multiple
percentages of ownership interest and inheritance
rights for the heirs of each tenant.
 Unlike joint tenancy, tenancy in common grants no
“right of survivorship.” Thus, no other tenant in
common is entitled to receive a share of the property
upon a tenant in common’s death; instead, the
property becomes part of the deceased’s estate.
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Joint Property Deeds
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Prior to August 1, 2014
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Only joint accounts at financial institutions were recovered.
Effective August 1, 2014
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All joint property and joint property deeds created on or after
August 1, 2014, will be subject to recovery.
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Non-Probate Property
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Property that is held in joint tenancy or as tenants by
the entirety
Bank or brokerage accounts held in joint tenancy or
with payable on death (POD) or transfer on death
(TOD) beneficiaries
Property held in a trust
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Non-Probate Property
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Prior to August 1, 2014
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Only POD accounts at a financial institution were recovered.
Effective August 1, 2014
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Recovery will be made from all non-probate assets for any
member who passes away on or after August 1, 2014.
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TEFRA Liens
Estate recovery uses two types of liens:
 TEFRA liens
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Must follow rules set out in the federal Tax Equity and Fiscal
Responsibility Act (TEFRA) of 1982.
Pre-death liens are imposed on the homes of living
Medicaid recipients determined to be permanently
institutionalized and not likely to return home to live.
Post-death liens which are often part of the probate
process
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TEFRA Liens
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Prior to August 1, 2014
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Estate Recovery Program did not pursue TEFRA liens on
life estates.
Effective August 1, 2014
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Estate Recovery Program will now pursue recovery through
TEFRA liens placed on life estates created on or after
August 1, 2014.
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Surviving Spouse’s Estate
(Marital Property)
Property acquired by either spouse during the course
of a marriage is considered marital property.
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Surviving Spouse’s Estate
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Prior to August 1, 2014
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Recovery has not been sought from a surviving spouse’s
estate since 1995.
Effective August 1, 2014
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Consistent with Wis. Stat. § 766.31, recovery will now be
pursued from 50 percent of the surviving spouse’s estate.
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Revocable Trusts (Living
Trusts)
A revocable trust is a trust created by an individual who
wants the ability to change the terms of his or her trust.
Assets in the trust are considered the individual’s
personal assets for Medicaid planning purposes.
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Revocable Trusts (Living
Trusts)
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Prior to August 1, 2014
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The authority for the Estate Recovery Program to recover
from revocable trusts was unclear.
Effective August 1, 2014
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Because Act 92 specifically granted this authority, the
Estate Recovery Program will now pursue recovery from
only those revocable trusts created on or after August 1,
2014.
Recovery cannot be made from irrevocable trusts, with the
exception of those assigned to a funeral home, special
needs trusts (SNT) and pooled trusts.
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Life Insurance
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Prior to August 1, 2014
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Recovery was made only from policies designating the
estate as the beneficiary or if the beneficiary predeceased
the insured.
Effective August 1, 2014
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Recovery will be made from all life insurance policies
created on or after August 1, 2014, regardless of the
beneficiary.
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Capitation Rate Payment
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Prior to August 1, 2014
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Estate Recovery Program recovered the costs of services
provided as reported by the managed care organization
(MCO).
Effective August 1, 2014
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Estate Recovery Program will now pursue recovery of the
entire capitation payment to MCOs made for all services for
a member participating in a long-term care program.
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Services Received While Participating
in a Long-term Care Program
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Prior to August 1, 2014
– Waiver services, drugs and inpatient-related costs were recovered
for anyone age 55 or older participating in a home and communitybased waiver.
– Program of All-Inclusive Care for the Elderly (PACE) costs were
not recovered.
Effective August 1, 2014
– Repayment will be made for all services received on or after
August 1, 2014, by a member age 55 years or older participating
in a long-term care program. This includes members participating
in home and community-based waiver programs and the Program
of All-Inclusive Care for the Elderly (PACE).
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Questions?
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Contact Information
Wisconsin Estate Recovery Program
(608) 264-6755 or (608) 264-7739
Jennifer Wickey
Estate Recovery Section Chief
Jennifer.Wickey@wisconsin.gov
(608) 261-7831
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