Wisconsin Makes Extensive Changes To Medicaid Clawbacks

Wisconsin lawmakers have quietly tucked into the state budget power to allow the state to recoup Medicaid costs for residents who wind up in nursing home care.

The provisions will impact not only Medicaid for nursing home care, but also enrollees in Family Care, a state program that uses Medicaid funds to provide nursing care in people's homes.

The budget language goes far behind the typical assumption that a deceased Medicaid enrollee's estate can be tapped to reimburse some Medicaid costs – a practice common in most states. 

Instead, all marital assets accrued five years before an individual enrolled in Medicaid would be used to pay Medicaid bills after the surviving spouse dies. This would apply for assets both in probate or held in a family or individual trust. The Wisconsin Department of Health Services would pursue the collections.

Those individuals engaged in a so-called “draw down” to become poor enough to qualify for Medicaid would also be required to sell assets at full-market value and spend the proceeds before applying for coverage. Under federal regulations, some assets -- such as shares in a family-owned business -- can be disposed of at less than market value without penalty.

Data collected by Gov. Scott Walker's administration concluded that collections would increase by a modest amount: $10.5 million over the next two years. The DHS has until June 30, 2015 to draw up regulations for administering the revised clawback progra

It's widely expected that regulatory changes will have a broad impact on nursing home care is paid for in Wisconsin. According to data from AARP, only about one-third of Americans are able to pay their own nursing home care out of their own pockets. The average cost of such care is $50,000 a year, and rising quickly. Demand is also expected to rise as the U.S. population continues to age.

Wisconsin attorneys that specialize in senior issues and estate planning voiced concern that the regulations would place Medicaid funding recoupment over the well-being of families.

“My clients are stunned,” said Carol Wessels, a Wauwatosa attorney who specializes in elder law.

The budgetary changes were implemented by a Republican-controlled Legislature and governorship last June. It's a political bloc that tends to be against estate taxes and has been adamantly against receiving an influx of federal dollars to expand that state's Medicaid program as part of the Affordable Care Act.

State officials said the changes were required to recover Medicaid dollars from families financially savvy and wealthy enough to avoid clawbacks by placing their assets in trusts.