1. 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

2. Agenda What is Estate Recovery? Methods of recovery Hardships Liens Voluntaries What governs the program changes? Changes Questions 09/2014

3. 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. 09/2014

4. Estate Recovery Authority Authorized by Social Security Act, Title XIX, Sec. 1917 Authorized by Wis. Stats § 49.496, 49.682 and 49.849 09/2014

5. Estate Recovery Section Includes 23 staff members: Transfer by Affidavit staff Estate and Lien staff Training and Special Projects staff 09/2014

6. Training and Special Projects Internal trainings External trainings Website design Collections process 09/2014

7. Who Is Subject to Recovery? 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) 09/2014

8. Who Is Subject to Recovery? (Continued) 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 09/2014

9. 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. 09/2014

10. What Is a Transfer by Affidavit? 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. 09/2014

11. Process for Transfer by Affidavit 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. 09/2014

12. Notice to DHS 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. 09/2014

13. Estate and Lien Probated estates Special needs trusts Revocable trusts Annuities 09/2014

14. Claims In Probate Court Personal representatives or attorneys handling estates are required to notify the Department of the estate and timeframes in which claims must be filed. – “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. 09/2014

15. How and When Will A Claim Be Paid? 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: – 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). 09/2014

16. What If the Estate Is Unable to Repay Medicaid? Creditors file claims in estates to ensure payment of a debt owed them. Recovery will also be made from the member’s non- probate 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. 09/2014

17. 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 09/2014

18. Estate Liens (Post-Death Liens) 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. 09/2014

19. Other Estate Liens (Post-Death Liens) 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. 09/2014

20. What If the Home Isn’t Selling? Lower the price Auction Allow more time for sale of the home 09/2014

21. Exemptions to Recovery (Hardships) 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). 09/2014

22. Exemptions to Recovery (Hardships), Continued 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. 09/2014

23. TEFRA (Pre-Death) Liens 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. 09/2014

24. When Can a TEFRA Lien Be Placed? 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. 09/2014

25. 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. 09/2014

26. Voluntary Payments 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

27. Changes Based on Act 20 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 long- term care program Capitation payments 09/2014

28. 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. Why the Changes?

29. Notification to Those Affected 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. 09/2014

30. What Is a Life Estate? 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 passes to the remainderer. 09/2014

31. Life Estate Prior to August 1, 2014 – The Estate Recovery Program did not pursue recovery from life estates. Effective August 1, 2014 – 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. 09/2014

32. 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. 09/2014

33. 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. 09/2014

34. Joint Property Deeds Prior to August 1, 2014 – Only joint accounts at financial institutions were recovered. Effective August 1, 2014 – All joint property and joint property deeds created on or after August 1, 2014, will be subject to recovery. 09/2014

35. Non-Probate Property 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 09/2014

36. Non-Probate Property Prior to August 1, 2014 – Only POD accounts at a financial institution were recovered. Effective August 1, 2014 – Recovery will be made from all non-probate assets for any member who passes away on or after August 1, 2014. 09/2014

37. TEFRA Liens Estate recovery uses two types of liens: TEFRA liens – 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 09/2014

38. TEFRA Liens Prior to August 1, 2014 – Estate Recovery Program did not pursue TEFRA liens on life estates. Effective August 1, 2014 – Estate Recovery Program will now pursue recovery through TEFRA liens placed on life estates created on or after August 1, 2014. 09/2014

39. Surviving Spouse’s Estate (Marital Property) Property acquired by either spouse during the course of a marriage is considered marital property. 09/2014

40. Surviving Spouse’s Estate Prior to August 1, 2014 – Recovery has not been sought from a surviving spouse’s estate since 1995. Effective August 1, 2014 – Consistent with Wis. Stat. § 766.31, recovery will now be pursued from 50 percent of the surviving spouse’s estate. 09/2014

41. 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. 09/2014

42. Revocable Trusts (Living Trusts) Prior to August 1, 2014 – The authority for the Estate Recovery Program to recover from revocable trusts was unclear. Effective August 1, 2014 – 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. 09/2014

43. Life Insurance Prior to August 1, 2014 – Recovery was made only from policies designating the estate as the beneficiary or if the beneficiary predeceased the insured. Effective August 1, 2014 – Recovery will be made from all life insurance policies created on or after August 1, 2014, regardless of the beneficiary. 09/2014

44. Capitation Rate Payment Prior to August 1, 2014 – Estate Recovery Program recovered the costs of services provided as reported by the managed care organization (MCO). Effective August 1, 2014 – 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. 09/2014

45. Services Received While Participating in a Long-term Care Program 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 community- based 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). 09/2014

46. Questions? 09/2014

47. 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 09/2014