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Wisconsin Medicaid Fact Sheet
Divestment
PDF (10 KB)
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Divestment
Divestment is giving away one’s resources, such as income, non-exempt assets and property for less than fair market value to become eligible for Medicaid. Divestment is also an action taken to avoid receiving income or assets that one is entitled to receive. For example, waiving pension income or disclaiming an inheritance.
Note: Fair market value is an estimate of the price an asset could have been sold for on the open market at the time it was given away.
When applying for Medicaid, “Divestment” is important
If you apply for Medicaid, divestment is important if:
- You are living in or entering a nursing home or hospital for a stay of 30 days or more.
- You are applying for Community Waivers Program.
- You are applying for Family Care.
The “divestment penalty period”
A divestment penalty period is a period of time when Medicaid will not pay for nursing home care or long term care benefits through the Community Waivers Program or Family Care. Persons may still be eligible for limited Medicaid card services during the divestment penalty period.
Divestment penalty period and how it is calculated
When you apply, you will be asked whether any financial resources have been transferred to another person within the past 36 months (60 months for trust funds). If you transferred financial resources during this time period, and did not receive fair market value for your transfers, a divestment penalty period will be calculated.
A divestment penalty period is calculated based on:
- Value of transferred resources,
- Date the divestment occurred,
- Date of application or date of entry into an institution, and
- Current average private nursing home rate.
Example. On January 1, 2007, John Smith transferred $84,486 in cash, CDs and stocks to the American Red Cross. On June 30, 2007, he is admitted to a nursing home and applies for Medicaid. Because he transferred these assets within 36 months of applying for Medicaid, a divestment penalty period will be determined. The months of the Divestment penalty period are determined by dividing the divested amount ($84,486) by the current monthly average private nursing home rate ($5,584), which would be 15.13. John Smith is ineligible for Institutional Medicaid from January 2007 through March 2008.
For More Information:
Information provided in this document is general. To find out more detailed information regarding Divestment, please contact your local county/tribal social or human services agency.
DHFS is an equal opportunity employer and service provider. If you have a disability and need to access this information in an alternate format, or need it translated to another language, please call (608) 266-3356 or
1-888-701-1251 (TTY). All translation services are free of charge.
For civil rights questions, call (608) 266-9372 or 1-888-701-1251 (TTY).
PHC 10058 (07/07)
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