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Rotunda Report
  • Rotunda Report
    May 30, 2013

    Two State Bar Sections Wary of Proposed Changes to Medical Assistance

    May 30, 2013 – Two of the State Bar of Wisconsin’s lobbying sections are actively opposing elements of the governor’s budget bill on the grounds that the provisions will negatively affect their clients.

    The Family Law Section and the Elder Law Section take issue with the governor’s proposed changes to Medical Assistance (MA), specifically relating to divestments, estate recovery, spousal impoverishment and marital property.

    Katie StenzKatie Stenz is the public affairs coordinator with the State Bar of Wisconsin. She can be reached at, or by phone at (608) 250-6145.

    Both groups argue that the new language may make divorce a more attractive option among long-married couples who are looking to preserve some portion of their estate in the case that one spouse requires medical assistance.  

    “As a practicing Elder Law attorney, I will add divorce to my list of planning options, as it’s my job to explain options to clients.  Thus far, a divorce has not offered much advantage, but that will change under the new provisions,” said Elder Law Board Chair-Elect and practicing attorney Jennifer O’Neill.

    The proposed law states that “100 percent of the property in the estate of the nonrecipient surviving spouse is subject to the department’s claim…” Existing law states that each spouse only owns one-half of the marital property, instead of the full 100 percent.

    In a memo to members of the Joint Finance Committee, the Elder Law Section argues that some of the changes go so far as to violate federal law and directly conflict with existing state laws. The group said that they do not believe that as a whole, the changes will have a “marked fiscal impact when compared to the public policy and unintended consequence costs if they remain in place.”

    O’Neill, who runs her own practice in Hudson is worried about how some of the estate recovery proposals will affect the successful transfer of a client’s small business into the hands of a family member or loved one.

    “Family businesses, especially farms, often do not generate enough income to fully support two generations. The disparity between value and income already makes it difficult to exempt a family business.  The new provisions regarding transfers of exempt assets will make it impossible to transfer a family business/farm because a sale must be for fair market value.  Often the fair market value is far beyond what the younger generation can afford to pay, so the older generations will be forced to sell to third parties who can afford to pay full price,” said O’Neill.

    She’s also concerned about the toll these changes will take on the community spouse, which is a term used by Medicare to refer to the spouse not in the nursing home, but living in the community.

    “When a spouse goes into a facility, there has often been years of caretaking beforehand.  The family has also been worrying about the expense of long term care.  With the current rules, the family can make the financial adjustments to have the institutional spouse eligible for MA, and the community spouse can continue to live his or her life, making gifts, and planning finances, without concern about how choices will impact the institutional spouse,” said O’Neill . “The new provisions make complicated changes to what a community spouse can do with his or her assets.  The result is the community spouse will suffer from uncertainty, or will make choices that will unintentionally impact the institutional spouse's MA.”

    The Joint Finance Committee will likely discuss the MA budget on Tuesday, June 4 at 10 a.m.

    For more details on the proposed changes, please view Elder Law Attorney Bruce Tammi’s article “Proposed State Budget: Expansion of Medicaid Estate Recovery and the Death of Divestment Planning?”

    Speak Out

    Are you concerned about the proposed changes to Medical Assistance? If you are interested in calling or emailing your state legislators prior to the June 4 Joint Finance Committee meeting, please click here for their contact information.


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