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Overview of Medical Assistance Lien Law
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Introduction

The Medical Assistance Lien and recently expanded Estate Recovery programs allow the State of Wisconsin through its Department of Health and Social Services to attempt to recover correctly paid Medical Assistance payments under certain circumstances. Recovery of "correctly paid" Medical Assistance benefits through liens and estate claims is relatively new in Wisconsin. Although federal authority for such recovery has existed since 1982, Wisconsin did not exercise the option to recover until 1991. At first, recovery under both the lien and estate recovery programs was limited to Medical Assistance payments made on behalf of nursing home residents. In 1995, however, the estate recovery program was expanded to include recovery of a variety of Medical Assistance payments made for certain non-institutional benefits for recipients over age 55. In addition, as of January 1, 1996, the state also recovers benefits from the estate of certain deceased recipients under the Community Options Program.

The purpose of this pamphlet is to explain the law, not to argue its wisdom. The law includes a significant number of safeguards which are designed to make sure that the enforcement of a lien or estate claim does not occur during the lifetime of the Medical Assistance recipient, his or her spouse or minor or disabled child. These safeguards are further designed not to affect the ability of minor or disabled children to receive or inherit property even if their parent is or has been a Medical Assistance recipient.

There are two distinct aspects to the law. It is important to understand the differences between the two methods by which recovery can be made: liens on homes and recovery from estates. What follows is a detailed explanation of the law and relevant examples to help illustrate it.

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What is a Lien?

A lien is a charge, hold or claim on a specific piece of real estate property. When the property is sold, the lien is then paid from the proceeds of the sale. A lien may be satisfied either in whole or in part. In this case, the lien is the amount of Medical Assistance payments made on behalf of a person receiving care in a nursing home.

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Which Medical Assistance Payments Can the Lien Include?

The state may include in the lien only Medical Assistance payments made on behalf of a nursing home resident. The state may not include in the lien Medical Assistance benefits the person received in the community. Also, a lien may only be filed for payments made on behalf of a Medical Assistance nursing home resident after October 1, 1991.

EXAMPLE: Harold Winski was on the COP-Waiver program and also received Medical Assistance benefits for home health care during the summer of 1995. No lien may be placed on his home because he did not receive Medical Assistance benefits for nursing home care.

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On What Property May a Lien be Placed?

The Medical Assistance lien may only be placed on the recipient's "home." "Home" is defined in the law as being property in which the person had an ownership interest and which used to be the person's dwelling. It includes all lands connected to the property. The lien cannot be placed on non-homestead property or on other non-real estate property, like cars, boats, bank accounts, etc.

EXAMPLE: Fred Chang goes into a nursing home. He owns a small run-down home in a bad part of town which he immediately puts up for sale. Eighteen months later, the house sells for $21,000. During this time, $35,000 in Medical Assistance payments were paid for Mr. Chang's care at the nursing home. At the time of the sale, the state can satisfy part of its lien of $35,000 out of the sale proceeds. Since the lien is for an amount greater than the proceeds from the sale, no money will remain for Mr. Chang's use after sale of the property.

EXAMPLE: Mildred Morgan places 40 acres of hunting land, upon which she has no buildings, up for sale. She enters the nursing home with no other assets. She receives Medical Assistance for two years before the land is finally sold. She makes $20,000 from the sale. A lien could not be placed on this property because it is not "home" property. No dwelling exists on the land. Mrs. Morgan may use the proceeds from the sale as she pleases. (NOTE: She will lose eligibility for Medical Assistance until the $20,000 is spent down to $2,000.)

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May the State Obtain Liens on the Homes of All Medical Assistance Nursing Home Residents?

No. In fact, there are many times when the state is prohibited from placing a lien. First, the state cannot place a lien on home property when there is a "reasonable expectation" that the Medical Assistance resident will return to the home. If you think you have a chance to get better and go home, you should challenge the state if it tries to put a lien on your home.

Second, the state cannot place a lien on home property if any of the following relatives live in it: (1) the spouse; (2) a child under age 21; (3) a disabled child; or (4) a sibling who has an ownership interest in the home and has lived in the home for one year before the recipient entered the nursing home. No matter how much Medical Assistance the person receives in the nursing home, the state cannot place the lien while any of these people live in the home.

EXAMPLE: Ricardo Rodriguez entered a nursing home for rehabilitation (physical therapy) after a hip fracture January 15, 1992. His wife had died six months earlier. His doctor expects him to return home within two months. A lien cannot be placed against his home because he is likely to return home.

EXAMPLE: Frank Antonio entered a nursing home October 1, 1991 and his wife Mary lives in their home. A lien cannot be placed against their home because his wife Mary lives in it.

EXAMPLE: Georgia Adair entered a nursing home in July 1994. Her son, Tom, who is 47 and receives Social Security disability benefits, still lives in her home. A lien cannot be placed on her home because Georgia's disabled son is still living in it.

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Once a Lien is in Place, Are There Limits on When the State May Collect On It?

Yes. Even if no one lives in the home, the state is not allowed to collect on the lien so long as the recipient has a living spouse or has a child under age 21 or an adult disabled childžno matter where the spouse or child lives.

EXAMPLE: Lloyd Buchelski has been in a nursing home for two years. Last year, his wife, Marie, moved to a small apartment. When Marie moved out, the state put a lien on the home. Marie sold the home last month. The state could not enforce the lien because Marie is still alive, even though she was not living in the home when it was sold.

EXAMPLE: Gus Andropolous entered a nursing home after his wife died. There is no reasonable expectation that Gus will return home and he has no children. He has low- income and no other resources. He will qualify for Medical Assistance if he puts the house up for sale. In the meantime, the state may put a lien on the home and, if Mr. Andropolous sells the house or dies before it is sold, the state may enforce the lien.

EXAMPLE: Viola Blay has been in a nursing home and on Medical Assistance since 1992. She has a severely disabled daughter who lives in California with Viola's son. Viola's home finally sells for $80,000 in 1995. The state cannot collect on the lien because Viola's daughter is disabled. Viola arranges to put the proceeds of the sale into an irrevocable trust for the benefit of her daughter. The state must let her do this.

In addition, even after the recipient dies, the lien still may not be enforced if the recipient's sole survivor is a non-disabled adult child who: (1) lived with the parent for two years and provided the parent with care that delayed the parent's nursing home admission; and (2) is still living in the parent's house.

EXAMPLE: Patrick Kelly, a widower, entered the nursing home July 1, 1991 after a sudden stroke which left this formerly healthy man severely paralyzed and unable to speak. He expects the nursing home to be his permanent residence. His adult son, who had moved back home in March 1991, is still living in the home. A lien may be placed on Mr. Kelly's home unless doctors can state that he is expected to return home. After Mr. Kelly dies, the state may enforce the lien, even though his son still lives in the home, because the son had not been providing care that kept him out of a nursing home.

EXAMPLE: Suzanne Takamuro entered a nursing home September 1994 after her advanced stage Alzheimer's Disease made it impossible for her to remain at home any longer. In 1991, her adult daughter, Anne, had given up her teaching job and moved back home in order to provide care approximately 16 hours a day. Anne has remained in the house. A lien could have been placed on the home but it cannot be enforced as long as Anne remains in the house.

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How Does the State Get the Lien?

The state must file a lien claim with the Register of Deeds office in the county where the home is located. It is not placed in the county where the recipient's nursing home is located.

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Does the State Ever Have to Release the Lien?

Yes. If the recipient leaves the nursing home and returns home, the state must file a release of lien with the Register of Deeds office.

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Do I Have Any Rights to Challenge a Lien by the State to Prevent the Lien From Being Filed in the First Place?

Yes. The state cannot file a lien without notifying the recipient first and giving him or her the right to challenge it. The state is required to notify the recipient in writing that it has determined that the recipient is not expected to return home and that the state intends to file a lien. The notice is called "Notice of Intent to File Lien." The state must also notify the recipient of the recipient's right to a hearing on the issue of whether the conditions for placing the lien have been met. The recipient has 45 days to request a hearing. If the individual requests a hearing, it must be held before the lien may be imposed.

EXAMPLE: John Smith has been in a nursing home and on Medical Assistance since 1992. Until last July, the doctors expected John to be able to return home. In July, the state sent a "Notice of Intent to File Lien" to John after consulting with his doctors. John asked for a fair hearing. Before the hearing was held, John sold his house for $60,000. Because John sold the house prior to the hearing, no lien may be placed.

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On What Grounds Could the Imposition of a Lien Be Challenged?

The imposition of a lien could be challenged by alleging and proving that:

  • There is a reasonable chance that the Medical Assistance recipient will return home; OR
  • The home is still occupied by the recipient's spouse; OR
  • The home is still occupied by a recipient's child under the age of 21; OR
  • The home is still occupied by the recipient's adult child who has a disability; OR
  • The home is still occupied by a sister or brother of the recipient who has an ownership interest in the home and who lived in the home for at least one year before the recipient entered the nursing home; OR
  • The property against which the state intends to file a lien is not a home.

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How Do I Challenge a Decision?

There are two methods of challenging a decision. First, if the Notice of Intent to File a Lien appears to clearly have been issued in error (for example, the spouse is still alive and living in the home), the matter might easily be resolved by contacting the Wisconsin Estate Recovery program staff at 608-266-2446. Often in these situations, once notified of their error, the department will immediately send a letter withdrawing the Notice of Intent to File a Lien. Even so, you should be mindful of the appeal deadline for a hearing to be sure that it does not expire while waiting for informal resolution. The other method is to request a hearing.

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How Do I Request a Hearing?

You may request a hearing by sending a letter to: Office of Administrative Hearings, P.O. Box 7895, Madison, WI 53707-7895. Your letter should include the following information:

  • The recipient's name
  • The recipient's current address
  • The address of the property against which the state intends to file a lien
  • That you disagree with the Department's "Notice of Intent to File a Lien"

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Do I Need a Lawyer to Request a Hearing?

NO. While a lawyer experienced with and knowledgeable of these laws will be helpful, you are not required to hire a lawyer to represent you in this matter. If you are over age 60, you could contact the benefit specialist in your county aging unit for assistance. Or, you can ask a family member, friend or anyone else to attend the hearing with you, whether to provide assistance or just moral support. You may also simply attend the hearing alone and represent yourself.

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What if I Lose the Hearing?

If the administrative law judge decides the state can file the lien and you believe the judge made a mistake, you have two ways to appeal. First, you can request a new hearing. If you want a new hearing, you have only 20 days from the date of the decision to ask for it. When you request a rehearing, you should explain why you think the judge was wrong. You do not need a lawyer to represent you in a request for a new hearing, although having one would help a great deal. Second, you may appeal the decision directly to your county's circuit court. You almost certainly need a lawyer to help you file your appeal correctly. You have 30 days from the date of the administrative law judge's decision to file the appeal in court.

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Who Are the People Most Likely to Be Affected by the Lien Provisions?

For the most part, single or widowed nursing home residents who do not have adult disabled children or children under age 21 may be subject to the lien. If a married nursing home resident has a spouse, a minor child or an adult disabled child living in the home, the lien will either never be filed or, if appropriately filed, will never be enforced at the time that the sale of the property occurs.


Last updated: August 12, 1997
By: Gail Schwersenska

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