Illustration by Pablo Iglesias
The scene is repeating itself all over Wisconsin: A faithfully wedded couple of 50 or 60 years walks into a lawyer’s office and says, “We need a divorce.” They’re happy together, perhaps happier than they’ve ever been. That’s not the problem. Their reasons, it turns out, are financial. A seemingly minor provision, passed as part of the 2013-15 state budget in June 2013, greatly expanded the powers of the friendly sounding “Estate Recovery Program.” Under its auspices, Wisconsin may recoup a portion of what it has spent, through Medicaid, to house someone over the age of 55 in a nursing home, once that person has died. Now, thanks to that most recent state budget, the state can also go after assets held by the deceased’s spouse, including payouts from life insurance policies – hence the “friendly divorces” said to be on the rise.
Wisconsin isn’t unique. All states have a version of the program, which can also be applied to medical costs. And as life expectancies have grown, so have the accompanying demands on state coffers. Wisconsin, Ohio and Minnesota have all recently strengthened their estate recovery programs to keep pace, spurring reluctant divorces by seniors.
“It’s terrible,” says Margaret Hickey, an elder law attorney based in Milwaukee. “These are people who have been married their whole lives. They don’t want to get divorced.” Her firm, as of mid-July, had taken on 15-20 such cases in the past 90 days alone, she said.
Other changes have made it harder for spouses to dodge estate recovery seizures:
➜ No more spousal refusal. Under the old law, a Medicaid recipient’s spouse could effectively stonewall the state by refusing to disclose his or her assets, a tactic used both while applying for coverage and during estate recovery. Now, both spouses are required to lay bare whatever wealth they control.
➜ A new “look-forward” rule. Previously, state officials scrutinized the five years before someone applied for Medicaid, to make sure the person hadn’t gifted away assets in order to qualify. Now, the scrutiny extends to a “look-forward” period that runs for five years after qualifying, meaning seniors could lose coverage shortly after acquiring it.
None of these rules apply to divorced couples. “When I started practicing 12 years ago, divorce was hardly discussed,” says Heather Poster, another elder law attorney in Milwaukee. Today, “It’s one of the major options because of the law.”
Carol Wessels, a lawyer based in Mequon, has called the changes to estate recovery in Wisconsin “draconian” and cited a 30 percent increase in the number of elder divorce clients handled by her firm since June 2013. A West Bend lawyer, Linda Vanden Heuvel, references a similar rise but says the trend started about five years ago. Greater social acceptance of divorce kicked off the rise, and estate recovery then intensified it, she says, by providing another incentive for couples to untie the knot.
A spokeswoman for the state Department of Health Services, Claire Smith, insists that the controversial changes to estate recovery are “crucial to the long-term financial sustainability of a Medicaid program that provides health care for Wisconsin’s most vulnerable citizens. … Any assets that an individual has an interest in – individual, marital or otherwise – should be recovered and reused to pay for the care needed by others.”
According to estimates by the nonpartisan Legislative Fiscal Bureau, the enhanced recovery powers, at the time they were passed, were expected to bring in about $3.4 million in fiscal year 2013-14 and almost $5.3 million in 2014-15. (Some of the changes didn’t take effect until Aug. 1, 2014.)
Although useful for prolonging Medicaid services, these savings don’t lessen the pain brought on by “friendly” and unfriendly divorces alike. “Sometimes, we lawyers who do this feel like therapists,” says Poster. “It’s a really hard time for people.” And even harder for the elderly. “When you compound going through a divorce with aging and care issues, it’s mind-blowing.”
