Could You Be Obligated To Pay a Parent’s Nursing Home Bills?

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3-generation-familyPennsylvania’s Superior Court ruled in Savoy v. Savoy that an indigent mother could sue her adult son to pay her overdue nursing home bills. The case was decided in 1994 and since then, filial support litigation has been spreading to other states across the nation.

Twenty-eight states have filial support laws on the books. The laws establish a legal precedent of financial responsibility among family members for the expenses incurred by a loved one and mainly apply to the area of health care, particularly the cost of long-term care. The laws provide the means for a nursing home or assisted living facility to go after children, grandchildren and other family members to repay outstanding LTC bills. Many other states pursue similar outcomes through a growing list of statutory precedents. New Hampshire repealed filial support laws and substituted a theory of fiduciary obligation. Essentially a loved one who has been given a power of attorney can be held personally liable for any unpaid bills.

The genesis for the 1994 ruling came from the Omnibus Budget Reconciliation Act of 1993. The Act contained rules compelling state agencies to collect back funds expended on Medicaid services from families if they discover the families have assets available.

A person is required to spend their income on health and/or long-term care insurance and spend down their own assets before becoming eligible to receive Medicaid benefits. Medicaid will go back to collect from the children if the parent is suspected of transferring property to the children just to claim poverty. They will also pursue them if the child misappropriated the parent’s assets for personal gain.

These laws may sound harsh. However, an assisted living facility that helped you care for a loved one deserves to be compensated. It’s also not fair to burden taxpayers for that expense when the family has funds to pay. Taxpayers become the victims when families attempt to game the system to get on Medicaid. This puts a lot of pressure on our social safety net to pay for care.

Fraud isn’t the only reason for the increase in filial support litigation. Health care institutions are often left with unpaid bills because Medicaid doesn’t pay 100% of nursing home costs. Medicare pays only for the first 100 days of care. Margins are tight forcing long-term care facilities to look for ways to collect on delinquent accounts.

Families need to plan ahead to avoid facing this issue before a loved one requires skilled care. A family shouldn’t wait until the bills start to pile up. The first step would be for children to find out if their parents have LTC insurance. Remember that most people don’t just decide to go to a nursing home. Typically it starts with a medical emergency and the patient is discharged from the hospital directly to a skilled care facility. Children should know if a policy exists and where it is kept. If dementia sets in, children will want to take charge of the policy to make sure it doesn’t lapse.

Family planning should include creating a file of available resources and assets, and designating responsibility among the family members. Proximity to parents may necessitate who takes charge of researching assisted-living communities firsthand and attending meetings with physicians. The family may want to meet with an elder care attorney and geriatric care manager to learn about options in the types of care and financing. There are lawful ways to structure qualification for Medicaid and still be able to preserve money for a healthy spouse.

One solution may be to obtain LTC insurance before a parent becomes uninsurable. Children could secure insurance as a way to protect themselves from filial-support claims. An easy way to obtain LTC insurance may be to check with your employer. Many employers are offering group/multi-life plans that offer coverage with a discount for family members that includes parents. Other solutions for veterans could be to determine eligibility for a veteran’s pension that could be used to help fund long-term care. Some life insurance policies can be converted into long-term care benefits.

The key is to start early and prepare. We probably all know someone who has already faced these issues with their parents. Don’t get caught off guard. Children need to have this conversation with their parents to find out what they have done, if anything. What are their thoughts on how best to deal with the financial burden of skilled care expenses? How do they see the bills being paid? Many seniors are fiercely independent and private. It’s not uncommon to find families where financial discussions are taboo. However, this is an important family matter that needs to be discussed. Don’t wait for a medical emergency to force action.

Rick’s Tips:

  • Many states have established a legal precedent of financial responsibility among family members for the expenses incurred by a loved one.
  • The Omnibus Budget Reconciliation Act of 1993 contained rules compelling collection from families that have assets available for Medicaid expenditures.
  • One solution may be for children to obtain LTC insurance on their parents.

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