Could You Owe Nursing Home Bills for Your Parent?

School of Financial Wellness

Nursing home bills for a parent are being reviewed by their daughter.

About 37% of people will need to stay in a nursing home during their lifetime. With the average cost of a private room being $108,405, these stays can be financially disastrous. While you may have a plan in place to pay for your own long-term care needs, you may not know that there are circumstances where you could be liable for your parent’s nursing home expenses as well.

If you are aware of the situations that could lead to you being responsible for a parent’s care, you can prepare for how to avoid these costs. With this knowledge, you can also ensure that your loved ones don’t owe for your long-term care if you should need it.

To learn more about long-term care planning and how it relates to your financial future, sign up to attend our no-cost webinar Preparing for Long-Term Care Expenses in Retirement hosted by Blake May, J.D., CFP®, Partner at Meld Financial. This webinar will be held Tuesday November 8 at 3:00 pm central time.

Could you owe nursing home bills if your parent had Medicaid?

In some cases, Medicaid will cover the cost of long-term care after your parent’s other financial resources have been exhausted. Assuming your parent qualifies for Medicaid, they could still owe nursing home costs accrued during the application process and any income-based cost sharing expenses. In most cases, you wouldn’t be responsible for these expenses, but they could quickly drain your parent’s remaining resources and impact your inheritance, so you should be aware of them.

After your parent passes, Medicaid could seek to recover expenses from their estate. While this provision would not require you to pay for your parent’s nursing home care, it could reduce or eliminate any inheritance you would have received. There are some protections in place for your parent’s estate if they were married and their spouse remains in the family home but there are few options to preserve inheritance for children. In some cases, Medicaid can even claim a family home from a child who would have inherited it.

In short, if your parent qualified for Medicaid, it is unlikely that you would be responsible for the cost of their nursing home care. However, you should still speak to an experienced financial advisor to determine how Medicaid could impact your parent’s finances and their estate.

Could you owe nursing home bills if your parent did not have Medicaid?

In most cases, if your parent self-funded their nursing home care or had long-term care insurance, you would not be responsible for any accrued bills after their passing. However, there are two notable exceptions.

Filial Responsibility Laws

“Filial support” or “filial responsibility” laws can require you to pay your parent’s expenses if they are unable to care for themselves. While Alabama does not have such a law, 29 states and Puerto Rico do.

Most of these laws were written prior to the establishment of the Medicaid program and they are seldom used today. However, in recent years there have been notable cases – like a 2012 Pennsylvania court case, Health Care & Retirement Corp. of America v. Pittas – where nursing homes have sued children for their parent’s care and won. Lawsuits under the filial support laws are rare but you should still be aware of them if you live in a state where this type of law could apply.

Third-party Guarantees in Nursing Home Agreements

The Nursing Home Reform Act [NHRA] prohibits a nursing home from requiring a person other than the resident to be responsible for the cost of care. However, you could voluntarily accept the financial burden of care – either intentionally or unintentionally.

The Consumer Financial Protection Bureau [CFPB] recently conducted a study which concluded that many children are being held responsible for a parent’s care based on the admission paperwork they signed. Often, these people did not realize that the paperwork they signed made them liable for the bill if their parent was unable to pay.

Nursing homes sometimes require you to sign as a “Responsible Party” or “Representative” for your parent. While this language can seem innocuous, it can sometimes be construed as a type of cosigning for the cost of nursing home bills. In fact, the CFPB found that some nursing homes have contacted these “Responsible Parties” for payment, reported them to debt collectors and credit reporting agencies, and even taken them to court for unpaid bills. Sometimes, these lawsuits are successful, and some people have had their wages garnished, their home foreclosed, or even faced bankruptcy due to admission paperwork they didn’t understand before signing.

Lawsuits under filial support laws and “Responsible Party” clauses are rare, but they can be a significant threat to your finances if you have a parent in a nursing home. To avoid a situation where you are responsible for your parent’s nursing home bills, review all admission paperwork carefully before you sign. It can sometimes be beneficial to have an attorney review this paperwork as well, especially if it contains a “Responsible Party” clause. Additionally, remain cognizant of filial support laws if they are applicable in your state.

How to Prepare for Long-term Care Costs

To avoid putting your heirs in a situation where they are responsible for your nursing home costs, ensure that long-term care costs are included in your financial plan. You may consider long-term care insurance, hybrid life insurance, or other options for pre-funding these expenses. An experienced financial advisor can help you determine an appropriate course of action for your specific situation.

You should also ensure that your children or other people who could assume a caretaker role have access to your long-term care plan. This could include information on long-term care insurance and the contact information for your attorney and financial advisor should you suddenly become unable to make financial decisions.

Prepare for Long-term Care Costs with Meld Financial

At Meld Financial, our team of tax, legal, and investment professionals has spent nearly 40 years helping our clients grow and maintain their wealth. As such, we have the experience to help you estimate long-term care costs and plan accordingly.

Through our decades of helping clients achieve their financial goals, we developed a proprietary wealth management process called Financial Fingerprint™. This comprehensive financial plan is quick to assemble, easy to understand, and simple to modify as your circumstances change. It also accounts for common threats to your financial future, including long-term care expenses.

Contact the team at Meld Financial today to discuss your long-term care options and get started with Financial Fingerprint™.

To learn more about long-term care planning and how it relates to your financial future, sign up to attend our no-cost webinar Preparing for Long-Term Care Expenses in Retirement hosted by Blake May, J.D., CFP®, Partner at Meld Financial. This webinar will be held Tuesday November 8 at 3:00 pm central time.

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