People with aging parents may worry about personal financial responsibilities for their parents’ nursing home bills if the parents can’t pay them. This article explores filial responsibility laws, which are rarely enforced, and Medicaid’s estate recovery process.
Given the steep cost of nursing homes, planning for long-term care is critical. This holds true not only for you, but also possibly for aging parents still in your life.
One important question to consider is whether you could be held financially responsible for your parents’ nursing home bills if they can’t pay them. The answer is: It’s possible, but unlikely.
Filial responsibility laws
More than half of the states have “filial responsibility” laws, holding adult children responsible for their parents’ medical bills if their parents are unable to pay. These laws are rarely enforced, for several reasons. First, nursing home expenses are usually covered by Medicare or Medicaid. Then, most filial responsibility laws require a court to consider the children’s ability to pay before imposing liability.
In rare cases, however, an adult child may be held responsible for his or her parents’ nursing home bills. This might be the case, for example, if a parent doesn’t yet qualify for Medicare and has just enough financial resources to be disqualified from Medicaid.
It’s also possible for Medicaid eligibility to be delayed by several months — or even years — if the applicant made certain gifts or other asset transfers within a five-year “look-back” period. Nursing homes may be able to seek payment from the adult children of a patient who has made such disqualifying asset transfers to them during the look-back period.
If you’re not currently responsible for your parents’ nursing home bills, you may ultimately contribute to their care indirectly through Medicaid’s estate recovery process. This allows Medicaid to recoup funds it spent on your parents’ care from their estates after they die, which could thus reduce the amount of your inheritance.
Financial complexities
Caring for aging parents is a difficult task and can lead to many financial complexities. If your parents are receiving, or may soon receive, nursing home care and have limited funds, consult an attorney. A qualified legal advisor can help you determine whether you’re potentially responsible for their bills. An attorney can also investigate whether your parents’ assets are exposed to the Medicaid estate recovery process and whether strategies are available to limit your liability.
Another consideration is their estate plan. Do they have a will and/or trust? Who has their advance health directive and power of attorney? Do you have copies of the documents? When it is time for a care facility, these documents should be drafted, signed and in place while they were in good health and able to make sound decisions.
The HoganTaylor Tax Services
If you have any questions about the content of this publication, or if you would like more information about HoganTaylor's Tax services, please contact Tony Otto, Lead Tax Partner. You may also contact Denise Felber, Tax Partner.
INFORMATIONAL PURPOSE ONLY. This content is for informational purposes only. This content does not constitute professional advice and should not be relied upon by you or any third party, including to operate or promote your business, secure financing or capital in any form, obtain any regulatory or governmental approvals, or otherwise be used in connection with procuring services or other benefits from any entity. Before making any decision or taking any action, you should consult with professional advisors.
