<p>I was just cruising through the Wall St Journal and ran into this. It doesn’t really apply to us because one set of parents isn’t around and my mother is living independently with more than sufficient resources.</p>
<p>The concept, though, is interesting. It appears that the child or children that got the parents into care may be the ones responsible for any bills - which means that children that didn’t provide any help may be off the hook. Or perhaps parents were irresponsible with their assets.</p>
<p>Would this, at some point in the future, apply to siblings, cousins, aunts and uncles?</p>
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<p>Thought you were immune from your parents’ debts? Not so fast. Twenty-nine states have “filial support” laws that could be used to go after patients’ adult children for unpaid long-term-care bills.</p>
<p>In at least one of those states, Pennsylvania, nursing homes have started routinely using the law to prod families into paying their elders’ bills or completing Medicaid paperwork on their behalf.</p>
<p>This is something I learned about when we looked at long term care policies. MA has a law, but it reads like something out of the colonial era: a fine of $200 or prison for a year or both. I can’t imagine that being enforced. Other states have real responsibility laws. Others have really limited ones. About half don’t have any. It’s a real mixed bag. And there is no clear political division; about half are run by conservatives, some in the deep south.</p>
<p>I know Florida explored cracking down on this a while ago, not sure what the current status is though. The thinking was that many of the retirees there were well versed enough in Medicare/Medicaid and the look back periods that they gifted away assets, legally, and then were in need of care and filed through Medicaid for nursing home care. They were talking about moving the look back to 10 years and requiring financial information on children to discover these gifted assets. </p>
<p>With the baby boomers in retirement now, this is only going to get worse. Protect YOUR assets and get Long Term Care insurance for you and your parents if they are still eligible.</p>
<p>It will be interesting to see how these laws may work across state lines, specifically states like FL, NC, AZ. If Mom moves to Palm Beach, but kids are still in Nebraska, will Florida be able to sue the kids? Will they have jurisdiction?</p>
<p>This will at some point become a Federal issue.</p>
<p>If I remember correctly with the FL case, crossing state lines didn’t matter because the issue was where the parent lived and their care so if the parent was entering a nursing home and filing for Medicaid in FL, part of the process was to get the financial records from their children, no matter where they lived. The option was that the parents would not qualify for Medicaid if the kids did not want to supply the information.</p>
<p>But unless the child signs the contract and agrees to be bound by Florida law, the mere giving of financial information may not be sufficient to give Florida jurisdiction over the resident of another state.</p>
<p>I was driving home from the grocery store this morning and there was a financial show on the radio and it was discussing this issue and the case described in the WSJ.</p>
<p>I’ve heard radio ads for the last 15 years on financial planning for seniors and the idea was basically on giving your assets away to your kids before they could be assessed for long-term care. This always seemed wrong to me - basically lawyers or financial planners helping seniors scam the state. I have not been in that position so I haven’t made a judgement on it (there may be some valid social justification for it that I haven’t heard about) - it’s just something that makes me queasy to think about. It’s unlikely that this will be an issue for my mother and her kids are reasonably well-off to be able to pay for long-term care if it were - so this is mostly academic for me outside of my tax dollars going to pay for this thing.</p>
<p>States are strapped for cash and the baby boomers are coming through and I guess that states are looking for ways to recapture past expenses and avoid future expenses while nursing homes are looking to avoid non-payment for services. It appears that this could be a huge game-changer for taking care of your parents.</p>
<p>The radio show this morning felt that this is something that’s going to see a lot of litigation. The judge at the appellate level judged solely on the ability of the son to pay - everything else was ignored. The radio show also suggested having long-term health insurance to cover expected expenses. This is something that I see helping out state budgets in the future.</p>
<p>Something else - apparently the laws are quite vague on ability to pay and I guess that they leave it up to the judge here. Families dealing with college expenses might have a tough time getting hit with long-term care bills at the same time.</p>
<p>Chedva–that is the point, either the kids agree to give that information or the parents don’t get Medicaid, plain and simple. The kids don’t have to give the information, but then they have to figure out how to take care of Mom or Dad or Both because they won’t be getting help from Florida.</p>
<p>BCEagle91–right now it is legal to gift away your assets and there are very structured ways to do that and it is a financial planning tool for families, especially for families with high wealth. Typically, however, those families have made provisions for long term care. Medicaid is moving toward limiting this by changing the look back from 3 to 5 years in all states and longer in some. Florida was toying with a 10 year lookback. What that means is if someone applies for Medicaid, the system can collect information on their assets for the past 5 years (or whatever it is in that state) and if you have given away assets during that time, Medicaid won’t pay out anything until you have paid out of pocket that amount of money. Say someone sold their home in 2010 and netted a profit of $100,000. They then gave that $100,000 to their 4 children. In 2013 they needed to go into a nursing home. Medicaid won’t start paying for care until $100,000 (well prorated but lets keep the math simple) of care is paid for by that person/family. Once they “use up” those assets, then Medicaid will kick in. There are slight variations on this by state but in general this is how it works.</p>
<p>It does become a moral issue vs a legal issue however.</p>
<p>Long Term Care insurance is a way to prevent these issues. Just make sure you get a good policy with a good company. If you have an older policy, say 10 years old or older, get it reviewed because they have changed quite a bit and the old policies are not very good.</p>
<p>We have LTC insurance. We have lifetime coverage and really will not have any worries should one or both of us end up in a nursing home–or really needing in home care because that is what most LTC policies pay out on. There are also federal and in some states tax breaks for having LTC polices. If you have a Health Savings Account, you can use funds from that to pay your LTC insurance premium, so basically 100% write off on your taxes for having LTC and a HSA.</p>
<p>FL doesn’t have a filial or family support law. But Medicaid does impose poverty-level requirements and that drives planning moves like divesting assets. </p>
<p>As far as I know, the push to use these laws is only in a few states and it isn’t the government seeking enforcement but private companies suing to obtain judgements. I assume a judgement will be entitled to full faith and credit in other states so a person with elderly parents in PA might have a problem even if they live in IL, which has no such law.</p>
<p>So the children who have no control over whether their parents have LTC insurance or whether they frittered away their money, would be on the hook to use the child’s savings to pay for the parent’s nursing home? I cannot think of any other instance in which a person who didn’t incur the debt is responsible to pay for another adult, except for married couples.</p>
<p>In the WSJ case, it seems that the driver who crossed the center line and caused this accident that caused the rest of this mess is the one who should be responsible. Maybe he was uninsured or maybe he had too little insurance. If so, that seems to be where the law needs to crack down.</p>
<p>TatinG–Pretty much under the strict meaning of the law. Keep in mind, you can buy LTC insurance on your parents, they would have to consent to it obviously, but you can pay the premiums for them…and if you are a business owner with certain types of business structure, write off those premiums :D. While various states could take this to the letter o the law, my GUESS is that they are instituting this more for people that gifted their wealth to their children and fall outside of the lookback, but that is purely a guess on my part-no evidence to support that.</p>
<p>The harsh reality is that there is no way the Medicaid system can support the number of people that will need long term care by 2020 and steps to alleviate the problem have been put in place for many, many years with the support of the federal government-such as the tax breaks on LTC insurance premiums. The general population has ignored these warnings and are going to pay the price, literally and figuratively.</p>
<p>We (potential payors) may be better off not setting this information get too well disseminated. I know plenty of parents who would refuse to buy LTC insurance if they knew their kids would be stuck for any LTC bills. </p>
<p>That kind of brings us back to the core issue … who decides what party (or parties) are responsible for the bill. “Accident of birth seems a poor criterion.”</p>
<p>NewHope-if you have proper LTC insurance you shouldn’t have any LTC bills or your bills should be low, which is why getting LTC Insurance is a good idea–get it young while you still qualify.</p>
<p>^ I agree with you Steve. My point was that there are many parents who are just (a) too poor to pay for LTC insurance for themselves, or (b) too proud to accept it from others, or (c) simply mad at their kids for whatever and REFUSE to sign off on LTC insurance. “My kids are responsible for my care? Great! Payback’s a b***h kiddies!”</p>
<p>I think this article is related to the soon to be decided SC decision, and considering the source, unreliable.</p>
<p>SteveMA says that policies from ten years ago aren’t good. That’s true and why I didn’t buy one. There are many who think that of policies sold today. </p>
<p>Manor Care is in 32 states which may be related to the number of states in the article.</p>
Yes, I got that, Steve. But what you’re missing is that simply agreeing to provide information to FL for Mom or Dad’s benefit DOES NOT necessarily subject the kids to FL law or to jurisdiction in FL courts.</p>
<p>So the question remains whether Florida can sue a Nebraska resident for debts incurred by another in Florida. State law does not always cross state lines. Only Federal law does.</p>
<p>Depending on the structure of the company, C-corps mainly, can opt to provide LTC benefits to employees, spouses and family members of those employees (there are some details to this that I am fuzzy on so consult an informed CPA :D) and deduct the premiums paid. Other corporate structures can opt to offer LTC as an employee benefit, cover spouses if they want and retirees. There are a LOT of advantages to having LCT insurance from a tax perspective. It is age graded so the older you are, the more of a break you get. We also get a small tax break from our state.</p>
<p>The biggest advantage comes if you have a HSA because the money into the HSA goes in tax free, grows tax free and is used for qualified medical expenses, LTC premiums being one of them. There is no other retirement product that does that. So, if you use HSA money to pay LTC premiums, you are reducing your taxable income by those premium dollars :D. So, if you are a business owner that has an HSA, it’s something to sell your employees on and since it is a benefit to the employees as a group plan, you get to save tax dollars too. Just get a good plan from a good company. Do you research, and a lot of it.</p>
<p>Chedva–I do understand what you are saying but if the kids don’t give their financials and agree to pay Mom and/or Dad don’t get to live in the nursing home, regardless of state laws/crossing state laws, etc. It applies to what is happening to Mom and Dad and they can just say, sorry, no info, no money, no bed. The kids then get to choose to fork over the money or say “too bad Mom and Dad”. I really don’t think state law applies other than FL law. No, the kids are under no obligation what so ever to provide the information but in turn FL nursing homes are then under no obligation what so ever to provide a bed for the parents.</p>