Could You Get Stuck With Your Parent's Nursing Home Bill?
That's a question you better ask yourself and know the answer to now.
Here's why. A recent Pennsylvania decision, Health Care & Retirement Corporation of America v. John Pittas, the Supreme Court of Pennsylvania ruled that a son can be held liable for his mother's nursing home bills. The case involved a woman who moved to Greece without settling her more than $90,000 nursing home bill. The court found that her son was liable for her nursing home bill. It ruled that a child capable of paying their parent's healthcare bills is required to pay them.
“So far, Pennsylvania is leading the charge to require adult children to foot their parents' long-term care bills. However, 29 states have laws in place that could require adult children to provide this financial support and there is reason to believe that other states will follow Pennsylvania's lead, although for now, states have varying degrees of enforcement,” says Mitch Adel, senior partner with the law firm of Cooper, Adel & Associates. “In Ohio, for example, the law is even more punitive than Pennsylvania's, as the Ohio statute makes it a criminal offense to fail to provide that support.”
What's driving the change? “The combined impact of states facing budget shortfalls and the demographics of aging Baby Boomers who are living longer and increasing the cost of long term care, means that states are reexamining laws that may assist third party creditors in compelling adult children to pay their parents' nursing home bills,” says Adel.
The tab can be huge. According to the Genworth 2012 Cost of Care Survey, the median annual rate for a private nursing home rate is $81,030.
“As in most situations, the wealthy will be able to afford a wide variety of long-term care options and have access to various financial planners and professional assistance. The poor will qualify for the various entitlements such as MediCaid/MediCal, unless the political landscape changes so drastically as to remove these entitle, they will not have major concerns. The middle-class family is in for a wild ride when it comes to planning for aging parents,” warns Forrest Hong, LCSW, C-ASWCM, a social work/care manager, who works extensively with families who are in the process of planning for their long-term care needs.
What can you do?
Talk to your parents long before trouble arises. Get a sense of what their financial situation is and how they will pay for care. Where are the gaps, discuss how you might fill them. “It's better to have the discussion up front than to manage in crisis mode,” says Jason Parker, a certified retirement financial advisor, and president of Parker Financial.
Encourage them to purchase long-term care insurance. Long term care insurance can help with costs like nursing home bills and other such costs.
Speak with a geriatric social worker/care manager. Before thinking about nursing home as a long-term care option, speak with a geriatric social worker/care manager. Develop a long-term care plan with that professional. They can provide referrals to reputable and knowledgeable financial and elder law professionals who can address those aspects of the plan, says Hong.
Do your research. Find out what benefit programs and resources are available that may help at your parents stay in their own home. What does your area offer in terms of assisted living facilities and in nursing homes. You want a good idea of what's what, before you need it. It's ill advised to make major decisions when you're in the middle of the situation, stressed and may not be thinking clearly or have time to explore all your alternatives. Poor decisions can be costly.
However, “Nursing home placement is a very expensive option and should only be considered if someone is bed-bound, needs 24-hour, 7-days a week care of a medical nature,” says Hong.
“Never take your parents to a nursing home without first consulting with a professional geriatric social worker. If you do this on your own, you will be left holding the bag, or in this, the bill,” he warns.
Pay the bill yourself. Another option, is to prepare to pay for the nursing bill yourself, says Adel. That's easier said than done, with many Boomers wondering how they will fund their own retirement, picking up the tab for mom or dad's care, much as they might want to, just isn't a realistic possibility.
Be proactive. Whatever you do, do something, now. The situation can be challenging to say the least. “My folks became unable to care for themselves at the same time when my oldest child was preparing for her freshmen year of college. The financial and emotional pressure from those two converging forces were tremendous,” says Michael Fliegelman, president of SWAN, Strategic Wealth Advisors Network.
His mother had Parkinson's disease and macular degeneration and his dad had a brain stem stroke followed by numerous TIAs (transient ischemic attack). Within five years their savings were wiped out by assisted living facility costs, the cost of an aid that lived with them in the assisted living facility, and medication. “These costs brought their cost of living to around $15,000 a month.” His parents passed a a couple of years ago. Says Fliegelman, “But my wife's parents are now ill.”