From Financial Advisor magazine comes the following information: more than half the states have filial responsibility laws making adult children legally responsible for indigent parents’ bills.
I’ve known about this for years, but never thought they would be enforced. However, now nursing homes, assisted living facilities, or even a publicly funded long term care agency can go after family members to repay outstanding LTC bills. 28 states have these laws on the books and are now starting to use them.
Buried in the Omnibus Budget Reconciliation Act of 1993 are rules that “compel state agencies to collect back funds they’ve expended on Medicaid services from families if they discover the families have assets available”.
Before Medicaid benefits kick in, you’re supposed to liquidate the cash value of any life insurance policies and spend the proceeds on health or long term care. If Medicaid discovers you did not, it will essentially fine you to pay back any money it’s spent on your behalf. Even after you die and your family collects a death benefit on that insurance, Medicaid can sue the family in probate court to recover what the state spent on care. It doesn’t matter if the family intentionally deceived Medicaid or it was an accident.
Why is this happening? 10,000 Americans turn 65 every day, we are getting older as a nation. We don’t have stay at home adult children to move in with a la Harriet Nelson (of Ozzie and Harriet). LTC is expensive, and most of us did not prepare for it – ending up on government welfare called Medicaid. Our government does not have enough money for Social Security and Medicare, let alone thousands per month for a LTC facility for all of us.
So now the Medicaid agency will pay (and the providers lose on the low reimbursements) initially and claw back when and where they can. If you think there is no reason to worry, the government will take care of everything, think again. Talk to your children, perhaps they would purchase LTC insurance for you to protect a possible inheritance (if you are still healthy enough to get it). They could end up paying for your care later, whether they want to or not.