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Although a nursing home cannot require a child to be personally liable for their parent’s nursing home bill, there are circumstances in which children can end up having to pay. This is why it is important to read any admission agreements carefully before signing.
Federal regulations prevent a nursing home from requiring a third party to be personally liable for a resident’s charges as a condition of admission. However, children of nursing home residents often sign the nursing home admission agreement as the “responsible party.” This is a confusing term and it isn’t always clear from the contract what it means.
Typically, the responsible party is agreeing to do everything in his or her power to make sure that the resident pays the nursing home from the resident’s funds. If the resident runs out of money, the responsible party may be required to apply for Medicaid on the resident’s behalf. If the responsible party doesn’t follow through on applying for Medicaid or provide the state with all the information needed to determine Medicaid eligibility, the nursing home may sue the responsible party for breach of contract.
In addition, if a responsible party misuses a resident’s funds instead of paying the resident’s bill, the nursing home may also sue the responsible party. In both these circumstances, the responsible party may end up having to pay the nursing home out of his or her own pocket.
In a recent case in New York, a son signed an admission agreement for his mother as the responsible party. After the mother died, the nursing home sued the son for breach of contract, arguing that he had failed to apply for Medicaid or use his mother’s money to pay the nursing home and that he fraudulently transferred her money to himself.
The court ruled that the son could be liable for breach of contract even though the admission agreement did not require the son to use his own funds to pay the nursing home. (Jewish Home Lifecare v. Ast, N.Y. Sup. Ct., New York City., No. 161001/14, July 17, 2015.)
Although it is against the law to require a child to sign an admission agreement as the person who guarantees payment, it is important to read the contract carefully because some nursing homes still have language in their contracts that violates the law. If possible, consult with your attorney before signing an admission agreement.
Another way children may be liable for a nursing home bill is through filial responsibility laws, which are on the books in about half the states. These laws obligate adult children to provide necessities like food, clothing, housing and medical attention for their indigent parents.
Filial responsibility laws have rarely been enforced, but as it has become more difficult to qualify for Medicaid, states are more likely to use them. Pennsylvania is one state that has used filial responsibility laws aggressively.
Don’t learn these lessons the hard way, contact one of our seasoned attorneys to discuss your estate planning needs.