How to Plan for your Parents’ Long-Term Care Costs

How to Plan for your Parents’ Long-Term Care Costs

By Roger Bair

By Roger Bair

Could you be on the hook for your parents’ long-term care expenses? The answer is YES!

In about 30 states, including Pennsylvania, there are laws called filial reasonability or filial support laws, which may obligate children to help defray their impoverished parents’ long-term care expenses. Most of these laws include civil enforcement, but several states even include criminal penalties for lack of support. These laws are based on the Elizabethan Poor Law of 1601, although most states repealed filial support laws after the enactment of Medicare. Filial support laws generally obligate adult children (or other family members) to pay for impoverished parents’ food, clothing, shelter, and medical expenses. The laws provide a method for a governmental or private entity, such as a nursing home, to bring legal action against the children to be reimbursed for expenses that their parents have not paid.

In 2005, the Pennsylvania legislature passed Act 43, which updated the Commonwealth’s filial support statute. In a subsequent 2012 case, a woman received care from a nursing home, which sued her son when she did not pay for services. A Pennsylvania court ruled that the son, a Pennsylvania resident, must pay the nursing home expenses.

The background of that case is as follows: An adult son was held liable for paying his mother’s $93,000–nursing-home bill under Act 43. John Pittas’ mother entered a nursing home for rehabilitation following a car crash. She later left the nursing home and moved to Greece, and a large portion of her bills went unpaid. Mr. Pittas’ mother filed an application for Medicaid, but notwithstanding the pending Medicaid application, the nursing home sued Mr. Pittas for nearly $93,000 under Act 43, which requires a child to provide support for an indigent parent.  The trial court, and then the Pennsylvania Superior Court, concluded that Mr. Pittas—as an adult child—should be held liable for the entire bill, notwithstanding the fact that Medicaid may ultimately be the proper source of payment for the bill or that there were other adult children who may also have some part of shouldering the financial burden.  

Families must carefully prepare a long-term care plan or what is more correctly characterized as a late retirement plan. A decade ago, a long-term care plan meant that a person would be buying long-term care insurance. Today, we realize that a comprehensive long-term care plan is really a late retirement plan, which addresses how family members will meet the realities, challenges, and costs of aging. The planning begins by listening carefully to the senior family members’ preferences for living arrangements and care and then combining those preferences with the reality of family resources. A late retirement plan may include insurance for long-term care expenses, but insurance is only part of the plan. Without a comprehensive late retirement plan, families will be vulnerable to large long-term care expenses and legal action if a parent becomes impoverished.

The Financial Consulate frequently provides advice, on a fee-only basis, to families as they take up the challenge of preparing a late retirement plan.