BY BERNARD A. KROOKS
Baby boomers could soon face their own fiscal cliff, as state governments consider the implications of “filial responsibility” claims making their way through court systems. Although seldom enforced, statutes holding adult children responsible for their parents’ bills are on the books in about 30 states. A Pennsylvania man was recently told to pay $93,000 for his mother’s nursing home care.
Filial responsibility laws have been around since colonial times, but with the advent of Social Security, Medicare and Medicaid, most states stopped enforcing them. Now that the national dialogue is increasingly focused on the role that entitlements should play in balancing the budget, that could change.
New York has no filial responsibility law at this time, but consider the numbers: According to AARP, nearly three-quarters of the $13.4 billion spent each year in New York for nursing home care is primarily paid by Medicaid, a program that’s jointly funded with federal and state dollars.
With the largest generation in U.S. history approaching retirement, costs stand to balloon. Gov. Andrew Cuomo has already been aggressive in his efforts to rein in Medicaid costs. Shifting responsibility from a controversial, publicly funded benefit to family members could prove attractive.
Filial responsibility laws usually involve situations in which a parent has unpaid medical bills or has relied on government support. States have been known to garnish wages, assign property liens and report unpaid debt to credit agencies. In some places, it’s possible to serve jail time.
Enforcement has typically involved situations in which the adult child was somehow responsible for the parent’s impoverishment, perhaps by defrauding them. Not so in the Pennsylvania case. So adult children who may have had absolutely no control over their parents’ financial decisions could suddenly be faced with whopping bills.
These are particularly stressful economic times for boomers, faced with tuition debt, shrinking retirement investments and recession-hobbled careers. Although courts have typically not forced adult offspring into poverty, the result can still be devastating. The son hit with his mom’s $93,000 bill had an $85,000 yearly income.
Given longer life spans, traditional preparations for retirement may be insufficient. In many cases, the younger generation has assumed that mom or dad could just move in with them, if necessary. At worst, they figured that Medicaid would handle nursing home expenses. But the elder care landscape may be changing in ways that are difficult to predict, and potential liability argues for increased involvement by adult children in their parents’ financial planning.
Because elderly parents can be stubborn about sharing money details, it may be helpful to frame such discussions in terms of the arrangements that middle-aged “kids” are making for their own golden years. And long-term care insurance should certainly play a part in the conversation. If parents don’t already have a policy, run the numbers.
Depending on their age, high premiums may mean that it’s more cost-effective to self-insure. In either case, money should be allocated to cover care that may not be handled by either Medicare or Medicaid. It may be advisable for adult children to help out with premium payments now to avoid more expense later on. If acquiring a long-term care policy is practical, sorting through the options can be confusing. So it’s wise to seek advice from a certified elder law attorney, who can explain the various options and riders available to you in these insurance policies.
It appears that many of the filial responsibility suits underway in Pennsylvania – given current program guidelines – are aimed at prodding offspring to file Medicaid applications on behalf of their parents. So establishing and maintaining eligibility for the government benefits that are currently available are other important considerations. Again, the process can be complex and legal advice can avert costly mistakes.
It’s not easy to watch parents age, and most adult children want to do everything possible to ensure their security. No one can predict what will happen in New York state regarding filial responsibility statutes, but candid family discussions and contingency planning could avoid having to make painful, crisis-driven choices in the future.
Bernard A. Krooks is managing partner of the law firm Littman Krooks L.L.P. (littmankrooks.com), with offices in White Plains, Manhattan and Fishkill. He is a certified elder law attorney and past president of both the National Academy of Elder Law Attorneys and the Estate Planning Council of Westchester County.