Ethan R. Okura
Hawai‘i Herald Columnist
One of the questions most frequently asked of us is: “Will I be responsible to pay for my mother’s (or father’s) nursing home expenses?” This can be a scary thought for a working woman who cannot provide physical care for her aging parent and who is looking at options for their care, especially if she has children of her own whom she is supporting financially as minors or through college.
In some cases, you will be responsible to pay for your parent’s nursing home expenses. However, with proper guidance and planning, you don’t have to be responsible for your parent’s medical expenses under Hawai‘i’s laws.
Nursing home costs in Hawai‘i have skyrocketed in the past 20 years. It used to be that the average cost of nursing home care in Hawai‘i was approximately $3,000 to $4,500 per month. These days, a nursing home on O‘ahu starts at $10,000 per month, and on the neighbor islands, it is usually at least $13,000 per month. We even had one client in the state-run Leahi Hospital who was paying $23,000 per month (that’s $276,000 per year) for her long-term care needs. Although some private care homes here cost about $6,000 to $8,000 per month, at those rates, the costs will exceed $100,000 per year in most cases. This can use up an elderly person’s entire lifetime savings very quickly. Then what?
In most states, there are still “filial responsibility” laws on the books. These old laws are based on the Elizabethan Poor Laws of 1601 and require adult children to pay for their impoverished parents’ basic needs, such as food, clothing, shelter and medical expenses.
Most of these states have not enforced these laws for many decades — not since Roosevelt’s New Deal, the advent of Social Security and, especially, since the enactment of Medicaid in 1965. However, with rising health care costs, there has been a trend recently to enforce these old laws. For example, a Pennsylvania appeals court held that John Pittas was responsible to pay for his mother’s $93,000 nursing home bill, even though he did nothing wrong. In some states, refusing to pay under these filial responsibility laws is actually a criminal offense for which one can be imprisoned.
Fortunately, Hawai‘i does not have a filial responsibility statute. That does not mean, however, that we are completely in the clear. You need to be careful when filling out nursing home admission paperwork. Nursing home admission contracts oftentimes includes language that names a “Responsible Party” who is also asked to sign the admission contract. Although it is usually presented to the patient’s family that the “Responsible Party” is the person in the family who will be the main point of contact with the nursing home on behalf of the patient, what may not be apparent is that these contracts often place financial responsibility for paying the bill on the “Responsible Party,” as well. This means that if you sign this type of admission contract to get your parent placed in the nursing home, they can come after your assets and garnish your wages to pay their bill.
Federal law prohibits nursing homes from requiring a family member or a friend to assume financial responsibility as a condition of admitting the patient or expediting the admission. However, if you don’t read the fine print and just sign the standard admission contract, you might be volunteering to be financially responsible for your parent’s nursing home expenses. Once you have signed a contract like this or as a guarantor, you will be legally obligated to assume the financial costs of your parent’s nursing home expenses.
Finally, there is another way by which you could lose your assets to your parent’s medical expenses. If your parents are listed as a joint owner of your bank account or on the title to your home or any of your other assets, those assets become legally available to pay for your parents’ medical expenses. Although it can be quick and easy to add a parent as a joint owner for convenience in managing your finances, it is almost never the recommended way to do it. You would be much better off giving or having access to bank accounts and other assets by using a power of attorney, a trust or as an authorized signatory — but NOT as a joint owner.
So, in most cases, it is best that you restructure the way you hold your assets and your parent’s assets so that you are not joint owners. Also, remember to carefully review the terms of any contract before signing it. If you need help understanding it, don’t be afraid to have your lawyer review it for you. A few hundred dollars of preparation can be worth hundreds of thousands of dollars in savings in the long run.
Ethan R. Okura received his doctor of jurisprudence degree from Columbia University.
The lawyers at Okura & Associates focus their practice on estate planning to protect assets from nursing home costs, probate, estate taxes and creditors.
This column is for general information only. The facts of your case may change the advice given. Do not rely on the information in this column without consulting an estate planning specialist.
See more articles by Ethan by visiting https://okuralaw.com/blog/