More than half the states have enacted “filial responsibility” laws. These laws make adult children responsible for their parents’ medical bills if their parents cannot pay. These laws are designed to minimize the parent’s burden on the state’s welfare system.
In some states, you are legally obligated to support your parents if they can’t do it themselves. That support includes basic needs, such as food, housing, and even medical care. This means, if you are in a filial state and your parents start accumulating healthcare bills they cannot pay, the healthcare provider may be within their right to sue you.
Most states with these laws don’t currently enforce them, but with the rise in healthcare costs and a growing senior population, experts predict a rise in enforcement.
Laws in each state differ, but there are commonalities when it comes to enforcement. You will most likely be responsible for a parent’s medical bills when:
- Your parent doesn’t qualify for Medicaid
- Your parent is impoverished
- Your parents have medical bills and cannot pay for them
- You have the ability to pay, or your parents fraudulently transferred assets to you.
Even if you do not currently live in a state with filial laws, these laws should be a consideration in all major financial decisions, both for you and your folks. Overlooking these laws can be an expensive mistake shall your state decide to implement these laws.
A few things to keep in mind
- You can be sued for your parents’ long-term care bills
- You may face civil or criminal penalties
- Financial transactions between you and your parents should be scrutinized. Transactions between you and your parents may be deemed as “fraudulent conveyance”, which is a property transfer that is intended to defraud creditors. You may also risk violating Medicaid asset transfer rules, which would make your parents ineligible for Medicaid.
- You may have to sue siblings to recover funds. States differ by law, and it’s unclear as to how siblings and spouses share responsibility for the medical debt. If a healthcare provider comes after you only, and a judgment is rendered against you, it’ll be up to you to sue your family and recover their share of the debt.
Unfortunately, if you live in one of these states, you can be forced to pay these bills. If you do not live in one of these states, it does not mean the laws in your state won’t change.
It’s a good idea to get involved in your parents’ financial planning and healthcare decisions now. If the medical bills end up your responsibility, it’s ideal to have a solution to the problem beforehand.
Here are some simple steps to help avoid the drama and expense of the situation
1. Start the conversation with your parents
It may be awkward, especially if you’re not close with your parents. Permanent life insurance is the solution to the problem. They can use the cash value inside the policy while they are still alive.
They can use the policy to transfer wealth to you and other siblings. By using this as a strategy to transfer wealth, there is less chance the government or the healthcare company will get their money.
2. Collaborate with your family members
3. Consult with an elder care attorney
Eldercare attorneys specialize in issues involving long-term care and Medicaid. A good attorney can help you and your family create a good strategy so you are not giving your money away to the government or to someone else.
4. Help them qualify for Medicaid
A team of good financial professionals, including a CPA and a good financial advisor can help an attorney lower your parent’s income and assets so they are eligible for Medicaid.
Talk to your parents today about their finances and the plans they have made. The earlier you have this conversation, the more time you have to plan a strategy that protects you and provides them with access to the care they need.