Filial Laws Might Prompt LTC Planning

Filial responsibility laws are laws that impose a duty upon third parties, usually adult children for the support of their impoverished parents or other relatives. These laws, so far, have not been enforced very much. However, 29 states and Puerto Rico have them in place.

The issue is your adult children could potentially be held legally responsible for your Long Term Health Care if you no longer have sufficient financial resources to take care of yourself. Until recently, these statutes have been largely ignored. However, several recent court decisions indicate that there might be renewed interest in enforcing them. Since most state budgets are under a severe financial strain, a lack of a Long-Term Care plan might be placed on your loved ones.

Quoted in a story in Investment News, Charlie Douglas, board member of the National Association of Estate Planner and Councils and an Atlanta-based wealth adviser said this could be a ‘sleeping giant’ of an issue.

“Most people aren't even aware of filial responsibility laws.”

Charlie Douglas, board member of the National Association of Estate Planner and Councils

In one case, Health Care & Retirement Corp. of America v. Pittas' placed the substantial financial burden on a son. Enforcing Pennsylvania's filial support laws, the defendant was found responsible for his mother's Long-Term Care bill from a skilled nursing facility, to the tune of $93,000.

Pittas' mother was admitted for six months to Liberty Nursing Rehabilitation Center in Allentown, PA after breaking two legs in a car accident. Later Pittas' mother, who was born in the U.S., relocated to Greece, where her two other children live.

As the only remaining family member left in the U.S. was left to foot the $92,943.41 bill. The Health Care & Retirement Corp. of America, which owns Liberty Nursing & Rehabilitation Center, sued Pittas' and won the case.

The son appealed but the Superior Court of Pennsylvania issued a verdict in favor of the nursing home again.

As more people require Long Term Health services many expect other states to take action to recover costs. Most Long-Term Care services are custodial in nature. This means assistance with activities of daily living or supervision due to a memory issue. Health insurance and Medicare will not pay anything toward custodial care. Health insurance and Medicare will pay for a limited amount of skilled care but only if a person is getting better. Medicaid, the medical welfare program, will pay for Long-Term Care but only for those with no assets or exhaust assets in a spend-down.

“Adult children could be on the hook for bills down the road for failure to address Long-Term Care planning.” Jamie Hopkins, the Larry R. Pike Chair in insurance and investments and an associate professor of taxation at The American College in the article in InvestmentNews.

Many states have tax incentives for people who purchase Long-Term Care Insurance. Federal tax incentives also exist for some people. Plus, most states have partnership LTC plans which provide ‘dollar-for-dollar’ asset protection. This means if you exhaust the money from your Long-Term Care Insurance policy you would be able to shelter your estate based on the benefits paid and still qualify for Medicaid. This is called ‘asset disregard’.

Many experts suggest that one way to avoid any future issue with Filial Laws is to have Long-Term Care Insurance in place as part of retirement planning. As people save money in their 401k’s, IRA’s and other savings, a person can protect their assets from the financial costs and burdens of aging.