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Paying for Long-term Care: Who Foots the Bill?

It is tough enough to make the decision to enter a loved one into long-term care – but then throw in complicated contracts, lack of legal understanding, and a whirlwind of emotional turbulence and you can easily be overwhelmed. What happens when the loved one doesn’t qualify for Medicaid, or cannot pay for services through other means? After the contracts are signed, and the loved one is tucked in to their new abode, who might be on the hook for the proverbial financial hot-potato?

Nursing Home Contracts

Contracts can be incredibly intimidating for clients, particularly when dealing with the need for placing a loved one into another’s care. When a loved one needs long-term or nursing care, someone will have to take on the responsibility to read, understand, and sign a contract with the facility for their services. That person can be the individual, a family member, a Power of Attorney for the individual, a social worker, or any other person assuming the responsibility for the individual. Thankfully, being responsible for an individual does not necessarily require financial responsibility, too.

Nursing home contracts cover the facility’s expectations for payment, rules, and other details. These contracts educate the individual and/or their representative of what to expect from the facility as well – such as services provided, covered expenses, and other costs. Within these contracts are also provisions regarding financial responsibility that must be carefully reviewed. A responsible party could find themselves financially liable for their loved one’s bill if they improperly sign such provisions.

While nursing home contracts are no longer permitted to solicit alternative sources of payment, some such contracts still exist. Signing such a provision puts a client at odds for a lengthy and expensive court battle to show that their agreement to accept financial responsibility was invalid. The applicable rules can be found at 42 CFR  483. More specifically,  42 CFR § 483.15 covers Admission, Transfer, and Discharge Rights; § 483.15(a)(3) specifically states that long-term care facilities are prohibited from requesting or requiring that a third party take on financial responsibility for their loved one’s care.

Remember, just because a facility is not permitted to seek out a financially responsible party other than the resident, this does not mean that someone cannot willingly take on such responsibility. In other words, any competent person can sign a loved one into care and take on the burden of ultimately footing the bill – but, the last thing anyone would want to do is take it on accidentally. Blindly signing a contract because it seems like the only way to get your loved one the services they need is not their only option. A facility, understandably, will seek out satisfaction of debts from whomever they are legally entitled to pursue.

Meridian Nursing and Rehabilitation INC. v. Skwara (2019) UNPUBLISHED OPINION

A recent New Jersey appellate court decision declared that a son was not personally liable for the debt incurred by his incapacitated mother after entry into a long-term care facility. The defendant, Mr. Skwara, signed the entry paperwork on behalf of his mother, who no longer possessed the capacity to sign for herself. He proceeded to file the necessary paperwork for her possible Medicaid eligibility, but she was subsequently denied for being “over-resourced”. He filed an appeal in which the Administrative Law Judge (ALJ) determined that she was ineligible, not specifically for having too many assets, but because of two recent transfers of assets that disqualified her from eligibility. The ALJ submitted his findings to the relevant social services board to determine the penalty period.

Mr. Skwara appealed to the Department of Human Resources on behalf of his mother. The director disregarded the ALJ’s findings and determined that his mother was ineligible due to excess resources. There were some complicated factors involving business and investment properties mutually owned by mother and son, in which valuable assets had been transferred and mortgaged. While the ALJ focused on this transfer as the reason for ineligibility based on a transfer penalty, the Director of the Department of Human Services concluded that these resources, and the partly-owned business Mr. Skwara and his mother owned together, were resources to be included in Medicaid eligibility criteria.

The trial court granted partial summary judgment to the facility and opined that because Mr. Skwara signed the legally valid contract as the responsible party, he did not appeal the Director of the Department of Human Resources’ decision, nor did he submit any additional applications, he should be held responsible for the several years his mother had been institutionalized.

The appellate court found that because the director focused her efforts on defendant’s mother having too many assets, and not that Mr. Skwara’s mother transferred a possible gift, a remedy for such a breach is not up for determination. The court also found that Mr. Skwara’s responsibility in this endeavor was to follow through with providing all necessary paperwork and information needed for Medicaid eligibility – not a responsibility to pay from his own pocket.

Further, the court determined that it was also Mr. Skwara’s responsibility to liquidate his mother’s assets following the determination of her ineligibility. However, due to the complicated layering of interests in the pair’s business, it was arguably not feasible to liquidate the company. Mr. Skwara offered the facility his mother’s interest in the business as payment, but the facility rejected the offer. The court also mentioned that had the facility taken the offer, not only would it have been compensated, but the sale would also have qualified defendant’s mother for Medicaid as well. The court remanded the case to determine if the sale of the business was feasible and if any income came from the business to Mr. Skwara’s mother. Lastly, the issue of the contract’s validity was not precluded from   further review.

Financial Responsibilities

Whoever ends up taking on the financial liability for long-term care costs will be responsible for securing payment from wherever possible to cover the expenses. This process typically entails lining up Medicaid assistance, selling assets, and making sacrifices along the way. Financially responsible parties will be expected to liquidate whatever assets are available to cover the bill. If the assets are not substantial enough to cover what is owed, the facility can seek repayment from the individual’s estate upon death.

Residents in long-term care also have legal rights to appropriate care. 42 CFR § 483.15(c) discusses various rights regarding transfers and discharging. Long-term care facilities cannot transfer or discharge a resident unless they meet certain criteria. Discharge or transfer is permitted when:

  • The facility cannot meet the needs of the resident,
  • The resident’s health has improved to where services are no longer needed,
  • The resident poses safety or health risks to others,
  • The resident fails to submit the necessary paperwork to qualify for Medicaid or Medicare, is denied such benefits, and refuses to self-pay, or
  • When the facility ceases to operate.

Thus, a facility must try to work with residents and their families to provide the best solution for all. Residents are entitled the opportunity to appeal a decision to end services. If a family feels that their loved one has been unfairly denied further services, contact the state ombudsman for long-term care and consider other remedial action.

In Conclusion

Taking steps to place a loved one into care is not easy – mentally or logistically. There are many hurdles to overcome during the process. As elder law attorneys, we can help our clients understand the basics of Medicaid procedure and requirements and the sometimes-complicated nuances of the long-term care facility struggle. We can help clients who feel overwhelmed by the process or feel that they are not succeeding on their own in working with Medicaid, long-term care facilities, healthcare providers, or the like. Loved ones deserve the care they need and there are resources to help make them affordable – without a family member footing the bill himself.

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