Broke Family Member’s Long Term Care Can Be Your Retirement Shock

Saving for a decent retirement is tough enough. Financially planning for our old age adds a lot of overhead to the numbers. But did you know that in some cases a family member’s long term care can become your retirement shock?

There are many people who couldn’t or wouldn’t save for retirement. Some of them may even be a family member or two. Many people have no plan for their old age nor any needed long term care. The issue of extended family’s long term care becoming our legal financial obligation just came to light for us.

We are now navigating the tricky issues around the sudden need for long term care for a parent. I thought it important to share what we have discovered.

First some numbers: According to what was found in the 2016 Genworth study, the national median nursing home cost for a semi-private room is $6,844 a month. 

Our situation: Where our parent lives the nursing home care happens to be $5,000 a month. She has $3,500 a month in Social Security and Pension income. That leaves a $1,500 a month shortfall that has to be paid from her other assets. Once all her assets are exhausted then State Medicaid can be applied for.

That is when things can become your own retirement shock to deal with. Fortunately our parent isn’t broke. Not yet anyway. Medicaid or our financial assistance won’t be needed or involved for a little while.

Filial Responsibility Laws Might Cause Your Retirement Shock

At issue is what’s called Filial Responsibility. The State can try to recover amounts paid out for long term care from family members. There was even a recent case in Pennsylvania where the courts backed a private nursing home. They singled out and sued one child for $93K under the state’s Filial Responsibility laws for his mother’s care. Medicaid had been applied for but not yet granted before his mother left. 

There are 29 US States and the territory of Puerto Rico that have these Filial Responsibility Laws. Our parent happens to live in one.

The following States have their specific flavor of Filial Responsibility laws on their books:

Alaska, Arkansas, California, Connecticut, Delaware, Georgia, Indiana, Iowa, Kentucky, Louisiana, Maryland, Massachusetts, Mississippi, Montana, Nevada, New Hampshire, New Jersey, North Carolina, North Dakota, Ohio, Oregon, Pennsylvania, Rhode Island, South Dakota, Tennessee, Utah, Vermont, Virginia and West Virginia, and in the territory of Puerto Rico

Filial Responsibility isn’t limited to one’s parents either. The State laws where our extended family members reside applies to siblings too.

That was a surprise to me and nothing I planned for. It’s one thing to try to help out a parent. But extending that financial responsibility to siblings goes far beyond anything I considered in my retirement planning.

I happen to have one financially reckless sibling who also lives an unhealthy lifestyle. I am not thrilled to know that my sibling’s life choices could turn into my retirement shock down the road.

The State Filial Responsibility Law Where our Extended Family Resides Says the Following:

“Children shall first be called upon to support their parents, if they are of sufficient ability; if there are none of sufficient ability, the parents of such poor person shall be next called upon; if there are neither parents nor children, the brothers and sisters shall next be called upon; and if there are neither brothers nor sisters, the grandchildren of such poor person shall next be called upon, and then the grandparents.”

Some State’s filial responsibility laws can also impose both criminal and civil penalties for failing to support their parents.

Broke Family Member now your Retirement ShockThe takeaway from all of this is that these laws allow nursing homes, hospitals, governments and certain third parties the ability to file a lawsuit against family members. They have legal backing to go after a judgment. One that obligates a family member(s) to pay their parent’s, sibling’s, or grandparent’s bill.

In the above mentioned Pennsylvania case. The nursing home didn’t even have to bother including all children in their lawsuit.

The Good News and Bad News Regarding Filial Responsibility Enforcement

The Good News- The filial responsibility laws have thus far been rarely enforced by the States. From what I read it’s because it is very expensive to track down and begin a suit against relatives of a broke Medicaid recipient. Not only that but judicial systems are already overburdened and filial enforcement would add to that burden.

States with these laws don’t even agree with each other over aspects of the laws. For example in the area of “sufficient ability” to pay. Nor have they figured out how to go after family members who live in a different State that does not have filial responsibility laws on their books.

The Bad News- The times they are a changin. There seems to be an appetite in Washington to reduce federal Medicaid support to the States. State budgets are already strained. If federal cuts do occur or States develop huge budget shortfalls they may feel that they have no choice but to hunt down extended family members who haven’t stepped up to the plate for their filial responsibility qualified family members.   

Mitigating Filial Responsibility Risk: What To Do

I wish we had been more involved in our parent’s financial condition and future elder care issues. It is usually uncomfortable to bring this up with a parent. I know I have heard “none of your business” many times from my parents. Along with our love and concern for their care, with filial responsibility it is our business.

If luck prevails, the hope is always that an elderly parent or family member can stay functional and healthy enough to remain in their home with our help.  Arrangements can also be made to have them live with us or with a sibling.

My mother lives with my sister in an apartment built specifically for her in my sister’s home. My sister and mother find it is a mutually beneficial arrangement.  

However, luck doesn’t always prevail. There is always the risk of incapacitation.

My mother-in-law was functional at home with her children’s assistance. But a fall and subsequent stroke has ended that option and left as us all scrambling. Something like this happens out of the blue and then there is no going back.

Here is what we are working through. I hope my sharing this will help others realize that it has to be part of our own financial planning to avoid serious future retirement shock.

Look into your parent’s State Filial Responsibility Law

Look online and find out what is on the books. We all want to do what is best for our loved ones. Knowing this will both motivate us to get moving and use it as leverage to get cooperation from an elderly parent who prefers financial privacy.

We only found out about filial responsibility after the fact. It was a financial surprise during an already emotionally stressful time. We are lucky that our parent has the funds to cover the financial side for a while. It gives us some time to adjust our finances to prepare for when our assistance may be needed.

Go over all of their financial information

Siblings should decide who should act as the lead. That way it is done once and not by everyone concerned. Have your parent write down all account information and assets held. Home equity/mortgage information, beneficiary designations, signers on accounts, etc. This is something that should be done for spouses and may have already been completed. If so then make sure it is up to date.

We had done this last summer when she was considering moving into an assisted living center. She had concerns that the house was too much. But she wasn’t ready to make a huge move like that yet. At that time we were just figuring out if she could financially handle it. Although we looked at account signers, beneficiary designations, etc. in the event of need, we should have been more seriously considering long term care too. I wish we had insisted she make the move then. But we all live without knowledge of what is ahead. The whole hindsight thingy… Our thought was she will decide soon enough on her own.

Power Of Attorney (POA)

It is important to get a POA. This is necessary to cover any assets that may need to be sold if our parent becomes totally incapacitated.

We were told one was in place but it was confused with beneficiary designations or something else. We should have all communicated more clearly among the siblings instead of taking our elderly mother-in-law’s recollection. My mother-in-law’s home equity is a big percentage of her assets. However there is still a $100k mortgage. That means we have to somehow come up with a nursing home funding shortfall and her home mortgage/HOA/etc. All those payments will quickly deplete other accounts until we can sell the home. Getting a POA now will be a huge challenge. Working under a “Guardianship” condition is time-consuming and costly.

Consult with an experienced Estate Planning or Elder Law Attorney

Be sure to seek a lawyer in the State where your parent lives. Filial responsibility laws and processes can vary State by State. A little money spent ahead-of-need will save a lot of trouble later on. Get educated. Know what is needed to facilitate and handle all the difficult decisions and options once a health event incapacitates a loved one. Develop a strategy covering which assets to use first for long term care, how/when to sell any property, and Medicaid issues.

We missed doing this before it was needed and have now met with an elder law attorney after the fact. The first thing they needed was a list of all the assets. Fortunately we had that done. We now wait to get their advice on next steps. Fortunately one of my mother-in-law’s accounts has one of our siblings as a signer. Otherwise we would be handling all the current financial issues for house payments, utilities, HOA payments, nursing home, etc. ourselves until things can be worked out.

Last Words

We did a lot in our own retirement and old age planning to make sure we won’t be a burden to our children. We now have the retirement shock of knowing we may have to also include a plan to handle a parent’s or even a sibling’s long term care debt as our financial problem if things go wrong.

It is important to be ahead of need in these issues. The goal is to have a clear long term care support strategy in place. One that is ready to be used in the worst case scenario. That includes having all the necessary legal work done to gain access to assets in the case of incapacitation.

Even though filial responsibility law enforcement is not a high priority in most cases for States to pursue, it doesn’t mean they never will.

We should all care about our elderly loved ones to help provide for them. Caring for a parent’s long term care wasn’t a big highlight of our retirement planning. Now it will be.

Doing things right can avoid ever having to worry about filial responsibility laws telling us through the courts what we will be paying and causing us severe retirement shock. By having a plan it also makes sure we are optimizing all options in a strategic way to reduce overall cost and provide the best care.

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12 thoughts on “Broke Family Member’s Long Term Care Can Be Your Retirement Shock

  1. Sorry to hear about your mother but fortunately you have the time to help her out. Hopefully your writing this gets other families to address these situations in advance. Less than 10% of the population have purchased long term care insurance even though the odds are very high it will be needed. There are solutions available even though the recent past history has seen rapid price increases. Retirement planning without long term care planningis not retirement planning.

    1. Thanks for the comment James. I do hope this post gives all who read it a push to look at long term care for themselves and also their aging family members. Sometimes it just takes one informed family member to make sure others get on board. A little planning and knowledge will make a huge difference if the worst case scenario happens.

  2. I recall hearing about these laws years ago. But had no idea siblings could be forced to support each other. Curious what happens if family members reside in different states with dissimilar filial laws? Is there a statute of limitations?

    Unfortunately, long term care insurance has become a minefield. New policies are very expensive, and existing ones not cheap. My LTC insurer wanted to raise premiums 45%, but the state limited it to 15%. Won’t take too many of those to make a policy unaffordable.

    1. Thanks for the comment Steve. I don’t know how many States include siblings in their filial responsibility laws but the one our extended family is in (UT) apparently does. LTC insurance is very expensive, especially once older and looking for it. We were also surprised at how the cost of nursing home care differed drastically across different cities/States. In the city where my Mother-in-law lives it is $5000 a month. Here where I am in CO it is $7500. Yikes!

  3. Some good points you bring up that many people probably arent aware of until its too late. Like you mention, getting most things in order ahead of time can really make things a little easier and less costly also. From what I’ve read on LTC insurance, I dont think its that good of a deal. They have really raised the premiums and if you dont keep paying it then its all for nothing. And if you do need to collect on it, you better have a business savvy relative who can make sure they are paying you the proper amount for your care. I’m sure there are a lot of codes and health designations which can be a gray area of interpretation. For me, I think Ill take my chances and keep all those premiums in my pocket. For the cost involved, I dont think its worth it.

    1. Thanks for the comment Arrgo. You make great points about LTC Insurance. I have the same feeling. I do know people who have it and started at a younger age so their premiums are less. But for what we were quoted for LTC insurance and our family history we decided on a self funding plan. That means though that there is a lot of things to setup long before an incapacitating health crisis arises.

    2. If you can afford a high deductible LTC plan than the premiums would not be wasted if unused. (They are more complicated but worth the time to understand. See Asset based LTC).

      1. Thanks for the comment James. I now have a higher appreciation of LTC than I did before. My wife and I were planning on self funding based on on our family history of independence until the end with at most very short LT stays. Thanks for the tip. It is something we will look into.

        1. Tommy

          I have a very smart friend who thinks all LTC is “snake oil”-the industry waay underestimated the costs and the lapse rates. Two academics (of RICP) did a super indepth study of LTC (Managing long-term care spending risks in retirementby Wade D. Pfau, Ph.D., CFA andMichael Finke, Ph.D., CFP®) that lays out the options very well.

  4. Hi, buddy!!
    Great Share.
    Someone who is planning for the estate distribution, appointing a proper attorney can work for you, especially when the time comes when you are no longer there then you have to prepare a “will” for your properties and assets in advance for your future generations.
    This can also support your family, especially your children, during your absence and especially when their security is your concern.
    Thanks for sharing and keep sharing!!


    1. Thanks for the comment Denise. We are finding out all kinds of important things from our Elder Care Attorney for our recent family issue and I have a whole new outlook about having adding some specific legal consulting to our own financial planning.

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