Filial Responsibility Laws, Medicaid, and LongTermCare Insurance

For over forty years, a federal law (14 USC 1396(a)(17)(D)) has blocked any real enforcement of state filial responsibility laws because it outlaws states from considering the financial responsibility of anyone other than a spouse, or disabled minor child, when deciding Medicaid benefits (or other poverty-assistance program benefits). Here's what that federal law instructs the states, in part:

"do not take into account the financial responsibility of any individual for any applicant or recipient of assistance under the plan unless such applicant or recipient is such individual’s spouse or such individual’s child who is under age 21 or (with respect to States eligible to participate in the State program established under subchapter XVI of this chapter), is blind or permanently and totally disabled, or is blind or disabled as defined in section 1382c of this title (with respect to States which are not eligible to participate in such program); and provide for flexibility in the application of such standards with respect to income by taking into account, except to the extent prescribed by the Secretary, the costs (whether in the form of insurance premiums, payments made to the State under section 1396b (f)(2)(B) of this title, or otherwise and regardless of whether such costs are reimbursed under another public program of the State or political subdivision thereof) incurred for medical care or for any other type of remedial care recognized under State law"

What is Medicaid to a Senior Citizen?

Medicaid is both a federal and state program to help the poor. When the elderly exhaust their assets, and their Medicare benefits run out, then Medicaid steps in and covers their long-term care costs - as long as that care involves nursing homes or other, analogous skilled facilities. Medicaid doesn't cover home health care, or assisted living. (See 42 USC 1395(d), 1396(a), 42 CFR 409.33).

The Medicaid Estate Planning Strategy vs. Program Budget Projections

Savvy estate planners work with families regularly, and legally, moving assets out of the elderly person's estate so when incapacity comes, family inheritances are protected and Medicaid can cover the costs of care to the extent that long-term care insurance hasn't been purchased in advance. Federal law 42 USC 1396a (see above) protects the assets now held by the kids, and the parent(s) can feel secure that they will have long term care costs covered, nevertheless.

Knowing this strategy exists, federal law first allowed Medicaid to go back as far as three years to gather assets transfered from the elderly and placed into the hands of children, loved ones, or trusts. Past that 3 year mark, and the transfer was secure.

In 2005, the Deficit Reduction Act expanded that time frame to five (5) years. It also denied Medicaid nursing home coverage to anyone with home equity greater than $500,000 and allowed states to increase that amount to $750,000 within their program jurisdictions. The Act also took into account the long term insurance policy, allowing Medicaid to exempt dollar for dollar every dollar provided under the policy until it is exhausted.

Here Comes The Aging Boomer Generation

A. Reevaluation of the Filial Responsiblity Laws

As The Boomer generation ages, Medicaid will be inudated with long-term care responsibilities and program costs are expected to skyrocket. Accordingly, both federal and state officials are taking a second look at filial responsibility laws, some of which have been setting on the books for decades, as a way to deal with this impending program crisis.The National Center for Policy Analysis sees enforcement of filial responsibility laws as a good idea for the country.

B. Government-Industry Partnerships to Encourage Long-Term Care Policies

Already, insurance companies are explaining to parents and children the details of long term care costs, and the potential need to plan now for a policy. The premiums are tax-deductible as medical expenses, with the deduction amounts correlated to inflation and the elder's age.

Some states have established partnerships with long-term-care insurance companies to encourage the purchase of these premiums and avoid a future Medicaid burden. These partnerships offer those who buy long-term care policies the ability to keep a certain amount of assets and still get Medicaid nursing home coverage. There's also talk of a national partnership program.

What Does Your State Say?

The states in bold-faced type are those with civil and/or criminal filial responsibility laws on their books. Those with established insurance company partnership programs are:

California
Connecticut
Florida
Idaho
Indiana
Kansas
Minnesota
Nebraska
Nevada
New York
Virginia

States investigating these partnerships, as of Spring 2008, included:

Arkansas
Colorado
Georgia
Hawaii
Illinois
Iowa
Maryland
Massachusetts
Michigan
Missouri
Montana
North Dakota
Ohio
Pennsylvania
Rhode Island
South Dakota
Washington.



For more information:

The Tax Adviser, April 2008, "What is Long Term Care and Who Is Responsible for Its Cost?" by Dianne Odem, CPA/PFS and editor, Michael David Schulman, CPA/PFS

List of States Having Filial Responsibility Laws (statutes given)


Filial Responsibility Law - Adult Kids Sued for Care of Parents

Wikipedia, Medicaid.

Reverse Mortgages - Don't Get Scammed

You've seen them. Seems like there are more and more advertisements for reverse mortgages every day on TV and in the paper. They make reverse mortgages sound like something that's almost too good to be true. It might be: the government reports that reverse mortgage scams are on the rise.

Before you even contact one of these companies, go to the US Department of Housing and Urban Development website and read everything they provide: some of these companies are asking people to pay for this free information. Don't pay for what's free! For example, HUD offers the "Top Ten Things to Know About Reverse Mortgages" at its site.

AARP has lots of good info on its website, too. AARP has information on how to decide between selling your home outright and opting for a reverse mortgage (the pros and cons) as well as five questions to ask yourself before considering a reverse mortgage.

Finally, the Federal Trade Commission is a great source of free information about reverse mortgages.

The FTC also warns Americans:

"Be cautious if anyone tries to sell you something, like an annuity, and suggests that a reverse mortgage would be an easy way to pay for it. If you don’t fully understand what they’re selling, or you’re not sure you need what they’re selling, be even more skeptical.

"Keep in mind that your total cost would be the cost of what they’re selling plus the cost of the reverse mortgage. If you think you need what they’re selling, shop around before you buy.

"No matter why you decide to take a reverse mortgage, you generally have at least three business days after signing the loan documents to cancel it for any reason without penalty. Remember that you must cancel in writing. The lender must return any money you have paid so far for the financing."

Filial Responsibility Laws - List of States Having Them

States with filial responsibility laws are: Alaska, Arkansas, California, Connecticut, Delaware, Georgia, Idaho, 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.

To look up the actual language of the statutes, here are the citations:

1. Alaska Stat. 25.20.030, 47.25.230 (Michie 2000)

2. Arkansas Code Ann. 20-47-106 (Michie 1991)

3. California Fam. Code 4400, 4401, 4403, 4410-4414 (West 1994), California Penal Code 270c (West 1999), California Welf. & Inst. Code 12350 (West Supp. 2001)

4. Connecticut Gen. Stat. Ann. 46b-215, 53-304 (West Supp. 2001)

5. Delaware Code Ann. tit. 13, 503 (1999)

6. Georgia Code Ann. 36-12-3 (2000)

7. Idaho Code 32-1002 (Michie 1996)

8. Indiana Code Ann. 31-16-17-1 to 31-16-17-7 (West 1997); Indiana Code Ann. 35-46-1-7 (West 1998)

9. Iowa Code Ann. 252.1, 252.2, 252.5, 252.6, 252.13 (West 2000)

10. Kentucky Rev. Stat. Ann. 530.050 (Banks-Baldwin 1999)

11. Louisiana Rev. Stat. Ann. 4731 (West 1998)

12. Maryland Code Ann., Fam. Law 13-101, 13-102, 13-103, 13-109 (1999)

13. Massachusetts Gen. Laws Ann. ch. 273, 20 (West 1990)

14. Mississippi Code Ann. 43-31-25 (2000)

15. Montana Code Ann. 40-6-214, 40-6-301 (2000)

16. Nevada Rev. Stat. Ann. 428.070 (Michie 2000);
Nev. Rev. Stat. Ann. 439B.310 (Michie 2000)

17. New Hampshire Rev. Stat. Ann. 167:2 (1994)

18. New Jersey Stat. Ann. 44:4-100 to 44:4-102, 44:1-139 to 44:1-141 (West 1993)

19. North Carolina Gen. Stat. 14-326.1 (1999)

20. North Dakota Cent. Code 14-09-10 (1997)

21. Ohio Rev. Code Ann. 2919.21 (Anderson 1999)

22. Oregon Rev. Stat. 109.010 (1990)

23. 62 Pennsylvania Cons. Stat. 1973 (1996)

24. Rhode Island Gen. Laws 15-10-1 to 15-10-7 (2000); R.I. Gen. Laws 40-5-13 to 40-5-18 (1997)

25. South Dakota Codified Laws 25-7-28 (Michie 1999)

26. Tennessee Code Ann. 71-5-115 (1995), Tenn. Code Ann. 71-5-103 (Supp. 2000)

27. Utah Code Ann. 17-14-2 (1999)

28. Vermont Stat. Ann. tit. 15, 202-03 (1989)

29. Virginia Code Ann. 20-88 (Michie 2000)

30. West Virginia Code 9-5-9 (1998).

These state laws vary; however, law student Shannon Edelstone, in her award-winning essay (cited below), studied all of the state laws and found that most agree that children have a duty to provide necessities for parents who cannot do so for themselves. The states' legislation also gives guidelines to the courts, telling judges to use a number of factors when weighing the adult child's ability to pay against the indigent parent's needs. Judges, accordingly, have considered such variables as the adult child's financing of their child's college education, as well as his/her personal needs for savings and retirement.

What state had the most court cases dealing with application of its statute? In my search, it was California.


Sources: Filial Responsibility: Can the Legal Duty to Support Our Parents Be Effectively Enforced? by Shannon Frank Edelstone, appearing in the Fall 2002 issue of the American Bar Association's Family Law Quarterly, 36 Fam. L.Q. 501 (2002); my own research using Lexis.Com.

June 9, 2010 Update:  I have discovered that the New York Times has used this post as a graphic without my knowledge or permission. The link to that graphic, which accompanied an article written by Jane Gross in the Times' New Old Age Blog is here:  http://graphics8.nytimes.com/packages/pdf/health/NOA/30states.pdf. 

I've written the Editor.  I suppose some would say that having your stuff lifted by the New York Times is a backwards compliment. 

Personally, I just want my readers to know that I did this work, I'm not the one who has stolen a blog post here. 

Filial Responsibility Law - Adult Kids Sued for Care of Parents

Thirty states have filial responsibility laws. Does yours?

Matthew Paluka explains that they are "...statutes that establish a duty for adult children to care for their indigent elderly parents. When enforced, the statutes can require the adult child to reimburse state programs or institutions that have cared for the indigent parent with either a one-time contribution or installment payments."

Paluka explains that in the past, Medicaid practices have curtailed states from requiring adult children to care for their needy, elderly parents - but his report also discusses the amount of Medicaid funding that would be significantly impacted by Filial Responsibility enforcement.

Recent changes in Medicaid legislation, as described at ElderLawAnswers.com, may result in litigation seeking to enforce these filial responsibility statutes, as nursing homes try and find help to cover care costs and expenses that are not covered by the federal government. The forecast involves lawsuits pitting nursing homes against the kids.

Perhaps elderly parents and children should stop and consider their options now. More information in that regard is also provided at ElderLawAnswers.Com.

See also: Filial Responsibility Laws, Medicaid, and Long Term Care Insurance