Understanding Who is Responsible for Nursing Home Bills
When a person is admitted to a nursing home, the responsibility for paying the bills typically falls on the resident themselves. The resident's personal income and assets are the primary source of payment, and only after those funds have been exhausted does alternative funding, like Medicaid, come into play. However, the situation becomes more complex when the resident's funds are depleted or mishandled, or if the resident passes away with an outstanding balance.
The Admissions Contract: A Common Trap
It is common practice for a family member or friend to sign the admissions agreement for a resident, especially if the resident is incapacitated. Nursing homes often include clauses in these contracts that attempt to assign personal financial responsibility to the signing individual, often referred to as the “responsible party” or “representative.” Despite these attempts, the federal Nursing Home Reform Act (NHRA) explicitly prohibits nursing homes from requiring a third-party guarantee of payment as a condition of admission. Nevertheless, many facilities ignore or circumvent this law.
Some contracts are designed to hold the "responsible party" liable for mishandling the resident's funds, such as failing to properly apply for Medicaid or using the resident's money for personal gain. If the nursing home can prove that the third party did not use the resident's money to pay the bill as agreed, they may sue the signer for breach of contract. This is distinct from being a personal guarantor, but the effect can be just as devastating, potentially leading to a costly lawsuit and judgment against the family member.
The Debt Collection and Legal Process
When a nursing home bill remains unpaid, the facility's options for collecting the debt escalate over time.
- Initial Contact: The nursing home's billing department will first contact the resident or the identified responsible party to discuss the unpaid balance.
- Collection Agencies: If the bill remains unpaid, the facility may sell the debt to a third-party collection agency. These agencies, and sometimes the nursing home itself, may attempt to pressure family members into paying, even if they have no legal obligation to do so. Under the Fair Debt Collection Practices Act (FDCPA), certain deceptive or abusive collection practices are illegal, and individuals have rights when dealing with collectors.
- Credit Reporting: Debt collectors may report the unpaid debt to consumer credit reporting agencies. This can negatively impact the credit score of the resident. They may also attempt to report the debt on a family member's credit, which can be an illegal practice if the family member is not personally responsible.
- Lawsuits: As a last resort, the nursing home or collection agency may file a lawsuit. The lawsuit would be filed against the resident, their estate, or, in some cases, the family member who signed the admissions contract. A judgment could lead to wage garnishment or liens on property.
The Medicaid Estate Recovery Program (MERP)
For many seniors, Medicaid pays for their long-term care. However, federal law requires states to have a Medicaid Estate Recovery Program (MERP) to recoup certain costs. This is one of the most significant consequences of unpaid nursing home bills.
How MERP Works
When a Medicaid recipient over the age of 55 dies, the state is required to seek reimbursement from their estate for all Medicaid-covered medical expenses, including nursing home costs. The state can place a lien on the decedent's home and collect its claim before heirs receive their inheritance.
Protection from MERP
There are crucial exemptions that can prevent or delay estate recovery:
- Surviving Spouse: Recovery is delayed until the death of the surviving spouse.
- Minor or Disabled Child: Recovery is delayed if the recipient has a surviving child under 21 or a disabled child of any age.
- Undue Hardship: Family members can apply for an undue hardship waiver if recovery would cause severe financial hardship, though the criteria and approval process vary by state.
Protecting Your Home
If the Medicaid recipient's home is a non-exempt asset in the estate, a lien may be placed on it. If the property is later sold, the state's lien must be satisfied first. Understanding these rules is vital for protecting family assets.
The Possibility of Filial Responsibility Laws
Some states have filial responsibility laws, which legally obligate adult children to provide financial support for indigent parents. While these laws are rarely enforced in most states, they do exist and can theoretically be used by nursing homes to sue adult children for unpaid bills. However, they are often less of a threat than the more common and aggressive tactics involving admissions agreements and Medicaid estate recovery. It is important to know if your state has such laws and to consult an elder law attorney regarding your specific situation.
Comparison of Potential Liabilities for Family Members
| Type of Liability | Source | How It Works | Key Protections |
|---|---|---|---|
| Responsible Party Clause | Nursing Home Admission Agreement | Family member signs agreement to manage resident's funds. Can be sued for alleged mismanagement of those funds. | Federal law (NHRA) prohibits personal financial guarantees. |
| Filial Responsibility Laws | State Law | Adult children legally obligated to support indigent parents. Enforced rarely and varies by state. | Non-enforcement in many states; typically requires a lawsuit where ability to pay is considered. |
| Medicaid Estate Recovery | State & Federal Law (MERP) | State recovers Medicaid costs from the deceased resident's estate. | Surviving spouse, minor or disabled child exemptions; undue hardship waivers. |
Taking Action to Protect Yourself and Your Family
If you are facing unpaid nursing home bills, proactive steps are essential. First, if a loved one requires nursing home care, carefully review the admissions contract and refuse to sign any clauses that make you personally liable. If you are a "responsible party," strictly adhere to your fiduciary duties regarding the resident's funds and keep meticulous records. If a bill is already outstanding, it is critical to seek legal counsel from an elder law attorney.
The Consumer Financial Protection Bureau offers resources and advice for dealing with nursing home debt collection and understanding your rights Consumer Financial Protection Bureau website. Consulting with an attorney can help you navigate aggressive collection tactics, determine your true liability, and challenge unfair or illegal claims.
Conclusion
Unpaid nursing home bills are a serious and complex issue, with repercussions that extend beyond the resident. While family members are often targeted by collection efforts, understanding your legal rights and the specific programs at play, like Medicaid Estate Recovery, is paramount. By carefully reviewing admissions contracts, managing funds responsibly, and seeking expert legal advice, you can better protect your assets and navigate the financial challenges of long-term care.
