You May Have to Pay for Your Parent’s Long-Term Care
By Karl Kim, CFP, CLTC
As I look out into the future, I see a “Perfect Storm” brewing in California involving adult children and their aging parents.
Adding fuel to this storm is California’s dire budget crisis, inevitable cuts in Medicare and Medicaid, soaring nursing home costs, substantial reductions in Medicare and insurance reimbursement to hospitals, doctors and nursing homes, Obamacare and an exploding senior population.
Right now, in Los Angeles County, skilled nursing home costs run around $220/day or about $7,000 per month. Sub-acute care monthly costs run somewhere between $25,000 – $35,000 per month!
These costs are paid out of your income and assets, long-term care insurance, or Medi-Cal.
Senate Bill 483 signed into law in September, 2008 by Governor Schwarzenegger, is about to be implemented at the end of this year or the beginning of next year.
This will make it harder for people to qualify for Medi-Cal benefits to help pay for nursing home costs by bringing California more in line with the Deficit Reduction Act of 2005.
There are very few companies left writing long-term care insurance in California. This is primarily because our legislature wants to dictate to insurance companies how much they can charge for premiums. The insurance companies have no choice but to take only the healthy.
Then you throw in what just happened in Pennsylvania. It involves “filial support”.
John Pittas’ mother was in a rehab facility after a car crash. After she was discharged, she left the country. Her $93,000 nursing home bill was not paid. She had applied for Medicaid but it was not approved quick enough for the nursing home.
The facility filed a lawsuit against John Pittas for his mother’s bill under the state’s filial responsibility law. John’s mother had a spouse and other children, but the nursing home singled out John for the lawsuit.
The trial court found for the facility. John appealed and lost. He was solely financially responsible for his mother’s $93,000 nursing home bill!
I know what you’re thinking. That was Pennsylvania, it can’t and won’t happen in California. Think again!
According to Katherine Pearson, Professor of Law at the Dickinson School of Law, there are 29 states that have filial support laws. Filial support means that adult children are legally obligated to financially support their parents.
California is ONE of those 29 states.
According to Professor Pearson, California’s filial support laws date back to 1872. It is currently in California Family Code sections 4400-4405.
The last California court case involving filial support was in 1973. The California Supreme Court upheld Swoap v. Superior Court of Sacramento that a revised 1971 statute provided a rational, enforceable basis for adult children to reimburse the State for aid granted to their parents.
Section 4400 is still on the books but it is currently being undermined by California Welfare and Institutions Code 12350.
W and I Section 12350 says:
“No relative shall be held legally liable to support or to contribute to the support of any applicant for or recipient of aid under this chapter.”
It further states “No county or city and county or officer or employee thereof shall threaten any such relative with any legal action against him by or in behalf of the county or city and county or with any penalty whatsoever.”
My question to you is this. If California really needed the money, don’t you think that W and I Code Section12350 would be readily amended?
In addition, this code only applies to the government, not nursing home corporations or companies.
OK, so let’s go back to the beginning.
California and the federal government are in a world of financial hurt as are nursing home companies. Based on what I have just told you, don’t you think that it is in your best interest to get involved in your parents’ retirement and financial planning?
Do you want to pay their bills?
I didn’t think so.
If you don’t plan, you could be.
Karl Kim, CFP, CLTC is the President of Retirement Planning Advisors, Inc. and is a Medi-Cal specialist. His office is located in La Mirada, CA and can be reached at 714-994-0599 or at www.KarlKimCo.com. He has submitted over 1000 applications with a 99.9% success rate over the past twenty years with a 99.9% success rate. This is meant to be an educational article. Do not make any decisions solely on the information contained herein. Consult your tax advisor, financial planner and attorney before taking any action. We are not responsible for any inaccuracies or misinformation.