Elderly Parents Should Be Cautious Before Making Gifts To Children
When our elderly parents or other relatives have a medical concern, often this is a time to review plans for long term care. A review of options includes the painful task of reviewing the costs of each option and the ability for the family member to pay for care.
One option (often as the last resort) is to move a family member to a nursing home. More likely than not, this decision comes after a medical crisis. Unfortunately, in many instances when this crisis occurs, there has been no advance family planning to deal with the financial consequences of this move. If your family member does not have the funds to pay for a stay at the nursing home, he or she must apply for state assistance (known as “Medicaid” or “Title 19”).
The process of qualifying for Medicaid can be complicated; and if the application for benefits is not done correctly, there can be adverse results. For example, if your parent is living in a nursing home while the Medicaid application is pending, a nursing home bill will begin to accrue. As long as your family member is what we call “Medicaid pending,” there is no obligation to pay the bill that applies to a period of time which will be paid by Medicaid. Once the application is approved and Medicaid is granted, the State of Connecticut will pay the nursing home bill. However, if the application is not approved or the payments are delayed because of something called a “penalty period,” the State of Connecticut will not pay all or a portion of the accrued nursing home bill; and the nursing home will look elsewhere to be paid – including to family members. A penalty period will be imposed if your family member made transfers of assets without getting something of equivalent value in return (known as “consideration”), including gifts to family members, within 5 years of the application date.
Previously, if Medicaid was not granted because there were transfers of assets by the family member without sufficient consideration, the nursing home would sue the family member residing at the nursing home for the balance due to the facility. The nursing home could also sue a child or other person for signing the nursing home resident agreement as the “responsible party.” And now, due to a recently enacted law, the nursing home can also hold liable the recipients of the gifts if the parent is disqualified from receiving Medicaid because of transfers of assets.
To be successful in its lawsuit, the nursing home has to prove (1) that the a debt to it was incurred by a transferor who willfully transferred assets without sufficient consideration during the penalty period and that the transferee received the assets with this knowledge; or (2) that the debt to it was created because of a material misrepresentation or omission concerning the assets in the application for admission. Even though the burden is on the nursing home to prove these factors, the threat of a lawsuit can lead to more family stress in an already stressful situation.
If your family member has recently moved into a nursing home, will be moving into a nursing home, or otherwise needs to apply for Medicaid to pay for the costs of long term care (including home care), you should consult our elder law practice group to discuss all the issues, including how this new law can affect you and your family member.