Jack was born in 1943, the only child of a doting mother and a father home from the rigors of war in the Pacific. He grew up during the fabulous 50’s and the experimental 60’s; got married and divorced in the free love 70’s. He became a typical consumer in the buy everything 80’s and the Internet 90’s, then bought Florida real estate in the 2000’s, eventually losing everything in 2008. All along the way, he never really saved a dime.
Everything he made was either consumed, eaten, smoked, or sold for cash to take trips to Vegas, Tibet, or wherever The Travel Channel recommended that month. He did contribute a little to his 401k but took loans against it and eventually cashed it out to buy a new Audi for his trophy wife that was 22 years younger. She left him 6 months later.
He never took very good care of himself and eventually passed away in early 2010, broke, penniless and indebted to the nursing home to the tune of $450,000. He never got around to buying long term care insurance.
Janet on the other hand was born in 1962 and learned early on that she wouldn’t get anything unless she worked hard for it. And work she did. She was valedictorian of her high school class of 1,600 and scored a major scholarship for college. It essentially paid for everything, but Janet still worked a part-time job and saved her pennies. She graduated with a double major in math and psychology … and had $26,000 in her portfolio and savings account.
She went on to become a physical therapist and landed a job at a prestigious hospital in her growing city. Over the course of three years, she was promoted to run the department and did it better than anyone, being handsomely rewarded along the way. She married a business executive she met at a fund-raiser for the children’s hospital and eventually had three children of her own. She and her husband did very well for themselves financially, adopting a saving and investing philosophy similar to other great investors – investing only in what they understood, thinking of their investments as “buying a business” rather than just buying stocks, and sticking with their decisions for the long term. After 20 years of marriage, Janet and her husband had amassed a portfolio valued at $1.15 million even after the stock market took a dive in 2008. They were well on their way to hitting their goal of retiring at 62.
That’s when Janet was introduced to Filial Responsibility. You see, Jack was Janet’s father and since Janet and Jack both lived in Pennsylvania, Janet was now responsible for Jacks debts. Impossible you say? Not in the age of tight budgets where lawmakers search for ways to extract as much money as possible from the taxpayers so the state’s general fund isn’t depleted. It’s happening and it’s called filial responsibility.
Filial responsibility is the moral obligation of children to care for their parents and support them in their old age. But recently, filial responsibility has become more than just a moral obligation … it has become a legal obligation as well.
The laws have been on the books for hundreds of years, Pennsylvania’s since 1771, but they haven’t been enforced. Since the 1960′s federal law (U.S. Code Title 42 §1396a(a)(17)(D)) has forbidden the states from holding anyone (except a spouse) responsible for the financial needs of any individual applying for Medicare, Medicaid, or any poverty program. Since federal law supersedes state laws, the federal government places that responsibility on the taxpayers. But that seems to be changing.
States are facing massive budget shortfalls and the typical response is to search for the quick solution, namely extract the monies from taxpayers and in the case of elderly parents racking up huge bills in state run nursing facilities, it means going after the children who have the means to pay.
Currently 30 states have filial responsibility laws on the books and nursing homes are gearing their lawyers up to file suits against the children of non-paying residents. Reba Kennedy at Everyday Simplicity compiled the complete list (with the actual state code references). A quick alphabetical listing: 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.
What does this mean for you? Perhaps nothing, perhaps a great deal. You CAN fight filial responsibility should a nursing home or other care facility file suit against you for payment, but it can be a long and arduous process filled with lawyers and depositions, not to mention the emotional turmoil. The best bet is to investigate long term care insurance for your parents … and do your own “due diligence” about the filial responsibility you may personally have.
The “forecast” isn’t good for Gen X and Gen Y. Again, according to Everyday Simplicity
Recent changes in Medicaid legislation 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.
Check out 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
What are your thoughts? Should children be responsible for parents when parents haven’t been responsible for themselves? Should hardworking children have to foot the bill for their parents expenses?
Though the characters Jack and Janet are fictional, this situation is a real possibility and should serve as a reminder to make certain you don’t find yourself in a similar circumstance.