You have been caring for your loved one at home for some time now. It has become increasing difficult. Although you have had help coming in to assist you, you are still exhausted. It is now to the point that your loved one needs 24 hour a day care. Even with assistance, you cannot do it anymore. And 24 hour a day in-home care is so expensive. For the health and safety of your loved one, and for your own health, you need to move your loved one from home to a 24 hour a day supervised facility.
There are assisted living facilities, adult foster care homes and nursing homes out there. You investigate your available options based upon the services needed now and what you may need in the near future. Change can be very traumatic for individuals in this situation, especially when moving from home. You do not want to move your loved one now and then have to move again in six months because additional services are needed.
You finally decide upon a facility and make the arrangements. You thought it would be as easy as making reservations for a hotel stay. But no, you were wrong. They give you a book of papers to sign about fifty pages thick. You are concerned about your loved one and not about the paperwork. You just sign everywhere you were told to sign, arranged transportation and moved your loved one to the facility.
After settling your loved one into the facility, you have a little time and take a breather. You start to review the papers you signed. There are so many different documents. It starts to make your head spin. There’s the Admission Agreement, Medicare Disclosures and Agreements for Rehabilitation Services and Resident Trust Funds. There were forms for prescription medication, laundry, durable medical equipment rental, physical therapy, occupational therapy, speech therapy and others
You cannot make heads or tails out of all of all these documents. The time to have these documents reviewed is before you sign them. Take them to your elder care/elder law attorney for review. You may think that because it is a facility provides custodial type care for you loved one that they are primarily looking out for your loved one’s best interests.
While it is true that they are looking out for the interests of your loved one because that is the business they are in, they have to look out for their own interests first. It makes sense. If they didn’t protect themselves, then they would go out of business and could not provide any services to anyone. Many of the provisions in the pile of papers that you received from the facility are there to protect their assets.
One very common tactic that many facilities use to protect their assets is to get as many people on the hook for the financial obligations in the documents as they can. There are two common ways to get you on the hook for your loved one’s obligations, make the agreement with you and/or have you sign as a responsible person or guarantor of the obligations in the documents.
By making the agreement with you, then you are personally on the hook for all of the expenses and financial obligations of the agreement. If your loved one runs out of money, you are personally liable for all of the payments due because the agreement is with you, not your loved one. Ouch!
The other most common way that a facility gets you on the hook for the financial obligations in the agreements is to have you agree to be the responsible person or guarantor of payments required under the agreement. Just like with making the agreement directly with you, if your loved one runs out of money, you have to pay. Ouch, again!
I have seen this scenario happen time and time again. Your loved one runs out of money and then passes away. Not only are you now grieving the loss of your loved one, the facility sues you for the balances due on the agreements. The facility wins a judgment against you because you personally agreed to it.
How do you protect yourself? DO NOT sign personally. Sign as agent of your loved one. If you are the power of attorney for your loved one, in all the signature lines, print your loved one’s name above the signature line, and on the signature line, print “By:” before your signature and “POA” or “Attorney-in-Fact” after your signature. If you are not power of attorney, you can still sign as agent of your loved one by signing it the same way as a power of attorney, except print “Agent” after your signature, instead of “POA” or “Attorney-in-Fact”.
By signing the documents this way, you are only signing as agent for your loved one. and not personally. In addition, eliminate or cross out all references to a responsible person or guarantor of the obligations under the agreements. If there is no reference for a responsible party or guarantor of the obligations under the agreement, when your loved one runs out of money, you are not on the hook.
Another item that we have seen increasingly in Medicaid qualifying nursing home facility agreements are provisions limiting your loved one’s ability to implement an asset protection plan. Your loved one may have instructions in a financial power of attorney to protect assets for a spouse or others, while still qualifying your loved one for Medicaid to pay for nursing home care.
With these limiting provisions in the nursing home agreements, you or your loved one agree not to divest or transfer any of your loved one’s assets for less than fair market value. If you agree to this, you cannot protect those assets for you or others, you must pay them to the nursing home before qualifying for Medicaid to pay for your loved one’s care. Cross out all of those limiting provisions in the nursing home agreements if you want to continue to protect those assets as your loved one intended.
Also, do not rely upon the nursing home or its staff for Medicaid qualifying advice. The nursing home wants to maximize its private pay rate, which is much higher than the Medicaid rate. We recently reviewed one local nursing home agreement which stated that under the Medicaid rules, you can keep one home and qualify for Medicaid to pay for your care, but incorrectly stated that your home is where you are residing, even temporarily.
If you followed the nursing home’s advice, you would have to sell the home and with the sale proceeds, private pay the nursing home. This improper and incorrect advice is contrary to Michigan Medicaid rules. Under the rules, your home is where you last resided prior to entering a custodial care facility.
If a loved one is bound for a residential care facility, seek the advice of an experienced elder care/elder law attorney. If you do not, it may cost you a whole lot more than the cost of the consultation. It’s like the old Fram oil filter commercial, “Pay me now, or pay me a whole lot more later.”
By: Matthew M. Wallace, CPA, JD
Published edited January 24th, 2016 in The Times Herald, Port Huron, Michigan as: Know What’s in Your Residential Care Facility Contract