How Are Nursing Home Bills Handled After Death?

Updated

Certified Care Manager, Aging Life Care Professional, and National Master Guardian Emeritus

Nursing home bills after death can be very stressful for family members. If your loved one has paid privately for nursing home costs and there are remaining bills to pay, it can be heartbreaking and difficult to understand.

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The best protection against any liability for someone else’s nursing home debt is to read the admissions agreement carefully before signing. If necessary, take the contract to an estate attorney to evaluate. It is far better to know what to expect than to have to scramble later.

Medicaid covers the majority of nursing home care, but to qualify for Medicaid, the patient has to have low income and limited assets. If a nursing home is the only option and the person is not eligible for Medicaid, nursing home costs can exceed $93,000 a year.

Fortunately, if a spouse is living in the primary residence, Medicaid does not count that as an asset for coverage. The only other payment sources for nursing home care are long-term care insurance (which pays a daily rate towards the cost) and private pay.

However, you may be unaware of any extra bills that your loved one may have to pay for as a result of nursing home care, leaving you saddled with the costs after their death. Medicare only pays for short-term rehabilitation, not nursing homes.

Why Do Nursing Homes Cost So Much?

If you consider placing your loved one in a nursing home, there may be no other setting where they can be cared for. Nursing homes offer 24-hour care in a medical-like environment. Included are physician services, nursing care, aides, therapy services, diagnostic testing, and the ability to provide almost any medical treatment. The level of care is greater than in virtually any setting except a hospital. 

If nursing home placement is unavoidable, make sure that you have a plan to pay for the cost of care. Pre-plan for all types of care, from home care to assisted living and nursing home care if necessary. As a reminder, Medicare only pays for short-term rehabilitation, not nursing homes. 

If Medicaid is an option, meet with a Medicaid planning specialist to ensure that you and your loved one’s estate are protected. Look into state programs that can provide care under Medicaid at home or assisted living. 

Who’s Typically Responsible for Nursing Home Bills After a Death?

Who is responsible for paying nursing home bills after death depends on these factors:

  • The state you live in and the laws regarding medical bill debt
  • Your relationship to the deceased person
  • If nursing home costs were paid for by Medicaid or privately 

Private pay situations

In most cases, the person responsible for nursing home bills after death is the person who was in the nursing home. Their estate (any assets) is responsible for paying the remaining bill, assuming enough assets are remaining to settle the costs. 

Things are trickier if someone else, such as a son or daughter, signed an agreement to be responsible for payment. Nursing homes are prohibited from requiring third-party guarantee agreements, but someone may sign one voluntarily, so be careful. Make sure you know what you are signing and don’t feel pressured to sign something you don’t understand. 

Additionally, there are filial responsibility laws. These laws state that adult children are responsible for helping parents pay bills if they cannot afford care. A few states have repealed or limited these laws, but some remain on the books. Enforcement of these laws is variable.

For the states where filial responsibility is still legal, it is unlikely that a care facility would pursue these cases. A nursing home would have to prove that the resident cannot pay from their estate to force adult children to pay expenses. Moreover, the children would have to be capable of paying the bills without hardship. 

Currently, 26 states and Puerto Rico have specific laws surrounding filial responsibility, but each state will have varying degrees of responsibility assigned to adult children. If a spouse signed a guarantee agreement upon admission, that spouse might be responsible for payment. 

Medicaid responsibility

You would assume that when your loved one qualifies for Medicaid, all of their nursing home expenses are paid for, and when they die, there is nothing left to do. Unfortunately, that is not always the case, as Medicaid is the primary payor source for long-term care. So the chances are good that you fall into this category. 

That said, there is something called The Medicaid Estate Recovery Program (MERP). The goal of the MERP is to recoup all the money that Medicaid spent on a beneficiary’s care for the duration of provided care. How is this possible if the person had no assets to qualify for Medicaid to begin with? In most cases, this is true that there would be no assets to recover.

However, in other circumstances, there may be assets (excluding the surviving spouse’s home). Every state is mandated to attempt to recover Medicaid payment. Specifics can differ from state to state, but generally speaking, these are the assets MERP can look to recover costs from. For example, in Massachusetts, the MERP can obtain money from the sales of any physical item such as a car that was owned only by the Medicaid member.

States are allowed to recover Medicaid funds paid for the nursing home care from assets such as a living trust or a joint tenancy (the holding of an estate or property by two or more parties). States are prohibited from making estate recoveries while the surviving spouse is still alive.

How Does Paying for Nursing Home Bills After a Death Work?

The process for paying for nursing home bills after death depends on the circumstances at the time of death. We will go through some possible scenarios and what to expect.

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Contact an estate planning attorney

You may be thinking that you don’t want to incur the cost of an attorney in addition to all of the other possible expenses involved in your loved one’s death.

But a good estate planning attorney can walk you through all of the additional scenarios below and make sure you and your loved one’s estate is protected. Also, if you are the executor of the estate, an attorney can ensure that you comply with state laws. 

As the executor of the estate

If you are the executor of the deceased person’s estate, you are responsible for settling all debts, including nursing home bills. It may take months to pay debts depending upon the complexity of the estate. 

In a state with filial support laws

Working with an attorney may relieve you of having to pay for your loved one’s nursing home bills. You will want to be clear on your obligations and if the state is likely to seek payment from you, and under what circumstances. There is little uniformity in how each state applies these laws and whether they will enforce it at all. 

Medicaid recovery process

Remember that the state can only attempt to recover assets from your parent’s estate, for example. If there are no assets, there is nothing to recover.  Calling your local Medicaid office may not give you the detailed information you need to know what your rights are and the process of recovery. Consult with an attorney that specializes in Medicaid law and elder law estate issues.  

Spousal responsibility

As the spouse of someone who dies, are you responsible for their medical bills, including nursing home costs? It depends on what state where you live.  The term community property states refer to states where anything earned or acquired by both parties while they were married is considered community property. Therefore, any debt incurred by a spouse is regarded as a community debt, and the spouse is responsible for repaying that debt. 

If the spouse is the designated executor of the estate, they are responsible for settling all unpaid debts. Also, if the spouse signed as a guarantor when their loved one was admitted to the nursing home, they will be responsible for paying any remaining bills.

What Happens If You Can’t Pay a Loved One’s Nursing Home Bills After They Die?

Paying medical bills after death may involve more than just nursing home bills. 

When your loved one dies, most of their debts are not forgiven, but that does not mean you will be legally obligated to pay what they owed when they died. Much depends on your relationship to the person who died and the circumstances of the outstanding debt.  

  • You are generally not responsible for the debt of someone who died unless you were the guarantor on the account, or as we mentioned,  your spouse died, and you live in a community property state.
  • There are times where you might be responsible under state law for certain debts of a relative who died if you live in a filial responsibility state.
  • The creditor or collector can try to collect from the assets of the estate of the person who died.
  • You can try and negotiate a debt payment plan and pay what you can towards that amount.
  • You can file for bankruptcy to get protection from creditors. 

Consulting an attorney about your responsibilities if you can’t pay is the best strategy. State laws are complicated, and you want to ensure that you make the best decision if you can’t pay a loved one’s nursing home bills after they die.

Nursing Home Bills After Death

Nursing home bills after death can cause confusion due to complicated state laws. Educate yourself before, during, and after nursing home placement to protect you and your loved one’s estate. Consulting with an estate planning attorney will give you peace of mind. 


Sources:
  1. “Cost of Care Survey. “ Genworth, 2021. genworth.com
  2. Garber, Julie. “How Filial Responsibility is Defined.” The Balance, 27 May 2021, thebalance.com
  3. “Massachusetts Medicaid Estate Recovery.” Mass.gov, 2021. mass.gov
  4. “Community Property State.” Investopedia, 2021. investopedia.com

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