Hidden Truths About Reverse Mortgages

Hello, again.  Carolyn and Mikol here.  We came across an article about a shocking case involving a son being stuck with his mother’s nursing home bill.  We wanted to give you a heads-up, as most people would never expect this. Could this happen to you?

John Pittas’ mother entered a nursing home for rehabilitation following a car crash. After she left the nursing home, she moved out of the country.  His mother’s $93,000 bill at the home was left unpaid.  The mom had applied for Medicaid, which would  normally pay the bill if she couldn’t.
The mom’s Medicaid application did not get approved in enough time to satisfy the nursing home, and it sued her son for the bill.  The state of Pennsylvania, like 29 others in our country, has something called a “filial responsibility law”.  Those laws require that spouses, children and even parents of needy adults support the indigent.  These laws were rarely ever enforced.  The nursing home  decided to enforce it rather than have Medicaid do what it was designed to do.
The trial court found for the nursing home.  Mr. Pittas appealed. He argued  that the court should have considered  Medicaid or going after his mother’s husband and her two other adult children.  Astonishingly, the appeals court not only agreed that the nursing home didn’t have to wait until the Medicaid claim was resolved, it also found that the nursing home could choose any family member it wanted to when seeking payment for the bill.
There is an adage in the law:  You can’t legislate morality. However that is exactly what the Pennsylvania courts in the Pittas case did.  If a son or daughter has the money and wants to pay for mom or dad’s care, that’s an upright choice.  But what if they choose not to pay? What if they have their own expenses, kids in college or a retirement they want to fund?  Since when is it okay to unfairly discriminate against a financially successful family member? Mr. Pittas’s tax returns, bank statements, and other personal data are now presumably public record.
Here’s the unspoken part of the picture that really rankles. Some parents  worked hard all their lives and never made enough money to pay for expensive things like nursing home care. I can’t justify any court making their kids pay.
A quarter of adult children, mostly baby boomers are already providing personal care or financial assistance to aging parents, according the the Met Life Mature Market 2011 study of the Caregiving Costs to Working Caregivers. These boomers are already out nearly $3 trillion in lost wages, pension, and Social Security benefits for themselves. Now some states want to saddle these same adult children with the nursing home bill too??
The pressure is on in all states to deal with the explosive costs of  Medicaid programs. States are not in trouble because of unnecessary spending for indigent sick folks.  They are in trouble because people are living longer, and having more health care needs as a result of longevity. Our aging persons who are in nursing homes for any length of time typically can’t pay the cost of being there.  The solution is not to force the high cost of care onto their children.  Historically, taxpayers have borne the burden of helping our indigent pay for care.  I can’t see any other choice, unless you think it’s okay to throw the sick and needy out into the streets.
Yes, it takes taxpayer money to fund Medicaid and cover Mr. Pittas’ mother’s nursing home stay.  So be it.  She was living on an income of $1000 a month.

What are the takeaways here?
First, if your parent is low income, see an elder law attorney who has expertise in Medicaid in your parents’ state and get the application going now if they qualify.  If assets need to be transferred to avoid losing a home, you need to do this years before your parent needs Medicaid.
Next, if there was ever an argument for buying long term care insurance, a state’s filial responsibility law is it.  If your parents are young enough and healthy enough to be insurable, get them to buy it or buy it for them.  If you just want to “think about it”, they may become unmeasurable while you drag your feet.
If you aren’t sure about what your responsibility is or may be for your aging parents, get competent advice before any more time passes.  We offer coaching programs to get  you through your aging parent transitions.  Learn about how the law, your parents’ health needs and your own emotional health can be managed to avoid costly mistakes.
Until next time,
Carolyn Rosenblatt & Dr. Mikol Davis
AgingParents.com

Carolyn and Mikol here.

We hope all of you are well and that the Moms out there will enjoy your special day.  Happy Mother’s Day to each of you!

As for our aging moms, here’s a reminder about a persistent and growing $2.9 billion a year problem.

Our aging loved ones are targets.  The thieves are extremely good at stealing.  They see our parents are an easy mark,  If you will be visiting or calling your mom on this Mother’s Day, think about these things and keep Mom close to your heart.  Aging moms and dads too need our vigilant protection, no matter how independent they seem.
Imagine this:

Two ruthless swindlers were arrested in New York for tricking an elderly woman out of her multimillion-dollar property in Harlem she had owned for over 40 years.

A  home care worker bilked a frail elder out of her life’s savings of $350,000.  Grandchildren get loans from grandparents without any intention of repaying them.  Unethical salesmen touting unsuitable annuities seduce unsuspecting elders.  A few scheming realtors take advantage of forgetful seniors.  Even lawyers prey on unsuspecting or impaired elders to rip them off.

Mikol’s mom, Alice, is 89 and still very sharp.  Someone tried to rip her off by sending her a legitimate looking check for $3800, advising that she was the second place winner of a sweepstakes. She does play various sweepstakes.  All she had to do, of course, was to deposit it and “pay the taxes” on her “winnings”.  Of course the check is rubber and the money is gone before the elder finds out that it has bounced.

Classic scam.  Alice called the number and quickly realized that it was a phony outfit.   Not everyone’s aging parent is lucky enough to be so alert to this kind of fraud.

What we know from research into Alzheimer’s Disease is that one’s judgment about financial transactions may be the first thing to become impaired when the disease is in the earliest stages.  “Mild cognitive impairment” as doctors may call it, is not so mild when you think about the financial damage that can result.  And the elder with this early warning sign of dementia may be living independently, paying taxes on time and otherwise appearing socially normal. For a time.

Vulnerable elders are truly sitting ducks, easy prey.  Isolation, confusion, forgetfulness, and fears about running out of money can all drive the susceptibility to entering into a “deal” with a clever scammer.

Here are seven basic things a family can do to reduce the risks of ripoff.  Pick any that apply and please do them!

1.  Check in often. If your aging parent lives alone this is crucial.  One of my clients at AgingParents.com emails her dad every day to check in. Others call every day or close to it.  They may not think they need this but they do.

2.  Ask to be a co-signer on the main bank account in case of emergency.  Some aging parents will agree and some will resist but ask regardless.  It will allow you to do online monitoring of the account activity.  A “new friend” who gets money from them is a huge red flag.

3.  Have your parent sign a Durable Power of Attorney appointing a competent and ethical agent, which could be you, a sibling or trusted other.  If cognitive decline happens, the agent can at least get the money out of the account and put into another safer one that the impaired elder can’t access. This is one way to stop the thieves who are looking for impaired elders.  Nothing in the account, no gain for them.

4.  Suggest having your parent use a licensed fiduciary to handle money if they don’t want you to do it.    If there are issues of not trusting you, an objective professional can protect them from abuse. You might do research to find a reputable one for them.

5.  Provide and encourage parents’ connection to others. Think of isolation and loneliness as two big factors in why elders get financially abused.  If you can provide encouragement for them to get involved in activities, it will make them less likely to want to talk to a smooth, slick “friendly” con artist on the phone.

6.  Monitor everyone who comes into your parents’ home regularly.  Even the most trusted housekeeper, gardener, caregiver or bookkeeper can be tempted beyond reason when their own financial circumstances change for the worse.  Your parents are all the more at risk when they trust the familiar person, who can use trust to exploit unsuspecting parents.

7.   Do background checks on any home care helpers who are hired to work for Mom or Dad.  The cost is modest, and you can find out a lot:  bankruptcies, poor driving records, and of course, criminal convictions and civil cases.

We urge everyone to think about the risks to our aging parents.  Your parent may seem fine, but be susceptible to poor money judgment.  If the question of whether your elder is safe with money is on your mind, call us for a consultation.  Our expertise will help you manage whatever is ahead of you.

If the decision-making is making you crazy and you don’t know where to turn, consider getting a free complimentary strategy session at AgingParents.com.  It’s a start.

Meanwhile, we both send you our best.

Until next time,
Carolyn Rosenblatt and Mikol Davis,
Aging Parents.com