Son Is Liable for Mother’s Nursing Home Expenses

Q. My mother was diagnosed with dementia and will need nursing home care in the not-so-distant future. She recently started giving huge monetary gifts to me and my sister for birthdays and holidays. I told her that what she is doing is a bad idea, because Medicaid has a five-year lookback period. She said she just wants to see us enjoy the money while she is still alive.

I heard recently that if she does go into a nursing home and can’t pay, then the nursing home can come after us (her children) for the money. Is that true? The reason I ask is that I read about a case recently where a nursing home came after a son for over $200,000 after the mother was unable to pay due to gifting her money to him. Please clarify if this can happen in Virginia. Thanks for your help!

A. Thank you for your question! The case you described does in fact show what can happen if you start gifting money to your children, and how nursing homes can come after your children for payment if you cannot pay.
In Amsterdam Nursing Home Corp. v. Lynch, the patient was not on Medicaid, and was expected to pay out of pocket, but failed to do so.

In 2013, Denise Lynch entered a nursing home in New York City that was operated by Amsterdam Nursing Home Corporation. One year later, she transferred all of her assets to her son, Sean Lynch, and subsequently stopped paying for room, board, and the skilled nursing care services she was receiving.

The nursing home filed a complaint for the unpaid costs of $213,909.02, alleging claims against Ms. Lynch for services rendered and against her son for fraud because the asset transfers to him left his mother unable to pay her creditors (the nursing home being her largest creditor). Neither the mother nor the son responded to the complaint, so the nursing home was forced to take them to court.

The Supreme Court of New York, NY County, found that the nursing home had a valid case against Ms. Lynch because she received the nursing home services without paying for them, and against her son because he received his mother’s assets with an “intent to defraud.”

The New York State Medical Assistance Program Nursing Home Eligibility Division (NHED) determined that defendant Denise Lynch’s Net Available Monthly Income, comprised of her Social Security benefits and her pension income, equaling $6,428.87, were to be paid directly to the nursing home on a monthly basis. However, checks were instead written out directly to her son, Sean Lynch.

The judgment was against Sean Lynch, in the amount of $213,909.02 plus interest at the rate of 9% per year until he makes the full payment, plus other costs (court fees etc.) This case describes what can happen if you gift money to an adult child while receiving services that you are responsible for paying.

Should all Gifting Cease if a Person Will Need Long-Term Care?

The case described above does not involve Medicaid eligibility, however gifting can and often does affect Medicaid eligibility! Even if there wasn’t a judgment against her, if Ms. Lynch applied for Medicaid today, she wouldn’t qualify because of the gifts she gave to her son. Gift giving can be a risky venture for anybody who may need nursing home care within five years.

To prevent applicants from simply giving away their money or resources to qualify for Medicaid, the federal government implemented the “look-back period.” In 49 of the 50 states, the length of the look-back period is 5 years (60 months). As of this year, the one exception to this rule is California, which has a 2.5 year (30 month) look-back period.

How the Five Year Look-back Rule Works

The look back period begins the date that one applies for Medicaid and is otherwise eligible. For instance, if a senior files an application for Medicaid on July 15, 2019, and is otherwise eligible, the look back period begins on that date and goes back 5 years to July 15, 2014.

A Medicaid applicant can be penalized if assets (money, homes, cars, etc.) were gifted, transferred, or sold for less than fair market value during the five year look-back period. Even payments to a caregiver can be found in violation of the look-back period if done informally, meaning no written agreement has been made. Asset transfers by the applicant’s spouse also affect the applicant and result in a Medicaid penalty period for the applicant. The reason for this penalty period is that these assets could have been used to help cover the cost of long-term care, had they not been gifted or transferred.

So, those who may need nursing home care within the next five to ten years must weigh the joy of giving against the potential cost of losing much-needed Medicaid benefits. For more information about gifting and Medicaid eligibility, read “Medicaid: The Perils of Gifting FAQ.”

Are Children Typically Responsible if a Parent Can’t Pay

Although the case described above was mostly about the fraud involved with a mother gifting money to her son instead of paying the nursing home, many states have filial responsibility laws that make adult children financially responsible for their parents’ care when the parents do not have the means to pay for it on their own. The extent of this responsibility can vary by state. Here’s the list of all the states that have these laws, which includes Virginia.

Filial responsibility laws can be used by nursing homes and other long-term care facilities as a means to seek reimbursement for unpaid bills. For more details on filial responsibility, please refer to our blog articles on the subject, as follows:

Seek Guidance When it Comes to Gifting

Like most financial choices, giving gifts isn’t always the right move. If it’s on your mind (or even if it isn’t), it’s important to consult an experienced Elder Law Attorney to help you decide which option can best help you provide for your loved ones without compromising your own financial security and Medicaid eligibility.

Even if your mother is years away from needing nursing home care, the time to plan is now. Call us at any time to make an appointment for a consultation:

Elder Law Fairfax: 703-691-1888
Elder Law Fredericksburg: 540-479-1435
Elder Law Rockville: 301-519-8041
Elder Law DC: 202-587-2797