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Nursing Homes Cannot Contractually Require You to Guarantee Payment of the Cost of a Family Member’s Care

Among the many issues that factor into whether a loved one should start receiving nursing-home care is the cost, especially when the need for this level of care develops quickly or is unexpected.  At some point during this time, when emotions are running high and it seems decisions must be made quickly, the facility may present you, as well as your family member, an admissions agreement that must be signed as part of your family member’s admission to the facility. It is natural to think you have no choice but to accept the agreement as-is and sign it, just because it is something the facility is requiring.

It is important that you resist that temptation until you know exactly what you are signing.  Of course, this is true with any contract.  But it is particularly true in this scenario, because it is common for nursing facilities to include language that makes you, frequently designated as the “Responsible Party,” liable to the facility for the cost of your family members care in the event that your family’s member’s funds are exhausted or there is an issue with payment from a third party, such as Medicare, Medicaid, or insurance.

This language is unenforceable under both federal and New Jersey law, which prohibit facilities from requiring you to guarantee payment of the cost of your family member’s care as a condition of his or her admission as a resident.  Although the New Jersey law was enacted in 1997, there are facilities whose agreements still contain this language.  If you see this language in the agreement presented to you, be sure you strike it from the agreement and speak with the admissions or other staff about it.  You should not rely on the fact that the language is prohibited, thinking that the facility would know better than to try to enforce it in court.  Given the speed at which the cost of care can mount, a facility faced with a big enough unpaid balance may take its chances and argue that you somehow waived your protection under the statute and agreed to be liable – if you give them the opportunity to do so.

Note that the facility may require that you, without incurring personal financial liability, provide payment to the facility from your family member’s income or assets if you can legally do so, e.g., as a guardian, agent under a power of attorney, or trustee of a trust for the family member’s benefit.  The key distinction to this obligation as the “Responsible Party” is that the law is clear that payment is coming from your family member’s resources, not yours, and your personal assets are not at issue.  However, you should still be sure to abide by all other fiduciary obligations that apply to whatever position gives you access to your family member’s assets.  If there is any allegation that you misapplied or wasted your family member’s resources under these circumstances, leaving the facility unpaid, the facility may claim that you should be responsible because you failed to apply the resources to payment to the facility.

Also keep in mind New Jersey’s filial responsibility laws, which could require a child under 55 to pay the cost of long-term care of a parent who is receiving public assistance.  These laws also could obligate a spouse to pay for the cost of the other spouse’s care, regardless of age.  These laws generally are not aggressively enforced in New Jersey, but they could provide another way, outside of the admissions agreement, for a nursing home to require a third party to pay for the cost of a family member’s care.

Especially for adult children of aging parents, it is a fact of life that there is an increasing need for family members to be involved with a loved one’s care and to ensure that loved ones are protected.  It helps to know that New Jersey law makes this at least a little easier by providing some financial protection for family members when a loved one enters a nursing home.

If you have any questions about this post or any other related matter, please email one of our estate planning and administration attorneys.