BUT WE RELIED ON WHAT YOU TOLD US”
What you tell the staff of an assisted living residence at the time of admission may come back to bite you.
I have had a number of clients contact me concerned over the terms of a contract that the staff of an assisted living residence asked them to sign. Obviously, or at least obvious to me, the terms of the contract are invariably one-sided, favoring the assisted living residence in almost every respect.
The bottom line is, an assisted living residence is a business, and that business wants to ensure your timely payment – or your timely ejection in the event you fail to pay. You can’t really fault these facilities for wanting to get paid for the services provided.
Yet more often than not, it is a document that a client might give little thought to before completing that could have the most significant impact on the client’s future choices. That document is a personal financial statement that most facilities request a prospective resident to complete.
Typically, these statements are one page in length and request basic information, such as monthly income and current assets.
If you didn’t know better, the document appears innocuous. In reality, perhaps more than any other document you might sign with the facility, this ostensibly harmless statement could come back to bite you. Here’s how.
The real purpose of a personal financial statement is to allow the facility to get an idea of how long you can afford to pay the facility privately, that is, before requesting Medicaid benefits. In this area of the state, an assisted living residence might cost anywhere from $3,000 to $6,000 per month, depending on the facility and the level of care that the resident is receiving.
Let’s assume that Mrs. Jones enters an assisted living residence that will cost her $4,000 per month and that she has $1,000 in Social Security income. The facility knows that Mrs. Jones has a $3,000 monthly deficit – $4,000 minus $1,000 is $3,000.
When Mrs. Jones completes her financial statement, she reveals that she has $90,000 in assets. Given this amount of assets, the facility can expect to be paid privately for roughly thirty months, or two-and-a-half years.
For most facilities in this area, the prospect of receiving two-and-a-half years of private payment is probably acceptable. Stated otherwise, most facilities would gladly accept Mrs. Jones as a resident given her monthly income and her asset level.
The facility knows that when Mrs. Jones has nearly expended her resources, perhaps two years after admission, the staff will prompt her to apply for Medicaid benefits and that Medicaid will pay the facility for her care after she spends the remainder of her assets.
But what if Mrs. Jones had $300,000 when she entered the facility and what if Mrs. Jones revealed that she had the $300,000 when she entered the facility? What if Mrs. Jones went to an attorney after she entered the facility, and the attorney advised her to gift some of her money in order to preserve it for her and her family’s benefit, that is, to engage in Medicaid planning?
Well, when Mrs. Jones or her attorney apply for Medicaid benefits, the facility might claim that Mrs. Jones told them that she had $300,000 when she entered and that they expected her to spend that money on her care at the facility, assuming that she continued to be a resident. This is a “detrimental reliance” argument.
In other words, the facility is saying: You, Mrs. Jones, told us that you had $300,000 in assets when you came here, and we admitted you based upon the information that you provided. We would have never admitted you as a resident if you told us that you had less than $300,000.
Of course, whether the facility would have admitted Mrs. Jones if she told them that she had $300,000 or $90,000 is a question that might have to be answered by a jury, but the point is, the facility will make that claim.
What should Mrs. Jones have done? She should have consulted with an attorney before signing the documents. It’s better to tell a long-term facility too little than too much. No one can claim that they relied on something you didn’t tell them.
Long-term care is a costly proposition. Think before you act, and seek the advice of a professional.
Helping a loved one move into assisted living is often emotional and overwhelming. Paying attention to the little details — from care plans to contracts — can make a big difference in comfort and peace of mind for everyone involved.