If you or a loved one is entering a long term care facility, you should be aware that the admission agreement may impose onerous obligations. Nursing home agreements may include liability waivers and binding arbitration clauses that limit your ability to sue if the nursing home injures you. Admission agreements may also include provisions that expose family members to liability if the resident can’t pay. If your parent, spouse or other loved one is entering a nursing home and you sign as responsible party, the nursing home may try to collect against you if your parent has an unpaid bill.
In addition, one particular issue arises with admission agreements to assisted living facilities. Assisted living facilities often require new residents to show they have enough funds to pay privately for a number of years before going on Medicaid (as Medicaid pays a lower rate than the private pay rate) – often two years. In admission agreements, new residents are often required to disclose assets to prove that the resident can fund their care at the assisted living facility for two years. The problem is these contracts also often include provisions to the effect that any assets disclosed on the application will be used to pay for the assisted living facility. If you disclose more than you have to on the contract, this may limit your opportunities to do Medicaid planning.
Medicaid will pay for long term care, but only if you meet the various eligibility requirements. One is that applicants must have less than $2,000 in Resources. A major goal of Medicaid planning is to employ your savings to meet that $2,000 limit, without wasting your savings. In other words, to spend the money in a way that meets your goals, meeting your needs and saving any excess for your family. However, if your money is already committed to an assisted living facility, you may not be able to save that money through Medicaid planning, and may lose money to long term care costs that otherwise could have been saved.
All of this emphasizes the importance that before you sign an admission agreement to a nursing home or assisted living facility, you should review it with an attorney to make sure you understand what you’re signing, since the contract may affect your rights.