There are few things in life that are more devastating than losing your mom or dad. In the aftermath of their passing, you probably have to deal with settling their estate. If they were ill and required hospital or nursing home care or medical treatments, there is likely a hefty bill. So, just who is responsible for paying your parent’s medical bills after they die?
What Happens to Medical Debt After Death?
- If you co-signed a loan or nursing home contract.
- You are a credit card joint account owner (does not apply if you are just an authorized user).
- The decedent and spouse live in a community property state.
- You are the estate’s representative or executor and failed to follow state probate laws.
- You live in a state that recognizes the filial law.
Related: What to Do When a Loved One Dies & How to Prepare
– A Comprehensive Guide
Do I Have to Pay My Parent’s Medical Bill?
As stated above, if you signed a contract for a nursing facility on behalf of your parent or co-signed a loan for them, you would be responsible for paying what is owed. Or if you live in a state that has the filial law, creditors could come knocking at your door.
According to Aging Care, the filial law holds adult children of an indigent parent liable for paying medical debt. Some sons and daughters could unknowingly find themselves on the hook for their deceased parent’s unpaid health care bills even though they did not have any shared responsibility. These are parents who cannot financially support themselves.
The 26 states (including Puerto Rico) with the filial law are:
- Alaska
- Arkansas (mental health services only)
- California
- Connecticut
- Delaware
- Georgia
- Indiana
- Kentucky
- Louisiana
- Massachusetts
- Mississippi
- Montana
- Nevada (only if there is a written agreement to pay for the parent’s care)
- New Jersey
- North Carolina
- North Dakota
- Ohio
- Oregon
- Pennsylvania
- Rhode Island
- South Dakota
- Tennessee
- Utah
- Vermont
- Virginia
- West Virginia
The good news is the filial laws are not always imposed. Some states have never carried them out and others enforce them sparingly. Most states exempt children who cannot financially pay or where a parent had abandoned them as a minor.
In the years since Medicare and Medicaid came along, the filial laws were really not needed. These government programs covered the majority of the health care costs. If your parent qualified for Medicaid, you are not responsible for any repayments.
However, if Medicaid covered your parent from when they were age 55 until their passing, the state may try to seek repayment from their estate for some services, but not from the parent’s children.
Recently, due to more and more aged people living longer in nursing facilities, a few filial law states have sought some reimbursement from adult children to pay for medical services not covered.
Does Medical Debt Pass on to the Surviving Spouse?
If your parent lives in one of the community property states, the responsibility for paying the debt could fall on the surviving spouse, even if the estate cannot pay it.
In these states, debts and assets accrued during the marriage – even by one spouse – are considered owned by both. So, if one spouse dies and has debt, the surviving spouse may be responsible for paying it off.
This is due to the Uniform Marital Property Act that became law in 1983. This statute defines all assets acquired by both spouses while married as being jointly owned, regardless of which spouse actually owns it.
The community property states are: Alaska (only if there is a special agreement), Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Oklahoma (by a special agreement), South Dakota, Tennessee, Texas, Washington and Wisconsin.
If you don’t live in these states, it’s still possible you could be liable to pay some of your deceased spouses’ medical bills, depending on your state’s laws. However, if your late spouse’s estate cannot cover the debt, you likely wouldn’t have to pay it. In most cases, any assets you had prior to the marriage would be safe from debt collectors.
Of course, if you are the executor or representative of your spouse’s estate, you would have to pay their debts out of the decedent’s estate assets.
An Estate Plan Can Protect You and Your Parents
One of the most powerful estate planning tools your parents could use to shield assets is a Trust. Their home, bank accounts, or other assets placed in a Trust would automatically transfer to the named beneficiary without going through probate upon their passing. This could keep these assets out of the hands of creditors, depending on the terms of the trust.
Related: 8 Reasons You Might Need a Trust
While a Will is going through probate, it may be vulnerable to debt collectors because it is a matter of public record. They can legally seek payments from assets to cover unpaid bills before anything goes to beneficiaries. All Wills must go through the probate process.
Other estate planning documents your parents should have are a Health Care Proxy where the person they appointed can make medical treatment decisions on their behalf, and a Power of Attorney to manage their finances in the event they become incapacitated.
Have a discussion with your parents about the importance of estate planning. Now is the time before a life changing event happens.
Related: Millennials, Ask Your Parents About Their Estate Plan
Dealing with Debt Collectors After Your Parent’s Death
Debt collectors can only discuss your late parent’s debt with the surviving spouse or their estate’s representative or executor. They must adhere to the Fair Debt Collection Practices Act. You can stop them from contacting you by sending them a written notice. Send it by certified mail and keep a copy for yourself.
Settling Medical Debt After Death
If there are sufficient assets in your late parent’s estate to cover unpaid medical bills, those must be used to settle the debt. By law, debt has priority to be paid by an estate before any assets are distributed to beneficiaries. Once the medical debt and other debt is paid off, any remaining assets can be dispersed in accordance with the Will.
