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Are Powers of Attorney Responsible for Medical Bills?

Nathan R. Olansen
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According to a Genworth’s 2021 Cost of Care Survey, the reported average cost of assisted living in Virginia grew to $63,000, an over eight percent increase in one year. As these costs continue to rise, so does the number of seniors who need long-term care. If you are the financial power of attorney for an elderly loved one, you probably have questions about your responsibilities and liabilities. Learn about the duties of a power of attorney in Virginia, the limits of your responsibility for medical bills, and how a Virginia Beach estate planning attorney with Midgett Preti Olansen can help protect both your assets and your senior loved one’s assets from ever-growing care or nursing home bills.

How Does Virginia Define Power of Attorney?

In Virginia, power of attorney (POA) is defined as the provision of power to one or more individuals (agent) to act on behalf of another (principal). The POA can either begin immediately or when incapacitation occurs. This power is not always all-encompassing, but can instead be limited to particular activities. These responsibilities may also be designated as permanent or only temporary.

The designated power of attorney can be family members, usually falling on adult children and caregivers or an unrelated individual or entity. If you find yourself in this role, you may be responsible for a number of fiduciary duties, and understanding what these fiduciary duties are is imperative.

To start, there are different types of powers of attorney (POA). The two most common in an estate plan are the healthcare power of attorney and the financial power of attorney.

What Are the Responsibilities of a Virginia Power of Attorney?

Being named a Virginia power of attorney is a big responsibility. However, your responsibilities will differ based on the kind of POA and the directives included in the legal document.

Healthcare Power of Attorney

The healthcare power of attorney narrows the power of an agent to make only medical care decisions on behalf of someone. In the Commonwealth of Virginia, this type of POA is often made in combination with a living will, and the resulting document is referred to as the advance medical directive.

The person(s) designated as the POA has the responsibility of making medical-related decisions in accordance with the expressed wishes of the principal. This type of POA is essential when a person can no longer provide informed consent to make important healthcare decisions.

Financial Power of Attorney

A financial power of attorney identifies an agent to manage the financial and business matters of another person (the principal). Examples of financial power of attorney responsibilities include managing investment accounts, filing tax returns, paying bills, and signing checks. As with the healthcare POA, the financial agent must follow all wishes expressed by the principal within the legal document granting the financial power of attorney.

There are four types of financial powers of attorney.

General Power of Attorney

The responsibilities of a general POA are varied, allowing the designated agent to act on the principal’s behalf in any and all matters in accordance with Virginia’s state laws.

Limited Power of Attorney

Under the limited POA, the agent is limited to acting for certain events or matters. For example, the named agent may be responsible only for managing investment or retirement accounts, or selling real estate. This type of POA may also be limited to a set time period, such as if you plan to be out of the country for thirty days or more.

Durable Power of Attorney

A durable POA establishes the responsibilities, which may involve property, legal, or financial matters, and continues even if the principal becomes incapacitated. Upon the principal’s incapacitation, however, healthcare decisions are not the durable POA’s responsibility. Instead, the durable POA makes financial decisions and pay bills relating to healthcare and treatment overall.

Springing Power of Attorney

Rather than making a power of attorney immediately effective, the principal may want to establish when a durable power of attorney becomes active. In this case, the principal will need to create a document that is referred to as a springing power of attorney. This type of POA clearly defines what must occur before the agency relationship becomes effective. In most springing power of attorney documents, the agency relationship becomes effective upon the principal’s incapacity.

To better understand which documents you need for your family, consult with our experienced estate planning attorneys.

Is the Agent Under a Power of Attorney Responsible for Nursing Home Bills in Virginia?

Woman reading a medical bill

Nursing home care can be expensive. As such, when it comes to nursing home bills, it is essential to understand who is responsible for paying them and what is expected of you as the agent/fiduciary. Simply put, you are only obligated to pay for bills out of the principal’s assets. You do not have to pay any of the bills with your own money and should not face any financial liability.

What Happens if the Principal Does Not Have Enough Assets to Pay the Nursing Home Bills?

When the bills become more than the nursing home resident (principal) has in checking, savings, or investment accounts, you will need to take measures to sell any stocks, bonds, or property in order to pay those bills in full. You may also have to file through Medicare or Medicaid and deal with anything left unpaid. The care facility will expect full payment without having to prompt you to take these actions.

Finally, if, after all this, the resident’s funds are not enough to pay the nursing home bills, you will need to take measures to protect yourself against financial liability.

Can the Nursing Home Make Me Liable For My Parent’s Bills?

When it comes to whether a nursing home can make you liable for a parent’s bills, the answer is no. You, as an individual, are not the responsible party. Federal regulations actually prohibit nursing homes from holding a third party personally liable for the bills. All the care facility can legally do is ask you to pay the bills with the resident’s assets.

However, the nursing home may present you with an admission agreement stating you will be responsible for payment. It is essential to know that you do not have to sign such a contract. Do not let them pressure you or tell you this is the normal procedure in such situations. It is not.

Know your rights, and if you need legal advice and assistance, seek out the legal help of an experienced estate planning attorney today.

Protecting Yourself as Financial Power of Attorney

Being the financial power of attorney for another person is an important role, and the responsibilities can be simple or numerous. While your good intentions are important, you also need to protect yourself. One way to do so is to be careful of the documents or contracts you sign on behalf of the principal and only sign them in your capacity as the POA.

For example, if you must admit the individual to a nursing home, thoroughly review all paperwork provided to you as the power of attorney for that admission.
Also, it is essential that you sign only in your capacity as the POA and not under your individual capacity. The way to sign is as follows:

(Principal’s name) by (POA’s name), POA

By signing this way, you protect your personal assets and the ability of the nursing home to demand that you personally cover unpaid bills.

How Can a Virginia Estate Planning Attorney Help?

lawyer consultation with a client

When it comes to meeting the requirements as a POA and fulfilling your responsibilities, the legal counsel of a Virginia estate planning attorney can help. Some of the specific ways they can assist you include:

  • Review contracts so you do not accidentally agree to liability and find yourself personally responsible for the unpaid bills of the POA’s principal
  • Advise on how to protect yourself as POA, including guidance on how to sign required documentation on behalf of the principal
  • Advise on how to protect your principal’s assets from medical/nursing home bills, such as by establishing an irrevocable trust. This step is particularly important as healthcare and nursing

home bills can continue to escalate, diminishing assets and leaving your loved one’s legacy depleted

Providing Peace of Mind for Powers of Attorney

Being named a power of attorney means you are specifically chosen and trusted to carry out the wishes of another. With the help of the estate planning and elder law attorneys of Midgett Preti Olansen here in Virginia Beach, you can experience peace of mind that you are legally carrying out those responsibilities while also protecting yourself from personal financial liability.

Call our law firm today at 757-687-8888 to schedule an initial consultation, or use our convenient online contact form to get in touch. In addition to Virginia Beach, we also serve the entire Hampton Roads area, including Norfolk, Chesapeake, Suffolk, Hampton, Newport News, and the Eastern Shore.

We value the attorney-client relationship and will legally do whatever it takes to help you meet your POA responsibilities in a caring and compassionate manner.

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Written By Nathan R. Olansen

Shareholder

Nathan R. Olansen is a Shareholder in the law firm of Midgett Preti Olansen. His practice is focused on estate planning, probate and trust administration, IRS and state and local tax audit and tax collection cases, as well as individual and entity tax planning, asset protection and a variety of related transactional matters.

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