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To Be Admitted Must Mom Sign Arbitration Clause
Jan L. Warner & Jan Collins

Question: My mother, 78, has Parkinson’s disease. When she entered a nursing home three months ago, she signed a lot of papers. To be frank, although I was there with her, it was an emotional time and I did not pay attention to what she signed other than noticing what she would receive for the $5,300 monthly charge. Mom was getting along fine until last week, when she called me very upset because the director wanted her to sign yet another paper. When I went by his office, he explained that the facility had implemented an arbitration procedure to keep disputes with residents out of the court system.

The way I read it, if she had signs it, my mother would waive all of her rights if she were to be injured. I took it to my lawyer who advised her not to sign. The administrator has now threatened to discharge her if she doesn’t sign. Is there anything I can do short of moving her? She really likes the place.

Answer: Much to the chagrin of disgruntled customers who didn’t read what they signed, the securities industry has successfully used arbitration provisions in their standard customer account agreements for years. Therefore, an overwhelming majority of broker disputes are decided under arbitration rules set by the securities industry.

The United States Supreme Court has decided that these clauses are enforceable even though many people don’t pay attention to the fine print, don’t realize that they are waiving important rights, and don’t have the authority to “opt out” of the provisions.

Due to rising malpractice insurance rates, a growing number of nursing homes and assisted living facilities have begun including arbitration clauses in their admission agreements in an attempt to resolve disputes and claims without going to court. Some contracts we have seen make arbitration mandatory, while others allow the resident to opt out and don’t base admission on acceptance of the the arbitration provisions. Some state courts have approved arbitration agreements that were signed, regardless of whether the person signing read and understood what was being signed.

Federal law governs the reasons for which a resident can be discharged from a nursing home, and, the last time we looked, not signing an arbitration agreement after the fact is not one of them. We don’t believe that your mother can be discharged for not signing what should have been presented to her at the time of admission so that she could have made a choice. Since the admission process is not as protected, only time will tell about the validity of these clauses.

A word to the wise: Folks who enter nursing homes and assisted living facilities are mentally and/or physically vulnerable. We suggest that every document presented for signature be read and understood before being signed. So make sure to ask questions about what you don’t understand and don’t give up important rights and protections without advice from a knowledgeable lawyer in your community.

Question: My father is a resident of an assisted living facility because he can’t live at home alone. He doesn’t have long-term care insurance, so his care will be paid for by money in his IRA. Can he deduct these costs as medical expenses to offset the income taxes so that his money will last longer?

Answer: Your father can deduct un-reimbursed payments for long-term care as medical expenses to the extent that these expenses exceed 7.5 percent of his adjusted gross income. The IRS guidelines basically require that your father itemize his deductions, that the expenses be “qualified long-term care services”, and that your father be “chronically ill”. To be “chronically ill,” a licensed health care practitioner must certify either 1) that your father is unable to perform at least two activities of daily life (ADL’s) without substantial assistance from another person because of functional loss, or 2) that your father has a “severe cognitive impairment,” such as Alzheimer's disease, and requires “substantial supervision.”

Because there is much more to know, you can visit www.nextsteps.net for free information about the deductibility of these non-covered long-term care expenses.



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