Dear Mr. Premack: I helped care for my aging father for several years. He worked with his lawyer to appoint me as his agent under a financial power of attorney and a medical power of attorney. When he had a crisis recently, I got him to the hospital and I handled the admissions paperwork. They stuck a large stack of papers in front of me and told me to sign, and questioned me when I signed using my dad’s name, but I told them I was his agent. Dad died a few weeks later, and some of the medical bills are being sent to me in my name. How should those bills be handled? – N.W.

Feeling rushed, flustered and disconnected at the time of hospital admission is something that many people have experienced. You actually did well to slow things down enough to sign using your authority as your father’s agent. Many people forget (or simply do not realize) that signing a contract individually creates personal liability.

If you had signed your own name to the admission agreement, which includes paperwork about paying the costs of hospitalization, then you would likely be liable for the expenses. But when you are agent – even under a Medical Power of Attorney – and you sign a document for the patient by using the patient’s own name, then the patient becomes liable for the cost of care.

The hospital should be paid so long as they did not cause him any harm and were not negligent in providing the care. Those bills should first be submitted to Medicare. What they pay depends on what coverage he had: Part A is automatic for most seniors and covers a large part of the cost of hospitalization. Part B helps those who pay an extra premium, and covers a large part of the cost of physician’s services. Beyond that, he may have had medical coverage through his retirement or a private "medigap" insurance policy to which claims will be sent.

Medicare has deductibles and then pays only 80% of the medical expenses they deem were medically necessary. If he had insurance, it may cover all or a portion of the remainder. Any part that is not paid by third parties must be paid by your father or by someone who volunteered to pay the bills for him. You acted wisely by signing as his agent, so you are not liable to pay from your personal resources.

Even so, you are likely one of the heirs to his estate, and your inheritance will be reduced by the amount paid to his legitimate creditors. If his estate goes through probate, his court appointed Executor can force his creditors to present their claims in a short time period. A creditor who fails to comply with the law is barred from collecting its claim.

A creditor who properly complies with the law then stands in line with the other creditors. If the estate contains enough available resources, then all the bills are paid in full. If there is not enough to cover everyone, then the bills are prioritized. Medical bills and funeral expenses are given a higher status than other debt (like regular credit card bills) but only in an amount not greater than fifteen thousand dollars. Medical bills beyond that are lumped together with other unsecured debt.

It is also possible to negotiate the medical bills. The hospital may be willing to set up a payment plan with the person (or the estate) liable for the debt. Ultimately, the amount you will pay and the time it will be due depends broadly on what legal process you select.