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The Challenge of Selecting an Elder Care Facility For a Loved One

If you have an elderly parent or loved one, you probably know that one day you may have to move him or her away from their home. The decision can be difficult, if not painful, for all parties but sometimes conditions dictate that a change is necessary.

Any case it helps to be ready for it. As we mentioned in our article “The Devastating Impact of Elder Care Costs on You and Your Family” the best time to talk things through are when everyone is healthy and clear headed.

Over the past two decades there has been an explosion of supportive housing alternatives, and the options are no longer limited to a choice between staying at home or moving to a nursing home. The two main alternatives to nursing homes are assisted living facilities and continuing care retirement communities (CCRCs). Moving into a retirement community or an assisted living facility is a big step for retirees and their family members. The key is to explore your options and needs by reviewing income, legacy and health issues.

Here are some interesting statistics:

  • The population of individuals over age 65 is expected to double by 2030 and become 19% of the U.S. population.1
  • Older Americans represent approximately 12 percent of the population. However, they comprise 26 percent of physician office visits, approximately a third of all hospital stays, a third of all prescriptions, nearly 40 percent of all emergency medical responses and 90 percent of nursing home residents, according to the National Academy of Sciences.2
  • About 1 in 8 people age 65 and older suffer from Alzheimer’s disease.3
  • Home healthcare aides cost on average $25 per hour.3
  • The average cost for living in an Assisted Living facility ranges between $60 and $80 per day ($1800 to $2400/month) for the basics.4

The material that follows should be used as helpful hints only. Each person’s situation is different. You should consult relevant professionals prior to making any decisions.

Deciding whether to sell

Once the decision is made to move your loved one to alternative housing, the family will need to decide whether to sell. For the senior the home is likely filled with special memories. It could also be a terrible time to sell home but if proceeds are needed to pay for long term care then it needs to be done. If the senior does not need the proceeds right away, an alternative could be to rent out the home until the real estate market improves or give the renter the option to buy at certain point. By renting the senior may feel more in control and also feel that the situation is not so final.

Consult your tax advisor on tax consequences of a sale since states differ on how property taxes work for seniors. In California, residents age 55 or over can move into a home that has the same or less value as their current house and maintain the same tax basis.

Assisted living facilities

Assisted living facilities are designed to be a middle ground between staying at home and going to a nursing home. Housing is often in small apartments, and a premium is placed on privacy, individualized care, and independent living. Even with the emphasis on independence, most facilities provide 24-hour care to help residents with the activities of daily living. Around-the-clock medical assistance also may be available.

Most states are in the process of adding or increasing the regulation and oversight of this growing industry. Find more information on your state’s policies on the Consumer Consortium on Assisted Living Web site, www.ccal.org.

What will it cost?

Residents agree to pay a fee, which can range from under $115 per day up to $510 per day, depending on services offered and geographic location.

If you are investigating assisted living facilities, be sure to obtain a thorough explanation of each facility’s cost structure. It is not unusual for a facility to have an affordable fee for room and board, but that fee may cover only a few hours per week of actual assistance.

If your family member needs additional assistance, there are likely to be additional charges. Be sure to ask how the assistance is delivered — by facility staff or contracted help — and find out how much it will cost. Some costs may be reimbursed by a long-term care insurance policy.

Because assisted living facilities are usually less expensive than nursing homes, many state Medicaid programs now provide some type of funding for elderly residents in assisted living facilities who qualify for Medicaid.

Continuing Care Retirement Communities (CCRCs)

CCRCs combine a variety of residential options under one roof — from independent housing to assisted living to 24-hour nursing services. Residents generally pay an entry fee and an adjustable monthly rent in return for the guarantee of care for the rest of their lives. Assisted living and even nursing homes make no such guarantees and, in fact, may ask a resident to leave if they believe they cannot provide adequate care.

Older people are usually healthy when they enter CCRCs. If and when it becomes necessary, they can move into living arrangements that provide the assistance they need. Nursing care is located either within the CCRC or at a related facility nearby.

In addition to health care services, CCRCs also typically provide:

  • Meals
  • Housekeeping
  • Maintenance
  • Transportation
  • Social activities
  • Security services

Some CCRCs provide units that are designed for people with special care needs, such as those with Alzheimer’s or dementia would require.

Financial Arrangements

CCRCs generally charge a one-time entry fee, which can range from $60,000 to $120,000.3 Additional monthly charges range from $200 to $3,200 or more. Often, seniors use the proceeds from the sale of their homes to make the initial investment in the retirement community.

Typically, 90% of the entry fee is returned if the resident moves out of the facility or upon his or her death. Some communities have also begun to make their services available on a purely rental basis.

Choosing a CCRC

Choosing a CCRC is a once-in-a lifetime decision. Consult with an attorney and a financial advisor before signing a contract. Also, to make sure a facility is right for you, ask if you can rent a unit for a few days or a few weeks before committing to it.

Here are some questions to ask when investigating communities:

  • What is the policy on refunds of the entry fee?
  • What does the monthly fee cover?
  • Does the monthly fee change when the resident’s living arrangements or care needs change?
  • Is any of the fee tax deductible as a medical expense?
  • What if spouses require different levels of care?
  • Is nursing home care guaranteed?
  • Who pays for health care?
  • Is the community approved for Medicare/Medicaid reimbursement?
  • Who decides when a resident needs more care?
  • What is the policy on visitors and overnight stays?
  • What are the staffing levels?
  • How financially sound is the CCRC?
  • What are the grounds for eviction?

Choosing an assisted living facility or nursing home

CCRCs are not for everyone because of their cost, their limited availability, and the fact that most people prefer to stay in their homes as long as possible. When people can no longer live independently, they are generally not good candidates for CCRCs. In such situations, finding a long-term care facility for a loved one can be a difficult job. Often the search takes place under the gun — when a hospital or rehabilitation center is threatening discharge or it is no longer possible for the loved one to remain living at home. And, in most cases, the task is one you must take on without the experience and insight gained from having done it before. That said there are a few rules of thumb that can help you.

  • Remember: location, location, location. No single factor is more important to a resident’s quality of life than visits by family members. Make it as easy as possible for family members and friends to visit. In addition, care is often better if the facility knows someone nearby cares and is paying attention.
  • Get references. Ask the facility to provide the names of family members of residents so you can ask them about the care provided in the facility and the staff’s responsiveness when the resident or relatives raise concerns.
  • Check licenses and certifying agency reports. Is a valid license posted? Is a state inspection report available for your review?
  • Investigate care plans (for nursing homes). Talk to the facility administrator or nursing staff about how care plans are developed for residents and how the staff responds to concerns expressed by family members.
  • Tour the facility. Try not to be impressed by a fancy lobby or depressed by an older, more rundown facility. What matters most is the quality of care and the interactions between staff and residents.
  • Ask if you can stay for a meal. This will help you gauge the quality of the food service. Eating is both a necessity and a pleasure that endures.

Financial Arrangements

Financial arrangements will differ depending on location, amenities and type of contract. The decision to commit to a long-term CCRC contract can be a difficult one for senior and for adult children who may be helping their parents find a suitable situation.

Residents may be able to choose a nonrefundable or refundable option. Entrance fee may or may not include an equity stake in the living unit. Some facilities offer a “right to life tenancy”. With this option, the facility is making a commitment to allow the resident to stay for life. The facility will likely request financial statements and proof that they will be able to afford the monthly service fees for the rest of their lives.

Generally, CCRCs look for assets equal to twice the entrance fee or income equal to twice the monthly fee. An investment portfolio that is conservative yet positioned to keep up with inflation is the objective.

At come CCRCs the resident purchases the actual living unit and can sell the property at any time. Concerns about resale value should be evaluated as prices typically fluctuate based on supply and demand as well as the upkeep and management of the CCCR.

With so many care facility options, it is important to investigate each choice thoroughly. Whether you are preparing for the care of a loved one or even yourself, getting a complete understanding of the level of care delivered at each facility can save you both time and money. The Care Facility Checklist will hopefully help you in this process.