AN ENTRANCE FEE GUIDE

If you’re considering moving into a continuous care retirement community (“CCRC”), you may find out that there can be a large entrance fee. If a community charges an entrance fee, it’s likely there are multiple options for you to choose from. Our post below attempts to explain the factors that you need to consider before making your selection.

We’ve identified a practical way and a strategic way to think about the entrance fee question. Practical, herein, means what works best for the payer. Strategic, herein, means the cheapest option.

Let’s set the stage: imagine a community that, regardless of which entrance fee option you choose, will charge you the same monthly rate. The three entrance fee options you have are: (1) you can pay $300,000 upfront, but it completely amortizes over 25 months; (2) you can pay $500,000 upfront, but it amortizes down to $250,000 over 25 months; or (3) you can pay $1,000,000 upfront, but you will receive only $900,000 no matter when you leave.

Practical people may choose to pay the entrance fee option that requires them to commit the least amount of capital. This allows them to spend the remaining amount on themselves, rather than having the community hold onto it until the end of their stay. A practical thinker may use the proceeds from the sale of his or her home to pay for the entrance fee, and then use their social security, pensions, and savings to pay for the monthly fee. The strategy of opting to pay for the lowest entrance fee makes sense to us for those who want to maintain as much discretion over their wealth as possible. In the example above, someone who chooses option (1) over option (3) has $700,000 more to spend on trips, gifts, charity, clothing, etc. On the other hand, option (1) is not necessarily the most economical option, because he or she may spend $300,000 on the entrance fee whereas someone who chooses option (3) will only have spent $100,000.

The strategic thinker is going to look at this as a math problem—which option is going to be the cheapest for me and my heirs? A strategic thinker is going to consider what he or she pays for the entrance fee and what he or she is going to get back, in addition to the opportunity costs. The opportunity cost, in this example, is what else could the tied-up money have been invested in. If the strategic thinker chooses option (3) over option (1), then he or she has committed an additional $700,000 in capital. That’s $700,000 in capital that is not earning a return in the market or in an investment such as a rental property. The lost earnings from that $700,000 should be taken into account when considering the actual costs of the entrance fee. Through our analysis, we can distill the entrance fee question into its most fundamental parts. For the above example, we assumed that the opportunity cost is 4% annually. The follow yields the per month entrance fee cost based on the number of months stayed:

​The above chart shows the per month cost of the entrance fee according to the number of months that the person stays in the community. For instance, someone who stays at the community for 21 months who elects to pay via option (1), or the blue line, will have paid an average of $12,000 per month. $12,000 plus the monthly fee that the person pays to the community is the total monthly cost of staying at that community. Those that wish to estimate their life expectancy may use this information to choose the entrance fee that is the least costly. Additionally, someone who is trying to compare the costs of two communities, one with an entrance fee and one without, may use this analysis to do so.

At Senior Advisors Plus we serve both the practical and strategic thinkers. Call us and we will help you with your senior living search.

A MESSAGE FOR WORRIED CHILDREN

We’ve spoken with a few people who have parents that live outside of D.C. and who are worried about them living independently. The children have talked with them about moving to D.C., but the parents aren’t interested. The children are stressed out. Here’s a post for all those people who are going through something similar. You are not alone.

You may have begun to worry about your parents living situation because they don’t do the simple tasks well. You may see signs of this such as their house is dirty, refrigerator has a lot of spoiled food in it, or body weight is dropping. You may have also begun to worry because a few severe things have happened such as your parents have begun falling, have developed attitude issues, or are wondering. These are all signs that it is time to have a conversation with mom or dad about getting help.

Start a casual conversation with your parents during their best time of day; typically, its morning. Suggest something small, such as offering to hire a cleaning service, someone to shop for them, or a driver to take them around to do errands. If they agree, then hire a caregiver to do these tasks. If the caregiver is successful at developing a relationship with your parents, then when more care is needed, the caregiver can step in and help with their personal care as well.

If your parents refuse additional help, it’s okay. It’s their life and they are entitled the take the risks they wish. Chances are you are more stressed out about their situation then they are. Try bringing up care one more time, but after an event that care could have prevented or has caused them to need help thereon. If they refuse again, then drop the discussion for now. There are two things that we suggest at this point:

(1) Talk to their doctors. See if they agree with you. If so, have them suggest that your parents should have someone around to help them.

(2) Create a back-up plan. There may be a time when they step forward and ask for your help. If you have a backup plan, you’ll be prepared.

To create a back-up plan, first think about their care needs—the activities of daily living (“ADLs”) and instrumental activities of daily living (“IADLs”) are lists that you can reference to gauge how much help they need. Transferring, walking, toileting, bathing, dressing, and eating are the six ADLs. Shopping, cooking, managing medications, managing communications, doing house chores, driving or using public transportation, and managing finances are the IADLs.

Think about the activities that your loved one needs help with and how long those take to complete on a daily basis. Then consider your care options–the two most popular are home and community-based care. Home care is a great option for people who want to remain in their homes; however, it can become very pricey as peoples’ care needs escalate. The other option is community-based care. For people that want to relocate or be around peers, assisted living and memory care communities are wonderful options, which can be much more affordable than home care. Whether you decide on home or community-based care, interview a couple agencies, caregivers, or communities. Narrow it down to a couple so that you’re comfortable selecting one if you need to make a decision quickly.

If you follow these steps that we’ve identified, you will have successfully controlled the things you can. Contact a Senior Advisor if you need help with your search. We can help you explore your options quickly and, if you’d like, at no charge to you.

ASSISTED LIVING VS. NURSING HOMES

In this post, we describe the general differences between assisted living communities and nursing homes. We gathered the information below from Washington D.C. and Maryland sources. While the laws vary from state to state, generally, assisted living communities and nursing homes of each state operate similarly. Prior to your loved one moving into a nursing home or assisted living community, a nurse will assess him or her to make sure that he or she qualifies for the level of care that you are applying to. To save on costs, we recommend applying for the lowest level of care first. With that said, here is a guide to help you determine the appropriate setting of care for your loved one.

Assisted Living Communities

Assisted living communities may prepare meals, do house chores, organize activities, manage medications, and provide custodial care for their residents. Custodial care means helping with the six activities of daily living, which include: transferring, walking, toileting, bathing, dressing, and eating. Before becoming a resident, a nurse may assign a level of care to an applicant1.

Level 1 – Needs oversight of one or more of the ADLs
Level 2 – Needs occasional hands-on assistance with one or more ADLs
Level 3 – Needs frequent hands-on assistance with one or more ADLs

The community will charge the applicant based on the level of care the resident requires. If a person requires too much care, then the assisted living community may reject the application. A person cannot live in an assisted living community if he or she2:

  • Is dangerous to him/herself or to others
  • Needs more than intermittent skilled nursing care(generally needs more than 35 hours of home health or skilled care per week)
  • Need treatment of stage 3 or 4 ulcers
  • Needs ventilator services
  • Needs treatment for an active, infectious, and reportable disease or a disease or condition that requires more than contact isolation.

Nursing Homes

Nursing homes must provide three meals a day, housekeeping, laundry, and maintenance to the building. Just like assisted living communities, nursing homes also provide custodial care and medication management. They differ from assisted living communities because they can provide routine skilled care.

Most nursing homes employ nurses, physical therapists, occupational therapists, and doctors. With these professionals onboard, nursing homes can provide a higher level of care than assisted living communities. While some of the following services may be provided at an assisted living community, those who need the following on a routine basis should consider moving into a nursing home.

  • Immunizations
  • Feeding tubes
  • Catheters
  • Treatments requiring direct nurse supervision and observation

Those who require the following, even on an intermittent basis, should consider moving to a nursing home:

  • Ventilator services
  • Wound management, particularly stage 3 or 4 ulcers

Again, these are general rules, so if you are confused if your loved one requires too many skilled services or not, check with a nurse. If you don’t know one, then have one come assess your loved one from the assisted living community that you are considering. From our experience, nurses from assisted living communities are happy to qualify potential residents. If you’re not comfortable with that option, then some states have programs set up at local health departments to provide assessments. In Maryland, the program that does assessments is called Adult Evaluation and Review Services (AERS).

We also wanted to shed some light on the costs of assisted living communities and nursing homes. Here are the average monthly costs that we’ve researched in the DC, Maryland, and Virginia areas:

​Here are several payers for each type of care. Some payers require the applicant to qualify before the payer will sponsor the care. Not all counties have the same sources of payers as the ones we’ve listed below, but it’s worth checking with your county to see if the county has the program and if you qualify.

Once you’ve selected a care setting, if you still need help choosing the right community, we do an assessment using the following criteria: health, wealth, lifestyle, and preferred location. You can contact us here. You may choose to use our services for free or for a fee. We’re happy to help in the capacity that you choose.

Sources:

  1. https://app.smartsheet.com/b/publish?EQBCT=8a0359466ab14c5c9225533ac6891da7
  2. https://dchealth.dc.gov/sites/default/files/dc/sites/doh/publication/attachments/AssistedLivingLaw.PDF

HOW MUCH DOES ASSISTED LIVING COST?

In the following post, we break down the cost of assisted living communities in the D.C. area and provide resources that will help qualified applicants pay for their stay at an assisted living community.

​In the D.C. area, including surrounding counties, we’ve seen the monthly rate for assisted living be as low as $1,650 per month, which includes the costs of room, board, and care. We’ve also seen the total cost per month for assisted living exceed $20,000. How is that possible? Well, if someone lives in an assisted living community and hires her own caregiver—between the community’s monthly fee and the cost of the caregiver, the total cost of stay can exceed $20,000 per month. If no outside caregiver is hired, then $13,700 is the highest per month cost we’ve seen for an assisted living community in the D.C. metropolitan area. For your reference, generally people do not need to hire outside caregivers to assist them while staying at an assisted living community; however, there are rare cases when it makes sense for the family to do so.

In sum, the per month cost of assisted living can range from $1,650 to $13,700. Here are the four variables that drive the monthly cost for assisted living:

  1. Location – the more expensive the area of the community, the higher the monthly rate
  2. Amenities – the nicer the amenities, the higher the monthly rate
  3. Level of care – the higher level of care, the higher the monthly rate
  4. Length of stay – the shorter the length of stay, the higher the monthly rate

In this next section we break down the ways that you can pay for a stay at an assisted living community.

  1. Out-of-pocket
  2. Long-term care insurance– this is something that you pay for out of pocket in advance of needing care that will help pay for care if the criteria written within the long-term care insurance policy are met.
  3. The Veterans Administration– through grants and at select communities, the VA will pay for room, board, and care (1). At other communities the VA may only pay for the cost of care, leaving the cost of room and board up to the resident. Applicants must qualify and meet certain financial and health requirements. To apply we recommend visiting your local VA medical center or call 877-222-8381 (2).
  4. Government subsidies– Some state and county governments offer subsidies to their residents to help pay for the costs of long-term care. Here are two programs for Virginia and Maryland residents:
    1. Virginia’s Auxiliary Grant – Virginia has an Auxiliary Grant that helps low income individuals afford assisted living. To determine eligibility the family may visit hereand then call their local department of social services.
    2. County grants through Maryland – Some counties offer subsidies to participants with limited income. To locate a county that participates in the Senior Assisted Living Group Home Subsidy program, have the family contact their local Senior Information and Assistance Program Montgomery County participates in the program. Hereis a link to Montgomery County’s program. At the time of the writing of this article, Prince George’s County was not participating in the program.
  5. Medicaid Waiver – Those who qualify for long-term care may be eligible for the Medcaid Waiver Program. Through the program, Medicaid will pay for the resident’s stay at a qualifying assisted living community. Usually these communities are group homes that have opted to participate in the state program. To find out more, it would be best to consult an elder law attorney or your local department on aging.

The process to find an appropriate, suitable assisted living community can be daunting. We’re here to help. Give us a call or contact us here if you have any questions about senior living.

Sources:

  1. https://www.charhall.org/
  2. https://www.va.gov/GERIATRICS/pages/VA_Long_Term_Care_Services.asp

AUTOMATION MAY HAVE HIDDEN LIMITATIONS, FOR NOW

For simple tasks, automation works; however, when a process’s inputs differ, automation is less effective than manual effort. Coordinating senior care is difficult to automate because the inputs, a person’s circumstances, differ from client to client and the solutions differ based on the family’s needs, bandwidth, and preferences. Many companies have tried to automate the senior living search process. However, to us, it’s obvious that technology is not as effective at exploring a family’s circumstances as a human. Here’s why:

Trust. Building trust is imperative to care coordination because the advisor must explore personal family matters before making a recommendation. Once trust is established, the advisor can ask questions such as, “Does your loved one have a 401k,” or “Does your loved one receive social security, and if so, how much is his or her monthly check.” Whereas, many automated processes fail to obtain financial information because seniors and families are skeptical of disclosing financial information to these systems. By building trust and getting access to families’ financial information, an advisor who provides a high level of customer interaction may be able to make more suitable placements than a company whose process is heavily automated.

Unique circumstances. While you would think a person’s health profile should not deviate too far from the norm, that is not the case! People are special. Each client has his or her own set of needs. An advisor must accommodate those needs via the search. A search may include finding an assisted living facility near a dialysis center or finding one near a geriatric psychiatrist. At this point, no automated senior living search advisor can handle the unique circumstances of each client effectively—there are simply too many permutations of cases for any system to be user-friendly while providing an exceptional search. Clients with special circumstances need to either do the search on their own or have a person do the search for them to get the results that meet their needs.

Feedback. When an advisor searches for a place for a client, one of the most important aspects of the search is for him or her to listen for feedback. There are always things that an advisor needs to follow up on. Whether it’s aggregating the questions from the assisted living communities about the resident’s medical history or asking the client about his or her experience visiting a community. Follow-up is imperative to fine-tune a search and ensure the client visits suitable communities. The best way to get specific feedback, is to ask specific questions. In order to ask specific questions, one has to have a deep understanding of the situation, which at this point is something a human can excel at versus a machine. Because feedback is vital to the senior living search process, we believe that a manual, person-driven process will excel over an automated one.

While the term “manual” has a slow context to it, we wanted to use this post to highlight another context of the term—and that’s “accurate.” By using a “manual” advisor we believe that you will reach your destination sooner because that person’s ability to gain trust, handle unique circumstances, and gather feedback is far superior to what an automated process can handle. Let us know if you would like a person to help you with your search by calling Tim at 540.330.4103.

GROUP HOMES MAY SERVE A VITAL ROLE IN EXPANDING BED CAPACITY AMIDST COVID-19

On Friday, March 13, 2020, the Centers for Medicare & Medicaid Services (“CMS”) issued a statement that waives the three-night hospital stay requirement for Medicare to pay for a patient’s stay at a skilled nursing facility (“SNF”). That means patients at a hospital no longer need to stay at a hospital for three nights in order for Medicare to pay for their stay at an SNF.

This waiver will likely cause SNF occupancy rates to rise as hospitals admit more COVID-19 cases and therefore must free up beds to handle their caseloads. Some experts, including those that conducted this Harvard study, fear that hospitals and SNFs may not have enough beds to handle all of the incoming cases. Additionally, not all admitted patients need a skilled level of care, and therefore, do not meet the requirements to be admitted into an SNF. Group homes could serve a vital role in helping patients with non-skilled needs get the care they need and free up beds at hospitals and skilled nursing facilities.

VIDEO CHAT IS CHANGING HEALTH CARE FOR THE BETTER AMID COVID-19

Telehealth was once restricted by the Health Insurance Portability and Accountability Act (“HIPAA”) because the law limited the use of telehealth meetings through popular channels such as Skype and Zoom. As people quarantined to limit the spread of COVID-19, the government relaxed regulations, which now allow professionals to share health care-related information via Skype and Zoom. A range of health care providers, such as doctors, nurse practitioners, clinical psychologists, and licensed clinical social workers, are using telehealth to give advice to their patients. While these former restrictions had merit and did help to protect patient privacy, the new rules allow for a vastly different health care system. Here’s what we see:

​Check-in visits, medication refills, and mental health support are among the most popular reasons that people use telehealth services. Many insurance providers, including Medicare, now reimburse payers for telehealth services. This has been in response to keep people in their homes and away from others; however, the problem with that is they don’t interact with their doctors as often. Many people must visit their doctor routinely for prescription refills and general health check-ups. Doctor’s office visits have dropped significantly. In fact, health care jobs have declined, which seems counterintuitive given we are in the middle of a medical crisis. Regardless, telehealth services have a real opportunity to fill a void in this type of environment, that is to provide a medium by which practitioners can give health care advice to their patients.

The other thing we see is that video conferencing has helped social workers and patients with care coordination. Lessened HIPAA restrictions and “no visitors” policies at nursing homes have limited assisted living communities from accessing patients in person. Some nursing homes we work with are setting up video conferencing lines so that the homes can interview patients remotely. This has been a tremendous opportunity for the industry and patients, particularly for low-income patients. Previously, few homes wanted to interview a low-income client because it was a lot of work for not a lot of money. With the ability to interview patients over video, the communities protect their time and money—no more sending a nurse to a skilled nursing facility to maybe get a client. As a result, more communities are willing to interview more clients, which means hospitals and skilled nursing facilities have a better chance of discharging patients who no longer require their respective level of care.

As of now, the new terms of telehealth and video chat are temporary, but we hope that the channels, such as Skype and Zoom, alter their platforms to be HIPAA compliant so that when the rules tighten back up, those channels can still cater to a need.