SENIOR CARE OPERATORS MUST RESPOND TO RISING WAGES

Caregivers are expected to be in short supply, but will the state-led minimum wage increases attract new talent or lessen families’ access to caregivers? Read about my opinion in the post below:

Maryland and D.C. have voted to approve an increase in the minimum wage while Virginia has not. D.C. led the pack in 2016 when Mayor Muriel Bowser signed an Act that would increase D.C.’s minimum wage a little each year until July 1, 2020. Afterwards, the minimum wage will remain at $15 per hour. The minimum wage requirement applies to any employee who works at least 50 percent of the time in D.C., regardless of where the worker resides. The date of this post marks the second to last minimum wage increase in D.C. As a result, D.C.’s minimum wage will be $14 per hour until July 1, 20201.

Currently, Maryland’s minimum wage is $10.10 per hour. At the end of March 2019, Maryland’s General Assembly overrode Governor Larry Hogan to pass an Act that will increase Maryland’s minimum wage over the course of seven years. Below is a summary of the state’s planned increases2:

For companies with at least 15 employees, this is the schedule of increases:

  • $11.00 on Jan. 1, 2020
  • $11.75 on Jan. 1, 2021
  • $12.50 on Jan. 1, 2022
  • $13.25 on Jan. 1, 2023
  • $14.00 on Jan. 1, 2024
  • $15.00 on Jan. 1, 2025

For companies with fewer than 15 employees, this is the schedule of increases:

  • $11.00 on Jan. 1, 2020
  • $11.60 on Jan. 1, 2021
  • $12.20 on Jan. 1, 2022
  • $12.80 on Jan. 1, 2023
  • $13.40 on Jan. 1, 2024
  • $14.00 on Jan. 1, 2025
  • $14.60 on Jan. 1, 2026
  • $15.00 on July 1, 2026

Personal care aides typically make more than the current minimum wage, but home care agencies and senior living communities will likely need to pay their aides more, especially as the minimum wage approaches $15 per hour. An RTI International report in 2017 found that nationwide 87% of healthcare support-related occupations in assisted living (AL) and continuing care retirement communities (CCRCs), namely personal care aides, will require wage increases if the minimum wage increases to $15 per hour3. Experts believe that even if caregivers are currently making more than $15 per hour, employers of personal care aides will have to increase their wages due to the “spillover” effect. That’s because the caregivers may find more valuable work elsewhere, say for a firm that does increase its wages. As a result of the minimum wage increases, it is likely that caregivers who work in the home and in the community will receive a pay bump regardless if they make minimum wage or not.

If the communities assume all of the financial impact from the increased labor costs, they may be able to preserve demand for their rooms. However, that is an unlikely scenario as investors will want to mitigate the financial impact of wage increases. A more likely scenario is that communities will pass on labor cost increases to the consumer in the form of higher monthly rates. Higher monthly rates will translate to less affordable housing options to consumers.

I believe the same dynamic will persist for home care agencies and registries: minimum wage increases will cause these firms to pay their caregivers more and then to pass on part of the cost increases to the consumer by charging more.

Fortunately, there is a winner in all of this: the hard-working people we know as caregivers. The US health care system needs more of them and needs them to remain with their clients longer. Higher wages will hopefully help resolve both of those issues. It’s not fair to the families and seniors who are constantly having a new face walk in their house because the former caregiver had to leave her job to find a better opportunity—that’s unhealthy for both the caregiver and the senior. So while wage increases may make access to care more difficult for some, it has the potential to better many more lives. If you are concerned about the rising cost of care, talk to a senior advisor. He or she may be able to guide you to an affordable option.

Sources
https://www.dcbar.org/pro-bono/newsletters/summer-2016/Minimum-Wage-2020.cfm
https://www.baltimoresun.com/politics/bs-md-minimum-wage-explainer-20190328-story.html
https://www.theceal.org/images/reports/RTI-CEAL-Minimum-Wage-Report-2017-FINAL.pdf

CLEARING THE CONTENTS OF A HOUSE DILIGENTLY

Two weeks ago we gave our opinion on how to clear the contents of a house quickly. This week we want to give you our opinion on how to clear the contents of a house so that you maximize the value that you get from its contents.

​First, contact your realtor to make sure both of you are on the same page about selling furniture. You may want to have a buyer pick up a piece of furniture after your realtor takes pictures of the house to market it.

Second, define your goal for clearing the house by determining if you want to:

  1. Clear the contents of the house quickly?
  2. Maximize your earnings?

Herein we are going to discuss how to maximize your earnings. To know that this post applies to you, you’ll want evidence that some contents in the house are actually valuable. Find an appraiser; we recommend doing so through the American Society of Appraisers. An appraiser will give you a rough idea of how much your belongings are worth. If you have a lot of valuables, we recommend that you explore selling them through several different channels.

We believe that if you don’t have a lot of expensive items, then you should start your sale process by hosting an estate sale. However, if you have some valuables that you want to maximize your earnings from, then sell them through other channels. Rare art, guns, valuable collectables, cars, antiques, designer rugs, expensive jewelry, and farm equipment are examples of items where you should explore the best marketplace. There isn’t a hard and fast rule as to the value of an item that you should explore which marketplace to sell it, but here are a few things to consider:

  • Difference in commission amounts – could you earn more money by choosing a marketplace that charges a lower commission?
  • Transportation costs – how much money will you spend to transport the item?
  • Your time – what’s your time worth?
  • Quality of the marketplace – some marketplaces may be able to generate better demand for your item (e.g. very expensive items require a unique marketplace).

When in question about which marketplace to use, we advise our clients to start their research by calling online auctions, auction houses, online consignment sites, and consignment stores to question them about selling a piece that they want to get rid of. People who buy expensive items through these channels typically trust them because they have secure payment mechanisms. In other words, the likelihood of the buyers and the sellers getting scammed is very low. That’s why we suggest approaching these four channels over Ebay and Craigslist to sell valuable items.

Online auction

  • There are two main players, Soetheby’s and Christie’s. At the time of writing this article, Soetheby’s prices were lower than Christie’s. Sotheby’s charges 20% on the first $100,000 in sale value and 12% on the sale value that exceeds $100,000. You’ll want to double-check the terms that an auction house sets for your items.

Auction

  • You’ll have to locate your local auction house. The fees are generally between 20%-50% of the sale price but check with you local house for actual pricing.

Online consignment

  • The main player in the online consignment industry is TheRealReal. It charges between 15% and 60% of the item’s sale price. It’s a big range, but the charge depends on the item and its value.

Consignment

  • You’ll have to locate a local consignment store. Consignment stores generally charge between 10% and 60% of the item’s sales price.

Because prices vary through all of these channels, you’ll want to call around to get quotes on what you want to sell. You’ll also want to inquire about how often these channels sell merchandise similar to the one that you’re proposing to sell—you want to choose a seller that is familiar with selling the item that you have.

Don’t be afraid to explore other channels as well. You want to find a marketplace that best suits your listing. For instance, if you have a motorcycle to sell, consider selling it on a website that specializes in selling used bikes, such as Cycle Trader. Do you have a used car? Try selling it through Autotrader.

These fees are absurd. If that’s what you’re thinking after you’ve called the auction houses and the consignment shops, then consider using Ebay and Craigslist to sell your merchandise, especially if they are everyday items. You may pay a lower price to sell them through either of these sites, and possibly nothing at all. However, we would not advise that you use these sites for substantial transactions for a couple of reasons: (1) buyers may be reluctant to bid on your item because they may not trust you; and (2) you could be scammed. Ebay and Craigslist are a great way to sell run-of-the-mill merchandise because the money at risk is very low.

Once you’ve sold all the items you’d like through auction sites or consignment shops, consider hosting an estate sale. For an overview of what to do from here, reference our last post Clearing the Contents of a House Quickly.

If you’re hesitant to pay the fees of an estate seller, you may want to host an estate sale or yard sale on your own. Afterwards, call a junk removal service or take whatever’s left to a thrift store first, then to a recycle center, and lastly to a dump. If you do all that yourself, you’ll deserve a pat on the back.

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.

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

PREPARING FOR MEDICAID: LOOK BEFORE YOU LEAP

Medicaid “spend down” is when someone spends his or her assets or income to qualify for Medicaid. If a person’s income or assets exceed the law’s limit, Medicaid won’t help that person pay for things such as long-term care in a nursing home. However, Medicaid does permit a person who has income or assets above the limits to make purchases AND be eligible to qualify for Medicaid Long-Term Care as long as: (1) those purchases are enough to put them under the law’s income and asset limits; and (2) are permissible purchases under the law’s guidelines. In the following post, we discuss the items that you can spend money on without Medicaid penalizing you.

If you would like to refresh yourself with the differences between Medicaid, Medicaid Long-Term Care, and the Medicaid Waiver Program, please do so by reading the following article, which will also discuss the qualifications for each of these programs.

It may also be helpful to review the difference between countable and non-countable assets here.

State Medicaid programs have their own asset limits; however, most asset limits are approximately $2,000 in countable assets. A person with more than $2,000 in countable assets will not receive help from Medicaid Long-Term Care 1. As a result, many applicants will enter “spend down” mode. During “spend down” mode, applicants are only allowed to make certain purchases and transfers. During the application process, a Medicaid case worker will review the applicant’s buying and selling activity for the previous five years. If the case worker finds unauthorized transfers or purchases, the applicant will likely be penalized. That penalty is usually in the form of a delay of aid to the applicant in proportion to the amount of the unauthorized transaction vis-á-vis the average cost of a nursing home in the state. As a result, it’s important for an applicant to spend money on permissible purchases before applying to Medicaid Long-Term Care.

Below is a list of permissible purchases to reduce one’s countable assets 2; however, please consult an elder law attorney before entering “spend down” mode—the law constantly changes, the limit varies by state, the strategy differs based on marital status, and there are nuances to the list below:

  • Home improvements – yes, you may be able to invest in your home; however, some states set an equity limit to one’s home value. Homeowners whose equity exceeds the state’s limit may not qualify for Medicaid under the state’s asset restriction.
  • Vehicle repairs or purchases – only one vehicle is exempt; it’s also likely a vehicle’s value can’t exceed a certain amount so check with an elder law attorney in your state for what you’re permitted to own.
  • Uncovered medical devices – can only deduct medical expenses that you are responsible for paying. Each state has a list of medical expenses that it approves. The following list includes items that are common among states, however, it is best to check with an elder law attorney in your state to identify which purchases it authorizes:
    • Nursing home services
    • Prescriptions and medically necessary over-the-counter drugs
    • Eyeglasses
    • Dental services
    • Personal care
    • Transportation to and from medical expenses
  • Paying off debt
  • Hire a family member to provide care – in some states you may hire a family member as the caregiver. The rate that the family member charges must be reasonable.
  • Funeral arrangements via an irrevocable funeral trust – commonly, states permit people to spend up to $15,000 per spouse on funeral arrangements.
  • Annuities
  • Life insurance policies with a cash value of less than $1,500

The above list highlights some general items that one may spend his or her countable assets on to qualify for Medicaid Long-Term Care. When applying for Medicaid Long-Term Care, a case worker will review the applicant’s income, medical needs, and expenses. While an applicant may earn income above the law’s limit, he or she may be able to qualify for Medicaid Long-Term Care by deducting permissible purchases from his or her income and qualify for Medicaid Long-Term Care. For instance, let’s say an applicant has no assets and is paying for nursing home services and other medical needs with her social security. If a case worker determines that the applicant’s permitted expenses exceed her income and she has a medical need for nursing home care, then she will likely qualify for Medicaid Long-Term Care.

If all of this sounds confusing, then contact us and we will put you in touch with a local elder law attorney who will review your case.

This article is not intended to give any legal advice; we hope that you can use it to gain a general understanding of how the system works. Please, consult an attorney if you are looking for counsel.  

Sources:
1. https://www.nolo.com/
2. https://www.payingforseniorcare.com/medicaid/spend-down

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.