Journal of Financial Planning: October 2017
Philip Herzberg, CFP®, CTFA, AEP®, is a client adviser for The Lubitz Financial Group in Miami, Florida. He is past president of FPA of Florida, past president of FPA of Miami, and vice president of the Estate Planning Council of Greater Miami.
Linda Lubitz Boone, CFP®, is the founder and president of The Lubitz Financial Group. She is the co-author of “Creating an Investment Policy Statement – Guidelines and Templates” and co-founder of IPS Advisor ProTM, an award-winning online investment policy statement application.
A growing number of seniors and their caregivers select a life care facility based on the elder person’s immediate care needs without a thought for the future. Where do you begin in advising your clients if they are talking about any kind of supportive housing arrangements, such as an assisted living facility or continuing care retirement community (CCRC), for themselves or for their parents?
Let’s start out with a review of the different care arrangements and their basic services. CCRCs are not independent living communities, assisted living facilities, or nursing homes. They are combinations of all of these residential and care options, which are staffed to provide a “continuum of care’” for residents. The assisted living and nursing home components of CCRCs are usually intended for use only by residents from the independent living units that are part of the CCRC and not by seniors from outside of the facility.
Assisted living communities, which are by definition non-medical care facilities, do not usually have a medical professional in residence and offer 24-hour staffing in the case of resident need or emergencies. Nursing homes are fundamentally medical facilities that offer the most extensive medical care seniors can get outside of a hospital.
A CCRC helps older adults enjoy a lifestyle in a community setting that enables independence, dignity, wellness, and personal care, with the benefits of support services to meet their daily needs. Because these life care facilities maintain a diverse array of on-site medical and social services, residents can enter the community while still relatively healthy and then transition to more intensive care as it becomes necessary. A CCRC is not an appropriate fit for everyone; it’s pivotal to understand what level of care your elderly clients need and how that may change with age.
We hope this column provides you with a framework to make the process of selecting a CCRC easier for your clients, as they seek information to decide how to best provide care for themselves or their loved ones.
Locating a Community
Most importantly, consider whether living alone is no longer a safe option for your senior clients or their family members. Determine whether they need help with managing medications or getting into and out of a shower safely or using an oven or cooktop, for example. These types of lack of personal abilities can be managed by hiring an aide to live with them, but often this is prohibitively expensive. Then it behooves the family or loved ones to consider other options.
First, there may need to be a family meeting to ensure there is consensus, as this is one of the most important precursors to a selection. Most likely, family members have some conflicting feelings and objectives. For a successful transition, family members should come to an agreement.
Older clients who have cognitive impairments like Alzheimer’s or similar conditions and who require supervision for personal safety will need to find a setting that is devoted to delivering specialized care. Their mental and physical health needs will serve as guideposts for decision-making and conversations with CCRC admissions personnel. Consider whether the environment will provide the needed stimulation to help your clients and their parents flourish emotionally and with dignity.
Is the CCRC’s location close to quality medical providers and other important places? It may be key to be near friends and family, as well.
Verify that the community is licensed in your state. Look through online reviews to see if you can find any information about the facility through the Better Business Bureau. Data on life care facilities may be difficult to obtain; therefore, suggest that your clients contact the local area long-term care ombudsman who can offer additional checklists or information on any citations against a facility, as well as answer any questions.
Further, you should consider whether the facility is a for-profit or not-for-profit institution, as that may affect how resources are allocated. One of our clients who just entered a life care facility revealed to us that this funding model may significantly influence the cost of care. Ask a CCRC financial executive or administrator what would happen if the prospective facility ran out of operating funds during an economic downturn. Another question to ask: are there situations that would cause the facility to request the resident to move out?
Assessing Services and Costs
Fees for life care facilities vary considerably by location and community size. The number of services included in the base rate also differs, affecting the overall cost and level of care. Understand that as residents age, they may experience a reduction in their capacities and require additional services over time that were not needed when they entered the community.
Alternatively, while seniors are active and want to participate in community social and cultural events, what are their options? Are there additional charges for participating? If so, be sure to factor them into the overall costs. Are there volunteering opportunities at the facility or nearby if those are important to the seniors? A personal example is a family member in a three-stage living facility who volunteers each week to read and to participate in a singing group for the community’s dementia patients. Does the facility provide on-demand transportation or scheduled shuttles? Is there an additional cost for these services?
Even though assisted living facilities provide a wider range of personal services, seniors are generally expected to require minimal assistance with dressing, bathing, and medications. They are also expected to possess the cognitive ability necessary to function in a semi-independent environment. Most medical insurance, including Medicare, does not provide any reimbursement for assisted living. This care may be incorporated into many long-term care (LTC) insurance policies, which may cover costs associated with room and board and other assisted living needs. Review your client’s plan and check with the LTC insurance provider to determine how benefits are paid for assisted living services.
Entering a life care facility can also impact your senior clients’ estate planning. In essence, a life care contract takes care of the portion of your clients’ planning that would address funding their health care needs. Depending on the facility, such a contract may ensure their health care needs will be met if they run out of money (through no fault of their own). Clients may also have the option of choosing a refundable contract that returns a portion of the entry fee to their designated beneficiary after passing away.
Be sure to ask the facility to list items not covered in the care contract and the costs for these additional services. For example, some facilities will charge a resident extra for meal delivery, while others add on fees for services such as transportation, housekeeping, and dressing assistance.
Tell your clients to read the life care community contract and admissions agreement carefully. Consult with an elder law attorney if any part of the admissions agreement is unclear. Seeking this guidance is well worth the cost if you think there might be issues.
Accounting for Quality of Care
Finally, encourage your clients to use their senses when they visit prospective communities. They will be able to notice how different staff interacts with the residents, whether the meals are appetizing and prepared to accommodate dietary needs, and if there are scheduled activities that will meet their social needs. Some things for clients to keep in mind include:
- Is the facility a bright, colorful environment?
- Are there any odors you find offensive?
- Are there private, quiet areas in the common rooms where conversations can take place?
- Does the furniture look worn and old?
- Drop in for a meal at lunch and at dinner. Is this food that you would want to eat?
- Are guests permitted during mealtime? If so, what is the cost?
- Are dietary or religious restrictions easily accommodated?
- Do the residents appear to be well cared for and dressed appropriately?
- Is the facility easy to get around?
A personal story underscores the challenges of navigating a facility. A family member moved into a delightful facility, but it was previously a hotel. Each floor had the same color wall with winding hallways. The families kept getting lost when going to visit their loved ones. As they began to lose memory, the residents also had no way to easily make sure they were on their floor, since all floors looked the same.
Plan to make at least one unannounced visit, so that you feel comfortable with the community’s culture. Our aforementioned client recommends that you should ask residents if there is anything about the CCRC that surprised them after moving into the facility.
Your knowledge, reassurance, and support are integral attributes to helping elderly clients make a successful transition to a life care facility during a period of adjustment. Residents whose families are engaged and proactive in a positive way generally have higher morale and receive optimal care.