Evaluating continuing care
Gifting rules, arbitration clauses described as areas that deserve close scrutinyDecember 6th, 2012
Seniors face a sometimes daunting process, particularly in evaluating contractual terms, when researching moving into a continuing-care retirement facility, says Richard Sayre, a partner at the Spokane-based Sayre & Sayre PS law firm.
"It's just like buying a house," Sayre says. "If you get handed 40 pieces of paper, you need to read them."
Continuing-care retirement communities are facilities that offer housing for different stages of retirement, typically including independent living, assisted living, and skilled nursing care. Some retirement communities also offer memory care quarters for residents with diseases such as Alzheimer's.
As residents move up, requiring more assistance and care, the monthly fees increase, says Lynn St. Louis, principal at Lynn St. Louis Law Office PLLC, based in Spokane. Her law firm handles estate planning and elder law.
Typically, retirement communities offer a number of contract options that offer a combination of an initial buy-in and monthly fees, which help cover the cost of most day-to-day living expenses, Sayre says.
He says a number of places in Spokane have the full gamut of living options, starting with an apartment rental and moving into the buy-in option.
When determining which retirement community to enter into, the contracts include a number of key areas that prospective residents should look over closely, Sayre and St. Louis say.
Seniors should pay close attention to restrictions on gifting or giving away money while living at a retirement community, St. Louis says, adding that Medicaid and some facilities see gifting as a way to receive living assistance more quickly. She says retirement communities that place restrictions on the amount a resident can gift can be a problem for people who, for example, intend to help grandchildren pay for their education.
She says Medicaid can take over a portion of the payment for retirement communities in partnership with the state when a resident exhausts all resources. Medicaid can inquire about any gifting within the last five years from the start of Medicaid disbursement to determine if giving away money is in an effort to receive Medicaid support sooner.
"You make sure you're not going to, one, violate the contract you entered, and two interfere with future Medicaid benefits," St. Louis says.
Sayre says stipulations on gifting are okay in some regards, such as in places that cover the cost of living in the facility through a foundation when a resident runs out of money. He says often, those facilities, like Medicaid-eligible facilities, will say if residents give away money, then they won't provide free care once a resident can no longer afford to pay for lodging.
"The place where I draw the line, though, is some places that take Medicaid," Sayre says. Medicaid-eligible facilities receive government reimbursements for a portion of the cost of care. Except for facilities that are foundation driven that don't take Medicaid, Sayre advises against signing a contract that restricts residents from gifting money to others.
St. Louis says seniors also need to be aware of the refund policy when they either die or leave the community. She says typically, the refund is between 80 and 100 percent of the buy-in amount. Some retirement communities impose conditions that can affect when a payout is received, though, such as stipulations on holding the refund until the retirement property is sold to another resident.
"If you buy in, you don't get a refund until they sell the condo," Sayre says. "Sometimes you can negotiate that with them."
Sayre says at some retirement communities, the initial buy-in funds are used to cover the cost of care if a patient runs out of money. Some of the retirement communities can hold the refund to cover other costs or funnel the money into a trust that's used to help pay for continuing care when other residents' funds dry up.
He says, "Do I think that's bad or unreasonable? No because they're paying for your care."
Sayre says people need to be on the lookout for arbitration clauses when signing contracts.
"What a client is doing is bargaining away their right for a lawsuit," he says.
An arbitration clause generally outlines that if there is a dispute between a resident and a retirement communityif a resident gets injured, for examplethen instead of the resident suing the retirement community for damages, the parties will enter into arbitration.
"Facilities want arbitration because arbitration awards are less than a lawsuit," Sayre says.
He advises against signing a contract that contains an arbitration clause, adding that a person can elect into them later on. Sometimes arbitration is the better approach, he says, but it should be left up to the person upon injury.
Sayre says retirement communities are more willing to negotiate now than they were five years ago. Facilities aren't full, he says, pointing to the poor housing market.
Jeffrey Bair, executive director of Touchmark on South Hill, formerly Waterford on South Hill, says the retirement industry typically mirrors the housing market: It's a buyers' market, and retirement centers are more willing to negotiate on some terms of a contract.
Prospective residents also should look into a facility's bed hold policy, Sayre says. Those policies outline how long or even whether a resident's room can be placed on hold if they are required to leave for a short period of time for medical reasons.
"Normally you must pay to hold your room, which is okay," Sayre says, but families and residents should be aware of the bed hold policy when deciding to move into a facility.
Prospective residents should also look at the policies in place for continuing care if they happen to run out of money to pay for housing and services, he says. Some retirement communities guarantee that if a resident is unable to continue to pay the monthly fee to stay, they'll front the expense, either through a combination of Medicaid and state assistance or through a private foundation fund set up by the retirement community. Depending on retirement communities policies on refunds, a portion or all of the buy-in paid upfront may go to help cover the cost of continued care, Sayre says.
Bair says Touchmark on South Hill, which has 307 living units, isn't Medicaid eligible and doesn't guarantee care after funds run out for a resident. However, he says, it tries to help residents through financial evaluations at the beginning and continues to advise residents on where to cut costs once funds start to get low. Cuts might include eliminating services the resident initially signed up for but doesn't use or moving to a more affordable unit within the community.
"With the recession, this has become a problem that has been more and more of a concern for people," Bair says. However, he says, "Rarely do you just suddenly get to a point where people say 'I have no money left.'"
Those actively looking at a retirement community should talk to current residents there, Bair says.
"These are people who have gone through this process before, and now they've had a certain amount of time to experience the community," he says.
Visiting prospective retirement communities can help seniors gauge which of them might be a good fit.
Key areas Bair says to examine are turnover rates for upper management, the number of skilled nurses on staff, and the long-term availability of services and activities offered for residents.
"If there has been a reduction in services over the years, then there's a problem with the financials in the background," Bair says.