Entrance Fees: Continuing Care Community

[Brat]

DH and I are ‘a bit’ older than most of you and are considering our housing options in about 5 years, looking at retirement communities.  This issue for us is personal, but for many of you it may be a concern for your parents, they may ask your opinion.

Givens: The non-profit community has a history of providing a quality life at all its stages and is financially sound.  The results of health department inspections of dining and health care facilities are good.  The history of monthly price increases, what it includes, and charges for care (compared to other similar facilities in the community) are reasonable.  The ‘life-style’ is suitable (some are into dressing for dinner, we are more laid-back). 

None of the above is an option if the potential resident’s finances don’t pencil.  Most have an entrance fee that is driven by the housing selected – a form of life lease paid up front.  The fee typically amortized over a couple years (3 to 5).  Some potential residents want their money back (50% - 100%) so the communities are offering refundable entrance fees in exchange for a higher entrance fee.  My analysis of the ‘cash back’ programs I have seen is that they don’t pencil out for the resident.  Consider the fact that the refundable entrance fee’s purchasing power decreases over time while the cash saved from the lower entrance fee can be invested.  Here are some examples from one community:

5-yr Amortized 80% Refundable 100% Refundable
$231,888 $394,210 $440,587
$132,177 $224,701 $251,136
$202,271 $343,861 $384,315

Financial gurus, tell me I am wrong.  Is there a ‘tipping point’ where refundable is better than the 5-yr amortized entrance fee?  Assume that the cash returns 6%/yr compounded (invested in a balanced no-load mutual fund) and inflation is 3.2%/yr.

 

[TromboneAl]

I'm curious about how this works, can you summarize?

For example, you pay $440,587 just to join the community, and then you pay a monthly rent for your house and the facilities -- is that how it works?

 

[Brat]

The rent is for current facility services, the entry fee is for capital expenses.  The monthly charge is for three meals a day, utilities, activities (fitness center, transportation to community events & retail centers & medical centers, events sponsored by community such as lectures & concerts), weekly flat linen laundry, housekeeping every other week, basic cable TV and phone, pro-rated share of property taxes, maintence of the unit and grounds, two days of infirmary care per episode of illness.  Typical monthly rate is ~$3,200 for two persons.

Passed through for income tax deductions are property taxes and health care facility expenses.

Skilled health care facility (Medicare certified), assisted living facility on campus.  Additional charge for higher level services.  Will work with residents who exausted resources to qualify them for Medicaid and facility trust for indigent residents.  If you have managed your resources responsibly they won't kick you out.

 

[2B]

Obviously, the cash back portion is going back into the estate. The choice you have to make is whether you would rather have a known amount go back for your heirs or you would rather have your own investments grow for them (and your possible use).

To do the math you need to know how long you will live. If at least one of you are in good health, I'd err on the side of keeping hold of my cash. Getting your money back will also depend on the financial situation of your care facility decades (hopefully) from now.

DW and I tried many years ago to get her father and mother to move into "Air Force Villages." It was a beautiful place that had independent, assisted and nursing all on one campus. They have a refundable buy in fee of around $500,000 that came back to the estate when you died but it was also a security deposit to cover indigents that ran out of money to pay their monthly fees. The fee was not refundable if you moved into the place after (I think) 75.

FIL and MIL wouldn't hear of such a thing. That was for "old people." After my MIL broke her hip and my FIL was in early Alzheimer's, FIL thought we should look into it. He was 85 so the $500K would be flushed down the toilet. Also, Air Force Villages wouldn't accept residents directly into their nursing facility. Case closed!

I wonder whether I will see the handwriting on the wall when the time comes and put myself into "independent living." Right now it seems so logical. Unfortunately, I've watched my in-laws go from being rational and logical to pathetic, old people grasping at "staying in their home" long after they were able to care for it or themselves.

 

[grumpy]

We have been through the continuing care community experience with both my parents and DW's parents. In the case of my parents they were in their early 80's. Mom had alzheimers and could not get LTC insurance and the premiums for dad would have been astronomical. Dad was struggling to care for mom. They entered a first class CCC. The initial entrance fee was $170,000 (this was in 1998). None of that was refundable. They had a two bedroom apartment which cost them $4,400 per month. That included all the usual services plus all medication and assisted living services and nursing home care if needed. Mom stayed in the apartment for about a year with assisted living services and was then moved to the on-site nursing home where dad could visit her every day. Dad was moved to the nursing home about a year later and passed away within 6 months. Mom lived another year in the nursing home. Her care continued to cost $4400 per month.

DW's parents moved to a different CCC a few years later. They paid $190,000 up front (non refundable) and $2500 per month for a very large 3 bedroom apartment. This did not include medications but was otherwise similar in services to what my parents had. Her mom had major heath issues and was hospitalized numerous times. She passed away after two years. DW's father is still in his apartment and doing pretty well, all things considered.

As we live 4 hours away from the city where both sets of parents were, these CCC's were a great solution. Fortunately both sets of parents had the financial resources to take advantage of them.

Grumpy

 

[Brat]

Although some would think moving in to a CC community in your 70s is 'early' I think it may be better.  First you are not usually making a decision because of a health condition so you can wait until you find the 'perfect' place.  It is easier to meet and make new friends when you are younger, and you can really use the facilities (pool, fitness center, wood shop).  I love our home but there comes a time when maintenance gets to be a pain and, in honesty, the kids don't really have the time to visit as often as we'd hoped. 

When I listed the current costs of utilities, home insurance & maintenance, fitness center, and meals our monthly expenses are comparable to the CC community monthly charge for independent living.

I have looked at several communities and notice that the entrance fees are highly correlated to the cost of housing in the local market and the extent of community service buildings (pool, wood shop and the like) - essentially the value of capital facilities.  As much as I would love to move near our daughter I don't think Pilgrim Haven in Los Altos would be in our budget.

Grimpy's parents' monthly care costs were much lower than what I have seen for our parents not in a CC community.  From an actuarial standpoint I would guess that the total of entrance fee and monthly charge would be comparable and they had the benefit of a consistent social network.  Also grumpy family members received the services of a facility social worker - he didn't have to 'put' them in assisted living or nursing care when the time came.

We still have 5 years before making our move, the analysis stage, a lot could happen between then and now.  My plan would be to spend down cash, putting the required minimum distributions in our Roths to maximize the growth of assets.  Maybe what we should do is to ask the kids their opinion of the entrance fee options.  Our daughter is particularly well equipped to critique finances.

 

[Nords]

As we live 4 hours away from the city where both sets of parents were, these CCC's were a great solution.  Fortunately both sets of parents had the financial resources to take advantage of them.

Same for my grandparents. If they hadn't been living in a 2-BR "assisted living" apartment in a CCC near their Cincinnati-area home, things would've been even worse when the inevitable declines set in.

Just about every time I do extreme yardwork I find myself wondering if I want to be doing it when I'm 85 years old. In the next 20 years we're going xeriscape!

 

[ladelfina]

Although some would think moving in to a CC community in your 70s is 'early' I think it may be better. First you are not usually making a decision because of a health condition so you can wait until you find the 'perfect' place. It is easier to meet and make new friends when you are younger, and you can really use the facilities (pool, fitness center, wood shop). I love our home but there comes a time when maintenance gets to be a pain and, in honesty, the kids don't really have the time to visit as often as we'd hoped.

Brat, you are so right. Case in point is my uncle, who sold his house in Pasedena and moved with his wife into a retirement/CC community under his own steam with exactly that in mind (settling in, making friends, etc.). My mom (his sister) is in "don't bother me, I'm fine" "what do you care, if I'm happy?" denial mode in a 9-room+ house on three stories (shower on 2, laundry in basement) with large yard. I'm going there soon for a while to help with whatever needs helping. I want to help her think about a possible transition, but I fear the answer will always be "later". Not sure if I can blame her, really.

 

[Brat]

They have a refundable buy in fee of around $500,000 that came back to the estate when you died but it was also a security deposit to cover indigents that ran out of money to pay their monthly fees. 

Interesting, that was similar to a comment I heard from one facility (not the one with the $$ quoted).  Since we both have LTC insurance it went over my head.

No one likes to be 'put' anywhere.  The problem for many of us is that we don't want to face the aging process.. the 'just shoot me' attitude.  That forces our kids to make very difficult decisions when we get frail and it often causes family conflict.  I think the best inheritance we can give our children is to behave as responsible adults and avoid forcing that situation.   

I have a distant cousin who put a deposit on a place at Twin Towers in Cincinnati, but just couldn’t bring herself to leave her home.  She is very social, a top notch professional dancer in her day (poster gal with Sally Rand dancers), but moved to Twin Towers when she was in her 90s.  She wasn’t able to take advantage of all the facilities at that age.  She would have been the belle of the ball, active in their theater and music programs.  Now she is in their assisted living group – but still moves like a ballerina. 

 

[KB]

Both my parents and Aunt are living in 2 different retirement communities in California.

My parents purchased their apartment, and pay 2 separate monthly fees. One is for the services that are similar to the ones Brat listed. That is about 3K a month. The second fee is for Long term insurance and is about $1200 a month. When they have the need for assistance, people will come in to help them.....Once they are not able to care for themselves, the apartment will be sold and they will go into the long term care part of the complex. The money from their apartment will not be kept by the center, but will go into their trust..

My aunt is in an Altzheimer unit in a different center. Her apartment was already sold and she will remain in the unit until her death. Her apartment was purchased much as Brat mentioned, more of a pre-payment for services....

My parents love where they live. They dress for dinner and the food and service are very good. They knew quite a few people who lived there before they moved there, so they had a very good idea about the services, etc. WHen they applied to the place, they had to pass mental, physical and financial requirements also.

It's nice to know my parents will be taken care of when the time arises. They moved in when my Dad was about 81 and my Mom was 77.

 

[2B]

That forces our kids to make very difficult decisions when we get frail and it often causes family conflict.  I think the best inheritance we can give our children is to behave as responsible adults and avoid forcing that situation.   

DW and I just returned from one of those conflict situations. We want to sell my FIL's car -- he has Alzheimer's. By Texas law and maybe national law, my wife's POA doesn't let her just sell the car. My FIL's signature is needed to make it "easy." He has been "thinking about it but not ready to sign" for about 2 months. We went there to tell him we need to sell it and he can make it easier on us and get a better price is he signs the automotive POA. This has been the only thing my wife's POA hasn't covered. He refused to sign it and got very angry saying there will be "consequences" if we sell his car. He then said we can't sell any of his assets especially his house without his permission. We're about to list his house and if we don't sell it he'll be living under a freeway overpass with his Parkinsoned - broken hipped wife.

BTW -- his dearth of assets are partly the compliments of a "wonderful" investment in annuities which is a big part of why I'm the "anti-annuity troll." The other part is my father's annuity investments. All stupid. All bad.

My wife is upset but I think it has finally pushed her over the edge. She knows she can't be "honest" with him anymore which has been driving him and me crazy. Sorry -- we're both crazy already in our own ways.

I have talked to many 50 somethings. We all agree that if we're not fit to drive and can't take care of our homes we need to be moved to independent or assisted living. I can't our parents generation saying anything different at age 50 - 60. Something happens as we age and our minds go to s**t. I have many coworkers and friends that have fought their parents to get them to stop driving and move where they can get proper care. It seems than very few people make the smart move (that they say they would do when they were just a few years younger) when they need to.

My FIL says he doesn't want to be a burden. He feels like the Alzheimer's medicine is really working and he's ready to move back home with his wife.

So, dear Brat, as one of my favorite posters here, move you and your DH's butt before you petrify and turn into my in-laws.

 

[Brat]

Been there, done that.  My mother-in-law did the same thing with her car - it represents freedom.  A member of the family removed a critical wire to disable the car so she couldn't drive.  One of her grand-daughters needed wheels so she agreed that she could use it "until".  The value of a used car is piddling compared to the cost of an accident.

My civil engineer Dad developed a frontal lobe brain tumor late in life, surgery left him manic (he threatened to jump over freeway overpasses, shouldered folks who didn't follow his instructions, for example).  My Mom mailed Dad’s driver’s license to Motor Vehicles along with a note telling them of her concerns.  When he sought to replace it DMV told him to ‘come in’.  If they hadn't created a revocable living trust that held their property Mom (who also has Parkinson's) would have been destitute.  We did need to get a court order to control his residence. 

It is time for a family conference so that all are on the same page; seek an elder-law attorney to declare him incompetent so that you can do what needs to be done.  It may be that there is a family member who can sweet talk him in to signing the necessary documents.

(edited to finish my thoughts)

 

[shtg42012]

This discussion touched me on alot of levels. I have 2 elderly parents, 79 & 80. Last year they had the severe car crash, fortunately no major injuries thanks to some good technology and plain luck. Didnt tell me about it, happened a few days before my b-day and they "didnt want to bother me". I wish there was a family member that could fool with a wire but they live alone 2 hours away from me & they would be pretty isolated. The independent/assited living issue is tied into the transportation/driving/living situation. The whole matter is not really resolved but we are working on it. At least they have each other but at some point, that will change.

One thing I did is that I insisted parents get umbrella liability insurance, said I would pay for it if they didnt (that really pi**ed them off). Doesnt really solve the problem but if you are elderly, injured and have a judgement hanging over your head, I cant think of too many things much sadder, particularly if the people are your parents.

The parent become the child and the child the parent, part of life.........

 

[2B]

It is time for a family conference so that all are on the same page; seek an elder-law attorney to declare him incompetent so that you can do what needs to be done.  It may be that there is a family member who can sweet talk him in to signing the necessary documents.

It's well past the family conference phase. Getting my FIL into assisted living has resolved most of the issues relating to his safety and living. DW has a POA for both of her parents and is slowly getting things done with it. We've taken control of his multiple but relatively small bank and investment accounts. The estate sale will be held as soon as my wife gets with the people that will do it (next week I hope). The house will be listed also "soon." SIL in California is worried we aren't asking enough for the property so she recommended an appraisal which will be done by Tuesday. Then there's nothing keeping us from listing.

We've assembled enough of his assets so we aren't in need of house money right away but there aren't enough assets for as long as I expect it to take for one of them to die. It is necessary to sell.

We have his car (03 Escalade) and the payment book. We'd like to get it out from in front of our house. My DW has been the dutiful daughter and tried to get him to see the logic of selling. He has always said he'll think about it -- for the last two months. DW thought if I explained the reasons he'd agree (mano et mano). He unfortunately sensed "pressure" and exploded with threats and accusations. He repeated something he's said before about not selling any of his assets without his specific approval. He threatened "legal action" if we do.

He knows the local DA who also knows he's got Alzheimer's. I'm really scared of "legal action." The chief of police of the city his house is in stopped by one time when we were cleaning out personal papers to offer his condolences to my DW on her father's condition. I think we're safe there too.

I've talked with an elder law attorney that says that in Texas we have what we need already with my in-laws situation. He didn't see any need for "guardianship" in either of their cases.

We have a way to get rid of the car which we will now do. We'll pay off the car and get a clean title in his name. With the POA we'll move the car to DW's name. When the clear title arrives we'll sell it CarMax. We'll have to pay the registration and insurance for about 1 month. It will reduce the net cash a bit but it will get the asset sold.

 

[Brat]

2B, you are have done what you need to do legally. I really understand your DW's pain.

We want to save our kids from having to do what you and I have been through.

 

[2B]

We want to save our kids from having to do what you and I have been through.

I've talked with a number of people about my age. Not one of them expresses any hesitation in saying that if their children thought they weren't fit to drive or take care of themselves that they would want to have the keys taken away and they would want to move where they would be safe and taken care of. I can't believe my in-laws would have said anything different before their minds went. It seems very common for elderly people to "hold on" well past where any rational person would have moved on. I suspect we will become that way and we need to prepare our children to do what they know we need despite our protestations at the time.

 

[REWahoo]

It seems very common for elderly people to "hold on" well past where any rational person would have moved on.

"A new study raises questions about when older surgeons should quit the operating room and how they can stay at the top of their game in the final years of their careers. With the percentage of working doctors older than 65 climbing, the questions hold growing importance for patients."

"...The United States requires airline pilots to step down at age 60, but there is no mandatory retirement age for surgeons, who — like pilots — hold life in their hands."

http://www.usatoday.com/news/health/2006-09-03-aging-surgeons_x.htm

 

[grumpy]

I've talked with a number of people about my age. Not one of them expresses any hesitation in saying that if their children thought they weren't fit to drive or take care of themselves that they would want to have the keys taken away and they would want to move where they would be safe and taken care of. I can't believe my in-laws would have said anything different before their minds went. It seems very common for elderly people to "hold on" well past where any rational person would have moved on. I suspect we will become that way and we need to prepare our children to do what they know we need despite our protestations at the time.

2B,

We have been fighting the driving issue with my FIL for the past few years. In his case his mind is fine at age 84. The problem is that he can't see (legally blind due to macular degeneration), can't hear (even with two hearing aides) and has major weakness in his legs requiring use of a walker. He has trouble moving his feet on the car pedals. He lives in a continuing care community that will provide him with necessary transportation. Despite all of this he refuses to give up his car. He says that his "lady friend" who is in her late 70's and who we suspect has a drinking problem drives him in his car when he wants to go somewhere. He has also admitted that he occassionally drives to a local store but "only in the daytime'!! He was in the insurance business when he was younger and I have tried to appeal to his first hand knowledge of what remorse he would feel if he injured or killed someone. With his conditions he wouldn't have any legal defense for continuing to drive. None of this has had any impact on him. DW has looked into getting the state motor vehicle administration to call him in for retesting but we figure if they pulled his license he probably would go on driving anyway. The car has been so strongly tied to his personal independence that he just ignores all rational arguments.

Grumpy

 

[Brat]

Have you discussed this with the social worker at the CC community?  If not maybe s/he has some suggestions. 

My Mom mailed Dad's licence in.  When he set out to drive to DMV the police pulled him over on the freeway, they told him that he would need to pass the exam and driving test to get his licence replaced.  He didn't follow up.

The facility administrator has a lot of authority.  That person may be able to require that he park a long way from his and her residence. You can't do much about the GF unless the car is gone or inconvenient.

If the local police patrol by neighborhood you take them a photo of his car and express your concerns.  They may have methods of their own.

 

[2B]

With his conditions he wouldn't have any legal defense for continuing to drive.  None of this has had any impact on him. 

Grumpy,

I hate to tell you this; but when he's in "the big one," you and your DW will also be liable. Every platiff's attorney will look at who "should have known" that someone in an assisted living facility was legally blind and deaf. That's you. Enjoy!

My DW is having horrible angst because her father "doesn't want his stuff sold without his permission." He will, of course, never give his permission and any attempt to talk to him about his finances turns into him "just needing to move home with mother and we won't have these expenses." He is so logical. Fortunately, his Alzheimer's medicine is working great and he'll be cured any day now -- at least that's his story and he's sticking to it.

DW has had two doctors tell her she just has to do what she needs to do and not dwell on how her father "feels" about it. She can't separate her father from the brain deteriorating old man. He ruled the roost with an iron hand and she can't move past it. I've told her that if she dies of a stroke I won't do a thing for them so she better stay healthy.

 

[grumpy]

I hate to tell you this; but when he's in "the big one," you and your DW will also be liable. Every platiff's attorney will look at who "should have known" that someone in an assisted living facility was legally blind and deaf. That's you. Enjoy!

2B,

Unless you are a lawyer, I would have to question your statement. I would think that FIL's eye doctor would have more legal responsibility than we do. Is he required to notify DMV? Are we? Any lawyers on the board willing to offer an opinion?

Grumpy

 

[2B]

2B,

Unless you are a lawyer, I would have to question your statement.  I would think that FIL's eye doctor would have more legal responsibility than we do.  Is he required to notify DMV?  Are we?  Any lawyers on the board willing to offer an opinion?

  Grumpy

You be screwed dear Grumpy. We heard that from my FIL's insurance company when DW called them about his new address and her POA. He has all of his insurance with the same company.

At this point, I'd just as soon shoot him than let him drive a vehicle. He has been a hazard for at least 3 years. I had told my wife and children to not ride with him under any circumstances back in 2003. He almost killed us both and didn't even see it. He would also approach stopped cars at 50 miles and hour, slam on the brakes and stop a few inches from a car. His car, which we need to get rid of, has a neat row of dings and dents around the entire vehicle.

 

[Nords]

"A new study raises questions about when older surgeons should quit the operating room and how they can stay at the top of their game in the final years of their careers. With the percentage of working doctors older than 65 climbing, the questions hold growing importance for patients."

"...The United States requires airline pilots to step down at age 60, but there is no mandatory retirement age for surgeons, who — like pilots — hold life in their hands."

How ironic-- the pilots have been trying to get their mandatory retirement age raised for decades.

I'm of two minds about doctors and experience.  I think gray hair is great for a little humility & perseverance, especially for avoiding "I'm the doctor, I'm in charge" personalities.  However they may also suffer from locked-in thinking or even be phoning in their performances.  Many younger doctors have been trained to know that they don't know what they don't know and are perhaps a little more willing to do the testing & research.

I guess the time I want an older doctor is when I don't want any of that "Normal for a geezer of your age" crap.  Is there a time when manual dexterity is better than experience & judgement?  Because I think that otherwise I can work better with someone who's younger.

As for pilots, when was the last time that flying an airplane required speed, reflexes, & physical dexterity?  Usually those skills just convince someone that they have the talents to get them out of situations that their bad decisions got them into.  Gimme age & conservative judgment every time.

He ruled the roost with an iron hand and she can't move past it.

That reminds me of "Elder Rage", a most excellent book for this situation...

 

[Brat]

After looking over Continuing Care Retirement Communities in our ‘neighborhood’ we found one that looked just like what we wanted, so paid a visit.  It is building a new structure to be completed in 18 months (DH observed that 2 years is more likely).  It is really nice (architect is a group DH has worked with), with an entry fee in line with its construction cost.  When we penciled the new building out it used a big hunk of our home equity and by the time the monthly charges were added we didn’t have quite as much play money as we would like.  The real capper for my husband was that they charged an additional fee for parking.  I can understand why they would do that, it provides an incentive for us seniors to get rid of the car, but that was just one nick too much in the play money budget. 

We were really impressed with the community and there were familiar faces.  Now the ‘old building’, which DH said he wasn’t thrilled about before our visit, is prime real estate because the entry fee is much less and the monthly rate somewhat less.  The wait list for a suitable apartment in the ‘old building’ is probably 4 years long, which works for us.

Observation: drill down on the details so that you know what the monthly charge does and does not include; model your cash flow using 4% annual increases in monthly expenses (energy and labor costs, also Medicare will increase higher than SS/CSRS); retirees nearing 70 who want to consider these communities should start looking now.

 

[Meadbh]

OK, here's the physician's POV on "driving retirement".

First, check out two very recent links of posssible interest.

http://www.cbc.ca/cp/health/060911/x091114.html

http://www.cmaj.ca/ (see September 12, 2006 edition for links to the research paper, commentary and analysis)

The physician's legal duty to report a patient's inability to drive is often enshrined in provincial or state law. Of course, there must be evidence.

Quote from Analysis (David M. Butcher):
"The role of physicians in ensuring road safety through the identification of patients with medical conditions that make it unsafe for them to drive is an important one. It is recognized in all jurisdictions with legislation that outlines the duty to report medically unfit drivers. In most provinces and territories, this duty to report is mandatory. If driver fitness is determined to be a causative factor in a motor vehicle crash, it can be alleged that the accident would not have occurred had the driver's doctor made an appropriate report — and physicians have been found liable for damages in these circumstances."

Obviously I can't speak for the US or other countries, so check out the legislation in your jurisdiction!

Now, Grumpy's FIL clearly has visual, auditory and motor impairments that would be obvious to an examining physician. Grumpy, I suggest you first check the legal situation in your state and then march FIL off to his MD toute de suite. Let the MD know of your concerns.

The problem is (as discussed in the study) that clinical examination often does not pick up milder cognitive deficits that can impair safe driving. And if there is no provision in law for the physician to order a road test, it's "he said, she said".

When physical examination is normal, when the "evidence" of impaired driving is hearsay, and when the patient is in denial, uncertainty exists. In this situation, the physician is in an ethical conflict between the public good and his/her patient's right to confidentiality. And then we are back to moral suasion.

My DF voluntarily stopped driving when he realized his own limitations after almost running over a child that he simply didn't see. Other than slow perceptual and reaction times, he had all his marbles. Mom was furious at the loss of independence.

Meadbh