Ccrc--good bad and ?

[audreyh1]

When considering LTCi or a CCRC, I didn't find the "average" or "median" stay length to be a very useful statistic. After all, I wouldn't plan my withdrawal rate for a 50% probability of failure. It looks like about 10% of those who check in to a nursing home are still alive 5 years later. The numbers are from this study from the UK, but their average stay length matched the US fairly close, so I'm guessing the "longest lived 10% number is also fairly close.
Now, if we add that about 30% of people over 65 won't go into a nursing home at all before they die, then we have something like 8% of the population of people over 65 will be in a nursing home for more than 5 years.

FWIW.

One thing I always wonder about is whether a stay in a nursing home is reduced by staying in assisted living prior to that. Seems like it would be - a situation where with some extra assistance, or in an environment where some additional nursing can easily be brought in to help the person stay in place before needing to be transferred to skilled nursing facility (whether within a CCRC or not).

If someone needs memory care unit, probably all bets are off. And those patients are the ones that tend to live longer (physically robust but mentally not there) and probably drive up the average stay.

 

[Amethyst]

Funny how it's "memory care" now, instead of "dementia." Makes it sound like your memory will somehow get better with proper care

If someone needs memory care unit, probably all bets are off. And those patients are the ones that tend to live longer (physically robust but mentally not there) and probably drive up the average stay.

 

[audreyh1]

I don't know. I understand why they wouldn't want to call it the Alzheimer's unit. And I suppose not all the patients suffer from Alzheimer's, so it covers a variety of mental diseases that cause memory loss. Memory care, like long term care in general, doesn't exactly imply a cure unfortunately.

 

[Huston55]

One thing to consider is annual rate increases. Many CCRC's increase monthly rates 3-5% every year. For residents who move in fairly young, say 75-80, and live a long time, the compounding of the annual increases can become a serious issue. If I were analyzing this, I would assume at least 4% cost increases each year, 6% if you want to be really conservative.

Concur. I used 5%/yr in my NPV analysis above.

Another consideration for me is the lifestyle impact. CCRC's, at least those I'm familiar with, are nowhere near as diverse as the broader community and by definition, you're surrounded by elderly people. For some, that is appealing. Others prefer more diversity and more interaction with younger folks.

That's absolutely true. But, I think (hope?) that we have a substantial amount of control over the "community atmosphere" we place ourselves in by selecting the right CCRC. Although admittedly preliminary thusfar, our CCRC research has revealed a fairly wide spectrum of environments from which to choose; several of which are akin to country club living. In terms of "community diversity", I think of the CCRC selection process as being somewhat similar to the 55+ Planned Retirement Community selection process; one has to choose wisely. I'd also say that having the ability to "choose" my community is one of the attractions of the CCRC route for DW & me.

 

[nwsteve]

Preliminary Conclusion: Because of the potential for significant down side risk (if we use more care than "average"), and because we prefer to "proactively" select our living environment, and because there are multiple soft social/emotional benefits to remaining in one's chosen community until the end of life, we will almost certainly choose the CCRC "Life Care" option, since the nominal 20% premium seems a small price to pay for certainty & stability.

I need to do some more work on this but, it's a preliminary result for our situation. I hope it's useful to you as you evaluate your options.[/QUOTE]

OUTSTANDING! Thanks for doing the math. As in a lot things dealing with retirement life choices, the soft variables are the ones most difficult to capture.
Your numbers look very reasonable to me as well as you conclusion that a 20% premium is a relatively small amount (if you can afford) to have control from day one of your long term life style and healthcare.
One of the things you did not mention is the Life Care option incentives are largely pointed to keeping you healthy (out of the more expensive care options) and vigorous.

 

[Hermit]

Huston's analysis was spot on. My plan is that I will have enough money to take care of contingencies when they arise. In the mean time, I will stay put as long as I can. In-home help this far up in the mountains may not be practical though, so I may need to move to a CCRC or assisted living facility when the time comes. I have already told DD I would go. (Kicking and screaming all the way. ) Yes, I am leaving that area somewhat unplanned with the exception of doing some earlier investigation to narrow down places I would like. I just do not want to plan my life, even later life, on what "could" happen. I guess that I have already made some pretty solid plans in this area. DD will assume full control if I can no longer make competent decisions. She and her husband have my total confidence in this area.

On the other hand, for those that wish to plan on such life events, I think CCRC is a good way to go, providing you find a place that you enjoy because you will possibly be financially locked in to it for up to the last 20 to 30 years of your life.

 

[youbet]

On the other hand, for those that wish to plan on such life events, I think CCRC is a good way to go, providing you find a place that you enjoy because you will possibly be financially locked in to it for up to the last 20 to 30 years of your life.

Actually, it would be unusual to spend as much as 20 - 30 years in a CCRC, especially for men. But it's true, you have less financial flexibility once committed to a CCRC than if you're handling things in a DIY manner.

I have no issue with spending all your independent living years in a completely self-managed situation as you describe your preference. Since you have family signed up to help you get into assisted living or NH if necessary later, you should be fine. Many folks, however, don't have others signed up to do this or don't wish to lay that burden on others. In that case, a Contract A CCRC, where you're able to delay moving in until independent living is starting to become a challenge, could be very handy.

 

[Brat]

Two of the best CCRCs in our area have both Medicare approved skilled nursing beds and assisted living units that do much of what is provided in a custodial care nursing facility.. but in my observation those residents seem to be much more active and not inclined to stay in bed.

The challenge is that it takes a large facility to provide for severe memory care residents.

My Mother's cousin lived in Twin Towers in Cincinnati. She moved too late in life to enjoy their amenities. If I didn't have family on the west coast I would move there in a nano-second.

 

[explanade]

Hermit's post & my response (above) got me to thinking about how to evaluate the cost of various options that each of us might be considering. So, I performed a rough NPV analysis for two potential scenarios for DW & me. My result is below.

Basis: I am 2 yrs older than DW and we have no children or other family who will care for us in old age. I assumed we will be "average" consumers of LTC in that we will begin to need it when I reach age 79 (near the average entry age of 80) and will use Assisted Living first, then Skilled Nursing Care for the average total duration of 5 yrs. I assumed 5% annual health care cost inflation & used a 3% discount rate to convert future values to present values. Your chosen factors will almost certainly vary but, this will at least provide you with a reference point.

Description: I compared two scenarios that are likely alternative choices for DW & me. Scenario #1 where we proactively enter a Life Care contract at a CCRC and; Scenario #2 where we remain at home as long as we can, using home care until we have to move to Assisted Living then Skilled Nursing facilities until we both die.

Scenario #1: DW & I move to a CCRC & select a "Life Care" contract, which fixes our costs (except for annual health care inflation). We start out in Independent Living, then move to Assisted Living and subsequently Skilled Nursing as needed. The duration of this scenario is 10 yrs.

Scenario #2: We remain at home until I (older & male) need paid home help, then move into an Assisted Living facility and Subsequently Skilled Nursing as needed; paying the market rates for these services as we use them. The duration of this scenario is 10 yrs.

Results:

- The NPV of both scenarios is in the low 7 figures (SF Bay Area)
- The CCRC "Life Care" scenario is ~20% more expensive (if the "averages" hold true)
- A crude sensitivity analysis shows that if we need care for ~2yrs more than "the average", the CCRC "Life Care" approach becomes cheaper (Note "samclem's" post above illustrates that 30% of Nursing Home residents stay >3 yrs.)

Preliminary Conclusion: Because of the potential for significant down side risk (if we use more care than "average"), and because we prefer to "proactively" select our living environment, and because there are multiple soft social/emotional benefits to remaining in one's chosen community until the end of life, we will almost certainly choose the CCRC "Life Care" option, since the nominal 20% premium seems a small price to pay for certainty & stability.

I need to do some more work on this but, it's a preliminary result for our situation. I hope it's useful to you as you evaluate your options.

Do you have actual name of the CCRC facility from which you calculated these numbers?

 

[Huston55]

Do you have actual name of the CCRC facility from which you calculated these numbers?

For Scenario #1, I used one of the more expensive "Life Care" CCRCs in our area of the SF Bay. These costs are available in open sources, if you're willing to dig a bit. Happy to pass on the name by PM.

For Scenario #2, I used a "Genworth" webpage and selected the appropriate cost/month for our area & the level of care. These are averages but, I checked them against a few facilities in our area, and they seem to be pretty close to reality. Plus, by the time we need to act, prices will have changed and we'd be wise to reconfirm our approach then.

https://www.genworth.com/about-us/industry-expertise/cost-of-care.html#

I see that you're also in Cali. If you want more detailed info, feel free to PM or email me.

 

[nwsteve]

Huston,
When you did your npv analysis did you allow for any refund of the CCRC entrance fee? In fact, if you could share the size and refund assumptions, that would be most helpful.
Thanks

 

[Huston55]

Huston,
When you did your npv analysis did you allow for any refund of the CCRC entrance fee? In fact, if you could share the size and refund assumptions, that would be most helpful.
Thanks

I assumed NO refund, which is typical for a Type A (Life Care) contract. I know that some/many CCRCs have options which include a defined or ammortized refund but, that typically means that future costs for additional care can go up by some amount; from what I've read, those would typically be categorized as Type B contracts. So, when modeling your own personal scenarios, you'd have to account for both parts of such a contract (the lower entry fee & the higher subsequent care fees).

 

[nwsteve]

I assumed NO refund, which is typical for a Type A (Life Care) contract. I know that some/many CCRCs have options which include a defined or ammortized refund but, that typically means that future costs for additional care can go up by some amount; from what I've read, those would typically be categorized as Type B contracts. So, when modeling your own personal scenarios, you'd have to account for both parts of such a contract.

I agree many CCRC are often a no refund type of experience. I have found here in the NW where I have looked at two new CCRCs (less than a year), they are only offering high % refund options--think 80-100%. Personally, I think they want the higher cash flow to build their endowment base and reserves. One plus on the new properties is the higher age is much lower think 75-77. In the most "mature" property we looked at, the average age of residents was 80-81 and typical entrant was 75-76. This property also offered a 90% refund option but it the entrance fee was 50+% higher than the five year amortization base option. All these locations were Type A (Life Care properties)

 

[explanade]

I don't know if this was linked previously in this thread but looks like State of CA has an overview:

Info & Resources > CDSS Programs > Community Care Licensing > Continuing Care

They also publish a map of facilities in CA:

http://www.calccrc.ca.gov/res/pdf/findaccrc.pdf

 

[FreeBear]

I have no issue with spending all your independent living years in a completely self-managed situation as you describe your preference. Since you have family signed up to help you get into assisted living or NH if necessary later, you should be fine. Many folks, however, don't have others signed up to do this or don't wish to lay that burden on others. In that case, a Contract A CCRC, where you're able to delay moving in until independent living is starting to become a challenge, could be very handy.

+1

We'd probably prefer to live on our own forever, but getting old will certainly get in the way!

We don't have any younger family to impose upon, and I don't know if I would want to anyway. I spent a good chuck of my life as a caregiver to family. I'm not sure if I have the strength to do it all over again, nor would I want to burden DW.

DW hates thinking about the certainty of growing older and the possible health challenges, although we are still quite young. With no one else to really help us, I'm seriously considering a contract A CCRC at the right time, preferably a bit before the "right" time. Most of it is just for peace of mind. Hopefully, we'll have enough $$$ to blow on a "resort" CCRC when the time comes and enough health to appreciate it.

Thanks everyone for a great discussion. This is such a taboo topic in the real world.

 

[Sunset]

My Father bought into a ccrc in Florida about 15 years ago, He is 99 now and still lives in a two bedroom cottage on the property. Paid about 250K up front and he and my Mother paid about 5k monthly. Now Dad is alone and I think he pays about 3.5k/mth. Lovely place in the midst of a Spanish Oak forest, parents were very happy there until they replaced the chef (who opened a restaurant in town and now he will only eat breakfast in the grill room. For the money I will just live here on the Pacific Ocean with a household staff and bring in skilled nurses if I need them at about $60 for a 12 hour shift.

Do you have any spare rooms ??

 

[Amethyst]

True. In my experience, people will go on endlessly about their old parents ("Sigh...we had to fly to Florida, Mom fell again"), but resist any discussion of when it's going to be their turn.

Or if the topic does happen to come up, some man will assert that he intends to shoot himself when the time comes (which is absurd - anybody know anyone who actually did that?) and the topic shuts down again.

+1

This is such a taboo topic in the real world.

 

[samclem]

Most of us are believers in diversifying our investments to give us the highest probability of avoiding a very bad outcome. After a lifetime of this, it is quite unpalatable to think of signing over a majority of the nestegg to a CCRC and putting our trust in a single CEO/BOD to look after DW and I for however long our road might be. There's no opportunity for do-overs and pretty much no way to get our dough back if they make bad management decisions or just let the CCRC quality slip over the years (to improve the bottom line, because of market conditions, or whatever the reason).
In addition to the solvency/management issue, there's the flexibiliity issue. With LTCi, an annuity, etc you are buying a cash flow that is highly flexible: The money can be used to fund any nursing home you want, home care, a combination of the above, etc. With a CCRC, you are (obviously) restricting yourself to a single facility, and if it/you change so that it is no longer the best fit, then you are a bit stuck.

 

[Amethyst]

We have been thinking along these lines as well.

The problem is that, cash flow aside, nobody can predict a catastrophic event that makes you unable to take care of yourself. Then, how do you go through the hard business of finding the place that will take care of you?

That seems to be why some people want to sign up with a CCRC now, while they've got the mental and physical resources to do so.

No easy road in this life.

Most of us are believers in diversifying our investments to give us the highest probability of avoiding a very bad outcome. After a lifetime of this, it is quite unpalatable to think of signing over a majority of the nestegg to a CCRC and putting our trust in a single CEO/BOD to look after DW and I for however long our road might be. There's no opportunity for do-overs and pretty much no way to get our dough back if they make bad management decisions or just let the CCRC quality slip over the years (to improve the bottom line, because of market conditions, or whatever the reason).
In addition to the solvency/management issue, there's the flexibiliity issue. With LTCi, an annuity, etc you are buying a cash flow that is highly flexible: The money can be used to fund any nursing home you want, home care, a combination of the above, etc. With a CCRC, you are (obviously) restricting yourself to a single facility, and if it/you change so that it is no longer the best fit, then you are a bit stuck.

 

[Huston55]

Most of us are believers in diversifying our investments to give us the highest probability of avoiding a very bad outcome. After a lifetime of this, it is quite unpalatable to think of signing over a majority of the nestegg to a CCRC and putting our trust in a single CEO/BOD to look after DW and I for however long our road might be. There's no opportunity for do-overs and pretty much no way to get our dough back if they make bad management decisions or just let the CCRC quality slip over the years (to improve the bottom line, because of market conditions, or whatever the reason).

There's no question that taking the "Life Care" CCRC option is a BIG commitment, both financially and psychologically. For those of us who've 'been in control' (likely almost everyone in ER.org ) to reach FI, it's tough to give up any control at all; just ask my DW, she'll attest to that.

But, personally, as hard as it is for me to consider, I'm convinced that I will absolutely have to give up some level of control as I/we get older; it's just the natural course of things. So, if I accept that, I want to control (there's that word again) how I do it and, particularly to limit down side risk. I think a Life Care CCRC contract is one way to do that; especially if you exceed average longevity or care needs by even a little bit.

In addition to the solvency/management issue, there's the flexibiliity issue. With LTCi, an annuity, etc you are buying a cash flow that is highly flexible: The money can be used to fund any nursing home you want, home care, a combination of the above, etc. With a CCRC, you are (obviously) restricting yourself to a single facility, and if it/you change so that it is no longer the best fit, then you are a bit stuck.

The LTCi and annuity options are "funding" options for selecting a path similar to what I called "Scenario #2" above; they are not "care" options. So, with LTCi and/or an Annuity, you would still have to select the "care" option that's best for you/couple.

It's also worth noting that you have to give up some amount of control when selecting either LTCi or an Annuity, and accept the risks associated with them. LTCi is really more of a prepayment approach, since lifetime LTCi with a Health Care CPI provision is virtually unavailable and most LTCi contracts are for fixed periods. So, LTCi doesn't address all of the downside risk. Purchasing an Annuity can provide lifetime income for one/couple and, frankly, it seems very much like paying the entry fee for a Type A CCRC contract; with each of them having their associated risk of insolvency, etc.

I have not done a NPV analysis of an option using LTCi and/or and Annuity to fund a long term care scenario but, would be interested in the results if someone does one.

 

[Just_Steve]

Or if the topic does happen to come up, some man will assert that he intends to shoot himself when the time comes (which is absurd - anybody know anyone who actually did that?) and the topic shuts down again.

As a matter of fact I do know someone who did this.
My mother was dying and in and out of a coma, my father went home one day and ate his 9mm. She died a month later. So yes it does happen.

 

[samclem]

Or if the topic does happen to come up, some man will assert that he intends to shoot himself when the time comes (which is absurd - anybody know anyone who actually did that?) and the topic shuts down again.

I'm not sure how absurd it is. For whatever reason, favoring "assisted suicide" or even euthanasia is viewed as merciful and open minded. But the idea of choosing to execute this plan before needing any help is subject to derision.
Now, that doesn't mean I think it is a good idea, it can cause all kinds of emotional problems for those left behind. But it seems less full of questionable moral "secondary effects" than euthanasia or assisted suicide.
Fundamentally, though, I do agree that cavalier talk of suicide as we sit here today is far removed from how we may feel as we get more ill. So many people say "I'd never want to live like that, I'd rather die first"--but few of those broken down oldsters choose to go that route. Most of us will keep pushing along, wanting at least one more day.

 

[Walt34]

The problem is that, cash flow aside, nobody can predict a catastrophic event that makes you unable to take care of yourself. Then, how do you go through the hard business of finding the place that will take care of you?

That seems to be why some people want to sign up with a CCRC now, while they've got the mental and physical resources to do so.

No easy road in this life.

That's the conundrum. We are going by the experiences of our respective parents, a couple of other relatives, and a friend whose mother has been living independently in a CCRC (same one FIL was in) for I think 30 years now. Had he moved when he needed to he might still be with us because they watch health issues carefully. Last time he mentioned it she was 95 and still driving, still living in a townhouse-type house.

My mother moved into a CCRC at about 72 and six months later said she wished she had done it ten years sooner. FIL didn't want to face the fact that his health was declining and he could no longer stay in the house until he was faced with the physical reality. He waited far too long and became a burden to DW. One BIL's mother was in a CCRC (passed a couple of years ago) and that worked out very well for her.

That's why we have applied to a CCRC but don't plan on moving for several years yet, about five.

 

[Brat]

Most CCRCs require a financial statement and evidence of income. Several that I researched have charitable trusts should a resident become insolvent through no fault of their own and they will process Medicaid applications.

 

[NYEXPAT]

Do you have any spare rooms ??

I'll have one room in about 6 years when the 12 year old heads off to college. My two year old's room (no ocean view) will be available in about 16 years, unless he decides to take over his brothers room.