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Making Sense of Senior Living Options: 

A summary of the options available for you or a loved one in a very confusing industry

 

By:  Anthony L. Cinotti, Founder, National Association of Senior Advocates

Many older adults reach a point where their current housing arrangement no longer makes sense. There might be safety issues, or perhaps just matters of convenience and lifestyle needs that have changed. When contemplating a move, understanding what options are available and being able to compare and contrast these options can be very useful in making the right choice. There are several different options for older adults who are planning to move.

 

There are three categories to choose: Independent Living, Assisted Living and Skilled Nursing. Let’s first differentiate the types of alternatives available. The information below is for the purpose of a brief summary only. Be sure to fully investigate all options.

 

1. Independent Living

Independent living comes in various shapes and sizes from an age restricted (age 55+) rental community, a 55+ home or condo purchase, a Continuing Care Retirement Community (CCRC) and others. Just as it states, independent living is for individuals who can still live independently without
help (or just require a little help) from others.

 

An independent living adult community is perfect for those who have the need to live on one floor or have grown tired of maintaining their current
residence. Social opportunities are another feature of these communities giving individuals opportunities to engage in activities that may not be as accessible in their current home.

Independent Living communities generally are not a good solution for those who need a lot of help with activities of daily living, commonly referred to as ADLs. Bathing, dressing, difficulty walking without a device (i.e. walker) and medication reminders are a few common ADLs. Although fair housing laws may allow one who cannot live independently to move into an independent living community, this more than likely will not be a good option if you want to maximize lifestyle opportunities. An assisted living setting may be more appropriate.

 

Services: Services vary widely depending on the community. When evaluating communities, make sure most of the services, programs and your other interests are available at your community. If not, try to find one that has what you need.

Costs: Vary depending on type of community. We will discuss in more detail below in the “Independent Living Options” section of this summary.

2. Assisted Living (AL):

Assisted living is generally for individuals who need help with many of the activities of daily living (ADLs) as described in previous paragraphs may make assisted living a great choice. Many assisted living organizations offer memory care as well. Think of assisted living as a place you would move to if
you could not live in an apartment by yourself due to safety or quality of life concerns.

Many people mistakenly believe that if they are unable to live in their current home, the next step is assisted living. This is not true in many cases. Independent living could be a great option if you only require single floor living, dining options and maintenance of the residence inside and out (appliances, plumbing, etc.).

Services: Most assisted living communities offer assistance with activities of daily living, memory care, maintenance, dining options, transportation, security, housekeeping and other full service needs. Think of it as an all-inclusive living arrangement with help physically if you need it.

Costs: Cost and services vary by organization. Costs are based generally on the type of care and how
much is needed. For instance, if you only need help with bathing, but can walk well and perform all other ADLs well, you would pay less than if you had multiple needs. The size of your residence will also determine cost. Most communities offer various sizes and accommodations.

Important: Services and cost of assistance vary with every community. Be sure to have a clear understanding of all of the above before committing to a community. Not all services are included in the monthly fee, rather offered a la-carte. Demand the total cost in writing before committing.
Compare services with other communities. Also important is friendliness of staff and residents. This is an important factor once costs and services are compared.

 

3. Skilled Nursing

Commonly referred to as a nursing home, skilled nursing communities offer the highest level of care and are a good fit for individuals with a high level of need. Those who are bed ridden or have high level memory issues are two good examples. To keep it simple, if you are not eligible to live in assisted living
due to needs, skilled nursing is your next option.

Services: Services will vary depend on community. Most states have mandatory services and staffing requirements. Be sure to ask questions such as staffing ratio, Medicare Ratings (1-5 stars) and limitations on service. If you are concerned about running out of assets due to cost of care, an
important question to ask is if the community accepts Medicaid. If not, you may be asked to leave once you can no longer afford the cost of care. Although federal law does require the organization to find you another facility to transfer, the law does not give you a choice as to what facility you will be
transferred. Therefore, if running out of money is a concern, this may be an important consideration when comparing communities.

Costs: Services will vary depending on community and services required, similar to an assisted living
cost structure, but applied to higher level of service.


Independent Living Options:

Rental Community: Just as it sounds, you pay a monthly rent. Some communities may also have a onetime deposit before moving in.

Costs: Similar to renting a non-senior apartment, costs generally depend on location, size of residence
and services offered.

Age Restricted Purchase: Referred to as 55+ or an active adult community, an age-restricted purchase is a community where you buy the property. It is a real estate transaction. You must buy the property and also pay a monthly maintenance fee. Maintenance fees cover a variety of services and are community specific. Services such as security, lawn maintenance and general home maintenance are common
features.

Costs: Similar to buying a home, costs mainly depend on location and size of residence.

Continuing Care Retirement Community (CCRC) or Life Plan Community:


A CCRC is a community that offers independent living, assisted living and skilled nursing all in one campus. A community must have all three levels of service to qualify as a CCRC. Although services vary, most have a common dining room (s), activity centers, wellness centers, outdoor recreation and
swimming pools.

Social events happen on campus, and often there are outings to events, such as the symphony, museums, shopping and other trips. Depending on the community, residences may include houses, cottages as well as apartment-like settings.

 

Types of CCRCs:

 

There are typically three fee schedule options at a CCRC:

1:  Life Care Contract (Sometimes Referred to as an Extensive or a Type A Contract): The most expensive agreement, a Type A contract gives residents priority access to all services (independent, assisted and skilled nursing) with little or no increase in the monthly maintenance fee, regardless of where you live.

Life Care contracts are underwritten similar to a long term care contract. Existing medical conditions may prohibit the ability to move into a community or services for these conditions may be excluded from the agreement.

The advantage of a Type A contract is predictability of monthly expenses regardless of what happens to you in the future. The disadvantage is that this is the most expensive CCRC option in both entrance fees and monthly fees. You are pre-paying for service you may never need.

 

2:  Modified Contracts (Sometimes Referred to as a Type B Contract): This contract offers residents priority access to healthcare. Part of the monthly fee pre-pays for future costs of care, but on a limited basis. For example, Modified contracts may offer the first 30 days in skilled nursing at no additional
increase in monthly fee. Once over the maximum care allowance, residents pay for healthcare as needed, with monthly maintenance fee increases to cover healthcare needs. Often the healthcare costs are offered at discounted rates.

The advantage of a Type B contract is a pre-payment of some services as described above as well as a discount of additional services if needed. The disadvantage, similar to a Type A contract, is that this is generally a more expensive CCRC option and you are pre-paying for service you may never need.

Fee-for-Service Contracts (Sometimes Referred to as a Type C Contract): Residents pay for all health care costs separately. This is the least expensive contract and offers all the benefits of a CCRC at the lowest cost. You are, however, at risk for future costs of healthcare needs.

Costs of a CCRC:

Generally, all CCRCs have a monthly fee and just as described earlier in this article, a CCRC may be available as a rental, purchase or in one other manner; what is referred to as an Entrance Fee Deposit. Many CCRCs are Entrance Fee Deposit communities.

Entrance fees vary among communities, some are fully or partially refundable, some have an amortized refund over a course of several years. Be sure to consult a trusted advisor when deciding between entrance fee options.

Common Types of Entrance Fee Deposits

100% Refundable: 100% of your deposit is refunded after leaving the entire community. The refund may be to you or a designated beneficiary. Depending on the community, the refund is triggered after a certain time period after leaving (i.e. 3-6 months) or until your former residence is re-occupied. Some
communities charge a refurbishment fee that is deducted from the deposit. Be sure to ask.


Partially Refundable Deposit: 90% and 50% Refundable deposits are the most common. These deposits are priced lower than the 100% option if available. Just as it implies, you will receive a percentage of the entrance fee paid at time of leaving the entire community. In the examples mentioned here, you
will receive 90% or 50% of what you paid, respectively. Just as in the 100% Refundable options, the refund is triggered after a certain time period after leaving or until your former residence is reoccupied. There also may be a refurbishment fee that is deducted from the deposit.

Amortized Refund Deposit: Entrance fees for this plan are partially refundable for a limited time period after you initially move into the community. If you move out or pass away after the amortization period, no refund will be given.

For example, if a community offers a 60-month Amortized Deposit Option, your refund will decrease by 1.667% per month after your initial move. After 60 months, there is no refund. This plan offers the lowest entrance fees and may be very appropriate if you do not have a
desire to leave money to heirs or are on the younger side with a long life expectancy. How the refund is
triggered and fees are the same as in previous options.


Not for Profit vs. For Profit Business Model

Traditionally, continuing care retirement communities were not-for-profit organizations; although now many CCRCs are privately owned as a for-profit business model. A not for profit CCRC generally has what is known as a Benevolent Care Fund. This fund is in place to assist in paying monthly and everyday living expenses if you run out of money due to no fault of your own. This fund should cover the cost of all levels of living; independent living, assisted living and skilled nursing.


If the CCRC is for-profit, there is no safety net if one runs out of money. There may be State or Federal regulations that restrict how you can be discharged, but often times, there is no obligation on behalf of the community. This is not to imply that the not for profit model is a better one then the for profit.  It all comes down to personal preference and your own comfort level. 

Remember, the above statements are for summary purposes only and are not intended to offer advice or recommendations. You should always fully evaluate all options along with your reason for moving when deciding between retirement living options. It is also a good idea to consult a trusted advisor
prior making any commitment.The National Association of Senior Advocates is a great place to find a trusted advisor. Visit the NAOSA Professional directory page to find a trusted advisor near you.