When You Can’t Take Care of Yourself by Dennis Friedman
I don’t believe I’ve ever enjoyed life more than I do now. What is there not to like about my life? I have my health, financial stability, plenty of free time to do the things I want, and I have a companion to share my journey with. I wish this stage of my life was never-ending.
But at age 73, I know my life could be turned upside down tomorrow. Lately, I’ve been thinking about what Rachel and I should do if we can’t take care of ourselves. Although I’m six years older than her, there is a chance she could need a caregiver before me. Women tend to have fewer years of good health to live than men. According to a Washington Post article, “Women are more physically frail than men in old age.”
We, like many folks, want to remain in our house until the very end. But I know that might not be possible, especially if it’s only one of us left behind. It can be expensive to hire a caregiver, and you can run the risk of running out of money. In California, where we live, the median hourly rate is $38.19. Also you might not get the quality care that you need.
As an alternative, we have been looking into a continuing care retirement community, or CCRC. Enrolling in one might be the biggest financial commitment of our lifetime. Here is what we learned, along with some of our preferences.
CCRCs can be either not-for-profit or for-profit. We believe a not-for-profit CCRC would better serve our interests than one that has to answer to investors or shareholders. We would also try to avoid a CCRC that is part of a consortium because we wouldn’t want someone from far away making important decisions concerning our community. This would also prevent our fees from subsidizing another poorly run entity. Hence, we would prefer to enroll in a CCRC that is a stand-alone.
Entry fees and monthly payments can vary greatly. You can’t thoroughly evaluate how much you should shell out for fees and payments unless you know what type of contract you're agreeing to.
There are four types of contracts: A,B,C, and D:
A Type A contract, which is sometimes referred to as an extensive or full life care contract, is substantially more expensive because you’re guaranteed that you will not be paying higher fees, except for cost-of-living adjustments, when you need a higher level of care, such as assisted living and skilled nursing care. Some view this type of contract as an insurance policy against soaring medical expenses, while it keeps your costs predictable.
A Type C contract is also known as a fee-for-service contract. If you’re living independently, you’ll have considerably lower entry fees and monthly payments, but fees will increase dramatically according to market rates for assisted living, skilled nursing care, and memory care when needed. This type of contract is suited for someone who has long-term care insurance that would cover their additional health care expenses.
A Type B contract, also known as a modified-fee-for-service contract, is like a hybrid between Type A and C. A Type D contract is like a short-term rental agreement.
We would choose a Type A contract because we want to know what our future costs will be. It would also guarantee us continuing care, even if our money runs out. In addition, part of our entry fee and monthly payments would be tax deductible because they are considered prepayment for future health care.
How do you know if the CCRC is financially sound? Every nonprofit CCRC is required to file Form 990 with the IRS. This is a public document that you can view online here. You can search for a CCRC by its name. The last line on page 1 gives the net assets (assets minus liabilities) or fund balances at the end of the year. Of course, you would like to see a large positive number. If the number is negative, we would walk away.
The occupancy rate of the CCRC could be a useful indicator of its financial health. One with a waiting list to get in would be a better sign of financial stability than one with a 90% occupancy rate.
How can you evaluate the medical facility? When my mother was discharged from the hospital, I had to find a skilled nursing facility for her quickly. I used this Medicare.gov site that rates nursing homes and rehabilitation facilities based on health inspections, staffing, and quality measures. Even though her facility was rated above average for care, we would still not stay there.
The place was dated. The inside badly needed a new facelift. It looked like it was stuck in the 1950s. My mother shared a room with a woman who was in so much pain that she would moan and groan. Her half of the room had, besides her bed, an old dresser for her clothes, a small end table, a lamp, a chair, and a television. This facility belongs to a CCRC that my wife and I once thought would show some potential.
The upshot is that you need to tour the medical facility to get a feel for the place. Don’t just focus on the independent living aspect of the community. We would want to make sure the health facility wasn't isolated from the rest of the community, so we could still participate in some of the activities. We would like to see a single room occupancy standard for all the rooms. Most importantly, they must have a policy that allows the spouse and community friends to visit the patient.
Get help. Since we would be making a significant financial commitment, we would consult a qualified elder lawyer for advice and guidance before signing on the dotted line. Sometimes the CCRC will insert clauses in the contract that allow them to raise the daily rates after providing a 30-day written notice. We would want to make sure we completely understand what we’re signing up for.
But at age 73, I know my life could be turned upside down tomorrow. Lately, I’ve been thinking about what Rachel and I should do if we can’t take care of ourselves. Although I’m six years older than her, there is a chance she could need a caregiver before me. Women tend to have fewer years of good health to live than men. According to a Washington Post article, “Women are more physically frail than men in old age.”
We, like many folks, want to remain in our house until the very end. But I know that might not be possible, especially if it’s only one of us left behind. It can be expensive to hire a caregiver, and you can run the risk of running out of money. In California, where we live, the median hourly rate is $38.19. Also you might not get the quality care that you need.
As an alternative, we have been looking into a continuing care retirement community, or CCRC. Enrolling in one might be the biggest financial commitment of our lifetime. Here is what we learned, along with some of our preferences.
CCRCs can be either not-for-profit or for-profit. We believe a not-for-profit CCRC would better serve our interests than one that has to answer to investors or shareholders. We would also try to avoid a CCRC that is part of a consortium because we wouldn’t want someone from far away making important decisions concerning our community. This would also prevent our fees from subsidizing another poorly run entity. Hence, we would prefer to enroll in a CCRC that is a stand-alone.
Entry fees and monthly payments can vary greatly. You can’t thoroughly evaluate how much you should shell out for fees and payments unless you know what type of contract you're agreeing to.
There are four types of contracts: A,B,C, and D:
A Type A contract, which is sometimes referred to as an extensive or full life care contract, is substantially more expensive because you’re guaranteed that you will not be paying higher fees, except for cost-of-living adjustments, when you need a higher level of care, such as assisted living and skilled nursing care. Some view this type of contract as an insurance policy against soaring medical expenses, while it keeps your costs predictable.
A Type C contract is also known as a fee-for-service contract. If you’re living independently, you’ll have considerably lower entry fees and monthly payments, but fees will increase dramatically according to market rates for assisted living, skilled nursing care, and memory care when needed. This type of contract is suited for someone who has long-term care insurance that would cover their additional health care expenses.
A Type B contract, also known as a modified-fee-for-service contract, is like a hybrid between Type A and C. A Type D contract is like a short-term rental agreement.
We would choose a Type A contract because we want to know what our future costs will be. It would also guarantee us continuing care, even if our money runs out. In addition, part of our entry fee and monthly payments would be tax deductible because they are considered prepayment for future health care.
How do you know if the CCRC is financially sound? Every nonprofit CCRC is required to file Form 990 with the IRS. This is a public document that you can view online here. You can search for a CCRC by its name. The last line on page 1 gives the net assets (assets minus liabilities) or fund balances at the end of the year. Of course, you would like to see a large positive number. If the number is negative, we would walk away.
The occupancy rate of the CCRC could be a useful indicator of its financial health. One with a waiting list to get in would be a better sign of financial stability than one with a 90% occupancy rate.
How can you evaluate the medical facility? When my mother was discharged from the hospital, I had to find a skilled nursing facility for her quickly. I used this Medicare.gov site that rates nursing homes and rehabilitation facilities based on health inspections, staffing, and quality measures. Even though her facility was rated above average for care, we would still not stay there.
The place was dated. The inside badly needed a new facelift. It looked like it was stuck in the 1950s. My mother shared a room with a woman who was in so much pain that she would moan and groan. Her half of the room had, besides her bed, an old dresser for her clothes, a small end table, a lamp, a chair, and a television. This facility belongs to a CCRC that my wife and I once thought would show some potential.
The upshot is that you need to tour the medical facility to get a feel for the place. Don’t just focus on the independent living aspect of the community. We would want to make sure the health facility wasn't isolated from the rest of the community, so we could still participate in some of the activities. We would like to see a single room occupancy standard for all the rooms. Most importantly, they must have a policy that allows the spouse and community friends to visit the patient.
Get help. Since we would be making a significant financial commitment, we would consult a qualified elder lawyer for advice and guidance before signing on the dotted line. Sometimes the CCRC will insert clauses in the contract that allow them to raise the daily rates after providing a 30-day written notice. We would want to make sure we completely understand what we’re signing up for.
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