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How Hidden Costs Can Affect Affordability For Long Term Care
By Lillian L. Hyatt, M.S.W. and a Resident of a CCRC
Excerpted from the Summer 2010 The CANHR Advocate newsletter
Extra costs for needed services in a Continuing Care Residential Community (CCRC) may appear affordable when a senior first enters a CCRC. However, after years of escalating increases in the monthly care fees, some as high as 8.5% to 10%, occurring as some seniors may have experienced significant losses in income or increasing need for help due to advancing years, a very different picture emerges. The costs in a CCRC after many years of residence may force people to move into smaller quarters. Most people assume they will remain in the apartment chosen upon entry. Many residents improve their apartments at considerable cost. Those residents may lose that part of their investment when making the downsize move. In addition, over the years the unit may become unaffordable because that unit may have doubled in cost.
Many CCRCs have resorted to drastic cuts in services due to bad investment decisions, as the monthly care fee continues to rise. Residents are powerless to control these cuts. There can be penalties for moving from one apartment to another that may cost as much as $20,000. Marketing Directors rarely disclose these costs. Although I was assured in writing that extra charges were always discussed, when I questioned one CCRC Marketing Director, a resident recently accepted into that community told me she had never seen the list of those extra charges nor had she been told anything about them. My own experience when I entered my CCRC 10 years ago was that I was never told nor did I see a list of such extra charged before I signed my contract.
Here are some examples: If you should develop a chronic illness you may incur a $5.00 delivery fee per tray of food which is delivered to your independent living unit. If you multiply that to three meals a day for a 30-day month, the cost will be $450.00 in addition to your monthly care fee. If you were unable to attend to your own laundry, the cost per full load would be $17.50. If you are ill for an extended period of time, that fee could prove to be very expensive. If you need to get to a doctor’s appointment and cannot go alone because you must use the driver and the vehicle provided by the CCRC, you would be paying $75.00 per hour. If you require an attendant, an additional cost ranging from $16.50 to $20.00 an hour would be charged. Most CCRCs offer only 45 minutes of housekeeping services per week. If you require additional help due to illness or need your quarters to be really clean, you are required to pay $25.00 per hour. All of these extra charges hardly amount to the promised life-long care. Before too long you may not have sufficient funds to remain in the home you had planned to live in for the rest of your life.
While the applicant is being sold the life-care element of a CCRC, in many respects they are actually being offered a “fee-for-services” model. None of the costs cited above are covered by the monthly care fee. If all real costs were included and itemized for seniors who are thinking about choosing a CCRC, the real question would be, is this type of care really affordable?
As a long term care advocate, I always tell consumers that they should read and study an admission agreement very carefully. For Residential Care Facilities for the Elderly (RCFEs) the law requires that admission agreements describe the types of services that the facility will provide and their costs. The admission agreement will state how, when and to whom the rates will be charged. How changes in the rates will be determined and any conditions for refunds should also be stated in the agreement. The RCFE can charge whatever the market will bear, however, and fees charged, whether before admission or after, have to be clearly stated in the admission agreement. Most RCFEs have a fixed monthly fee and charge extra for more care or services and/or changes in the resident’s level of care.
It is critical that consumers check carefully the type and frequency of services offered for a fixed rate. For example, a resident may be charged extra for getting more than one shower a week. Similar to CCRCs, RCFEs can charge extra fees for having food trays brought to their room when they are sick. As residents age and illnesses develop, these extra costs could mount up. Many facilities will have an extra fee for incontinence care. Another common extra cost is specialized care. If your loved one develops Alzheimer’s or dementia or if admitted with such a condition, the fee may go higher as the condition advances. An average cost for specialized dementia care in the California ranges from $6,000 to $8,000 per month - much higher than U.S. the average of $3,000 for basic care.
Like RCFEs, Skilled Nursing Facilities (SNFs) must also include the services available in the facility and any additional costs in the admission agreement. Medicare and Medi-Cal certified nursing homes must state that optional and covered services may be different for residents in those programs than for private-paying residents.
Most people do not anticipate the huge costs when long-term care is needed or chosen. This column is designed to make consumers aware of the realities people and families will face as loved ones age.
(Ms. Hyatt is a resident of a CCRC and AARP Policy Specialist on CCRCs)