Continuing Care Retirement Communities, an alternative to Medicaid planning?

This month in Crisis Corner, I want to take a closer look at Continuing Care Retirement Communities (CCRCs) as an alternative to Medicaid planning.  In many cases, whether because of very high resource values or simply because a client does not like the idea of Medicaid, CCRCs can provide an alternative means of ensuring that you and/or your loved ones will receive the care that they need for the rest of their lives, without worrying about being displaced if they run out of money (read the fine print).

CCRCs, in general, are communities that offer independent living, assisted living, and skilled nursing all within the same campus. They have “buy ins” that can range from around $50,000 to over $1,000,000, and monthly charges for rent and care, which can vary greatly from $2,000 per month to over $10,000 per month. When looking at CCRCs there are several key points that you should research before choosing a community.

Flat Fee.  These are used in roughly 1/3 of WA CCRCs.  They tend to have larger buy ins, but the monthly fees are relatively consistent from move in to death.  There may be annual raises in fees for inflation, but you pay the same whether you are in independent living or in skilled nursing care.  These CCRCs are more likely to sign up residents who will come in at the independent level and spend as long as possible at that level of care.  This can be a great deal if your health turns well before the end of your life, but if you are expecting a long, healthy life, you will likely pay more here than you would for independent living at a different CCRC.

Resource Requirements. The buy in is only half of the financial qualification process. Nearly all CCRCs require that you show evidence of sufficient resources to pay for some number of years. This number can vary greatly from community to community, but my limited experience with these requirements suggests that it is often roughly double the buy in fee; i.e. if you buy in with $200,000, then you have to demonstrate proof of at least $400,000. It is important to know what this number is because you may want to reduce your estate to a number that is closer to this amount before showing your resources. Most CCRC contracts, at least for the ones that guarantee that you will not be kicked out if you run out of money (all non-profit CCRCs must make this guarantee, but for profit CCRCs are not required to do so) include language that states you will not gift resources after moving in. This is not small gifts at birthdays or holidays, but it does exclude larger gifts, such as those that you might make if trying to qualify for Medicaid.

What this means is that if you move in with $600,000 in resources and you live there for 15 years, you could easily be out of money. If you only needed to have $400,000 to qualify, then you could have given $200,000 to your family before applying, still run out of money (without being kicked out), and kept $200,000 in the family. Either way, you might run out of money but, by gifting before moving, your family can hold onto money that can be used for your benefit or just so that you feel like you are protecting a legacy for your children.

Type of Contract.  There are four basic types of CCRC contracts to be aware of.  It is important to understand which type you are signing up for when weighing buy in costs and initial monthly fees.  The different types are:

  1. Flat Fee. These are used in roughly 1/3 of WA CCRCs.  They tend to have larger buy ins, but the monthly fees are relatively consistent from move in to death.  There may be annual raises in fees for inflation, but you pay the same whether you are in independent living or in skilled nursing care.  These CCRCs are more likely to sign up residents who will come in at the independent level and spend as long as possible at that level of care.  This can be a great deal if your health turns well before the end of your life, but if you are expecting a long, healthy life, you will likely pay more here than you would for independent living at a different CCRC.
  1. Pay As You Go. These are also used in roughly 1/3 of WA CCRCs.  The buy in may be smaller, but your monthly expense is based largely on the level of care that you need and can make significant jumps any time your needs increase.  You may start in independent living, paying $2,000 per month, then start needing help with dressing or bathing and find yourself paying over $5,000 per month.  In these communities, skilled nursing care is often over $9,000 to $10,000 per month.
  1. Roughly 1/4 WA CCRCs use a hybrid contract.  In these communities there is a set monthly cost for independent living, one for assisted living, and one for skilled nursing care.  The level of care needed within each classification does not affect the cost, just the classification itself.  You will pay the same for assistance with dressing as you do for assistance with dressing, bathing, and using the toilet.
  1. Month to Month. A small number of WA CCRCs have month to month contracts, where either you or the community can terminate the contract with 30 days’ notice.  In most of these CCRCs the buy in is smaller or it vests over time, so you can get a partial refund if you leave within the first five years or so.

Care Levels.  Most CCRCs have independent living, Assisted Living, and Skilled Nursing care.  However, not all have the Skilled Nursing care.  It is important to know what level of care the community can provide before spending 10-15 years there, using up all of your savings, and then being told you have to leave because your care needs exceed those that the community can safely provide.

Location, Reputation, and Atmosphere.  These can all be lumped together as the “squishy factors.”  Location is most important to those who want to be close to family, friends, or community activities.  This is something that only you can judge the importance of, but it can play a big difference in your costs.  Reputation is hard to judge from the internet or the handouts the CCRC gives you.  You will see the highlights, but it is harder to locate the bad reviews.  You should talk to a professional housing specialist for the inside scoop.  Finally, Atmosphere really boils down to how you feel about the place when you visit or tour or spend a week test-driving the place.  If it feels like home, great; if it feels like a prison, bad.

Talk to a Specialist.  There are a lot of geriatric care managers who specialize in helping find appropriate housing.  If you are thinking about moving to a CCRC, contact us for a list of companies you can contact for help.

If the Nursing Home is Trying to Take Away a Medicaid Patient’s Stimulus Check, They’re Breaking the Law, Uncle Sam Warns

If you or a loved one live in a nursing home and receive Medicaid benefits, watch out. Some nursing homes and assisted living facilities around the country have snatched up their Medicaid residents’ stimulus checks, claiming that the facility owns that money.  But according to this Michelle Singletary column in the Washington Post, they’re wrong. That money belongs to the resident, and both the IRS and the Federal Trade Commission have recently issued strongly-worded statements putting violators on notice.

That Stimulus Check Belongs to You, Even If You’re on Medicaid

“The IRS issued an advisory last week to clarify that the economic impact payments distributed as part of the latest stimulus package belong to recipients, not a nursing home or assisted-living facility,” writes Singletary. This action by the IRS and other federal agencies comes in response to reports that “nursing homes and other elderly care organizations have seized the payments, arguing that because the residents are receiving Medicaid, the facilities are entitled to the money.”

(We’re reprinting portions of the IRS and FTC statements at the end of this article.)

As the Washington Post reports, The CARES Act (Coronavirus Aid, Relief, and Economic Security) provides a $1,200 refundable tax credit for individuals and $2,400 for joint taxpayers. “What many have not realized is that the stimulus payment is an advanced tax credit, and as such, it is not considered income, which is why it’s not taxed,” Singletary explains. “As a result, for the purpose of qualifying for federal benefits, such as Medicaid, the stimulus payment is not counted as a resource.”  This ruling also applies to other federal benefit programs.

You’re Free to Spend Your Stimulus Check as You See Fit

The National Center on Law and Elder Rights has determined that the stimulus payment cannot be used to affect a resident’s monthly payment or “share of cost,” according to the Post. Residents are free to spend their stimulus money however they please.

CMS has also weighed in on this issue, Singletary reports. The Centers for Medicare and Medicaid Services issued a warning which you can read here that “commandeering stimulus payments from residents could subject facilities to federal enforcement actions, including the possibility that they cannot participate in the Medicare and Medicaid programs.”  One IRS spokesman couldn’t have been more blunt. “The law is clear, and we want you to know that,” he said. “If you’re in a nursing home or other care facility, your economic impact payment belongs to you, not the home.”

According to the Washington Post, if a nursing home or assisted-living facility has taken your payment and won’t return it, you should contact your state attorney general. Since many AgingOptions blog readers live in Washington State, we’re including  this link to the website of the Washington State Attorney General.

The following comes from the IRS statement, which you can read in its entirety here:

The Internal Revenue Service today alerted nursing home and other care facilities that Economic Impact Payments (EIPs) generally belong to the recipients, not the organizations providing the care.

The IRS issued this reminder following concerns that people and businesses may be taking advantage of vulnerable populations who received the Economic Impact Payments.

The payments are intended for the recipients, even if a nursing home or other facility or provider receives the person’s payment, either directly or indirectly by direct deposit or check. These payments do not count as a resource for purposes of determining eligibility for Medicaid and other federal programs for a period of 12 months from receipt. They also do not count as income in determining eligibility for these programs.

Here’s a Link to the Statement by Lois Greisman of the FTC:

Do you or a loved one live in a nursing home or assisted living facility? Are you (or they) on Medicaid? If you said “yes” to both, please read on and prepare to get mad. We’ve been hearing that some facilities are trying to take the stimulus payments intended for their residents on Medicaid. Then they’re requiring those people to sign over those funds to the facility. Why? Well, they’re claiming that, because the person is on Medicaid, the facility gets to keep the stimulus payment.

But here’s the deal: those economic impact payments are, according to the CARES Act, a tax credit. And tax law says that tax credits don’t count as “resources” for federal benefits programs, like Medicaid. So: when Congress calls these payments “tax credits” in the CARES Act, that means the government can’t seize them. Which means nursing homes and assisted living facilities can’t take that money from their residents just because they’re on Medicaid. And, if they took it already, get in touch with your state attorney general and ask them to help you get it back.

This is not just a horror story making the rounds. These are actual reports that our friends in the Iowa Attorney General’s Office have been getting – and handling. Other states have seen the same.

If you’ve experienced this already, tell your state attorney general’s office first, and then tell the FTC: http://www.ftc.gov/complaint. If a loved one lives in a nursing facility and you’re not sure what happened to their payment, talk with them soon. And consider having a chat with the facility’s management to make sure they know which side of the law to be on.

(Note that the FTC statement includes other helpful links should you need them.)

Crisis Corner: 5 Myths of Medicaid

By: Aaron Paker

Welcome to the first installment of Crisis Corner.  Since this is the first article in this series, I should introduce what Crisis Corner is.  This is a monthly article to help aging Americans understand the options that they have when things go wrong.  I specialize in helping folks who are dealing with a sudden illness or diagnosis that turns their world upside down and they have not made all of the arrangements necessary to flow with the change.  This month, I will take on the five most common myths that prevent people from seeking Medicaid help.

The Big 5.

  I often get calls from adult children seeking help for their parents.  The children want the parents to get Medicaid to help pay for increasing care costs, but the parents will not listen to them.  I sit down with one or both parents to talk and I almost always hear between 1 and 5 of these myths: 

1) I make too much money
2) I have to be broke
3) I have to spend the money on care first 
4) I’ll lose my house when my spouse dies

5) I’ll have to move to a nursing home

This is the absolute, no contest, most common objection I hear.  In over 5 years and hundreds of Medicaid plans, I have run into three (3) people whose income was too high for Medicaid to approve them, though there have been a handful of single applicants whose income was high enough that remaining on benefits, once approved, would be impractical at best.  Generally speaking, the “ill spouse” can have an income of $7-10,000 per month and still be approved for Medicaid benefits and the “well spouse” can have unlimited income.  A high income for the ill spouse just means that they will pay for more of their care before Medicaid kicks in to pay the rest.  Sometimes this even means that they pay everything and Medicaid pays nothing, but they pay the Medicaid rate and not the private rate, which could be a savings of $2-3,000 per month or more.

Where this really becomes an issue is when a single person has a high income.  One situation that I have seen a few times involves a single person with an income of about $5,000 per month.  They are living in a care facility that charges $7-9,000 per month and so they are losing $24-48,000 per year from savings that may not have been very robust to begin with.  They use various methods to bring their savings to less than $2,000 so that they can apply for benefits and they are approved.  So far, so good.  Then the Medicaid rate for their care is set at $4,000 per month.  They pay the care providers $4,000 and add $1,000 to their savings, putting them over $2,000 and costing them their benefits.  This means that they have to find other things to spend $1,000 per month on, without gifting.  This can be done with companion services, messages, field trips, etc. but it is very difficult to continuously find appropriate expenses every month.

This one takes less words to explain away.  A single applicant can have one house with up to $595,000 in equity, a car of any value, and $2,000 in other resources.  If they want to protect the house from being liened, then they are essentially limited to a car and $2,000.  A married couple can have a house of any value, a car of any value, either $60,075 or up to $130,640 (in a nursing home scenario) in other countable resources, AND the well spouse can have unlimited income.  This means that, in most situations, a couple with one ill spouse and one healthy spouse can come to me with a great house, a nice car, and $1,000,000 or more and I can protect most or all of those resources and get them help.  There are times that it makes more sense to avoid Medicaid when you have that many resources, but that comes down to a case-by-case analysis of the situation.  I will clarify, because I am often asked “why would someone with that much need Medicaid?”  Here is a brief scenario where it might make sense: Couple has been very frugal with relatively large incomes while younger and made strong investments; retirement income is a combined $4,000 per month plus any interest being made from the investments; husband becomes very ill and has to move to a nursing home or have 24 hour care at home that is costing $12,000 per month.  This means that the $1M in savings is dropping by more than $96,000 per year ($96,000 is just his care costs and ignores all of her expenses), and they will be out of money in less than 10 years if he lives that long.

Here is my shortest answer of the day.  NO!  There are many ways to protect resources for a married couple and a few for single people.  Talk to an expert and we can help.

It is true that, if your spouse is on Medicaid AND their name is on the Title of your house WHEN THEY DIE, then the State will place a lien on the house for the amount paid in benefits. There are a few important things to note here; in most cases we can take the ill spouse off of the Title before the application or before they die.  In rare cases, usually where there is not a valid Power of Attorney and a Guardianship would be too costly or time consuming, we cannot get the ill spouse off of the Title.  In those cases the lien is placed.  The lien cannot be enforced during the surviving spouse’s life time, so they never have to pay the lien.  Oddly enough, if the surviving spouse sells or give away the property before their death, the State’s lien just goes away and is not paid by anyone.  The only time the lien can be enforced is if it was a single person who died with their name on the Title or a situation where the ill spouse was on the Title at his/her death and the surviving spouse never took steps to cancel the lien before passing.  This can be as simple as giving the house to a child or selling it to move to a smaller house.

Medicaid benefits are available in most nursing homes, many adult family homes or assisted living facilities, and in your own home.  There are times that one setting or another makes the planning easier, or provides more appropriate care, but there is no truth to the myth that Medicaid will only pay for a nursing home.


Take Away.  
There are many myths floating around that make Medicaid planning seem like a pipe dream.  If you or a loved one is facing current or expected costs of care that threatens to destroy a lifetime of savings, call and talk to an expert.  You may just learn that you have a relatively easy road to travel and a willing guide to make it even easier.  

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