In this issue:
 
Susan's Photo

"Assisted Living In California"
 Part One of Susan's Nine Part  Series
           
"RAISING UP Your Parents" Susan's California Seminar Tour
Its Free For Adult Children, Caretakers and Seniors

Next Week: Look for the compelling and all to common elder care story of Mrs. M.B.

 
August 5, 2010
Assisted living is in vogue. In truth, many of my clients ask me about how to choose the right facility. This question causes me to analyze several items. The cost, the location and the level of care and projected level of care.

Because so many questions abound, I have decided to create a nine part series on assisted living.
 
Part One - This particular newsletter is intended to provide information paying for care and  the tax treatment of long-term care services.
 
Part Two is about finding the right facility.

Part Three speaks to admission. 

Part Four covers quality of care.

Part Five covers daily living.

Parts Six through Nine cover protecting resident's property, preventing eviction, health care decisions and resolving problems respectively.  I intend to send out one newsletter a week for nine weeks. If you do not want to hear from me, please let me know. 

If you want to skip reading and ask me any questions directly, feel free to email me by "Clicking Here" and I will get back to you. Please be sure to mention "Assisted Living" in the subject line.

How Much Does Assisted Living Cost?
Older swimming

The cost of assisted living in California can range widely, from $2,500.00 to $7,000.00 a month or more. This cost covers room and board, basic utilities (electricity, heat, water, and garbage), basic housekeeping (fresh linens) and some meals.

Most facilities include 3 meals as part of the package. There are plentiful snacks as well. The cost of senior programming and activities is included in this price. Most facilities have a very active social calendar of events.
 
This is just a base rate and does not include charges for assistance with activities of daily living such as eating, bathing, walking, toileting, medication management, etc.  Some people need assistance with doing their personal laundry.
 
Most facilities charge money on top of the base rate for room and board to "assist" individuals with these tasks; there is some structure for levels of care established with a corresponding fee schedule. Some charge these fees based on a point system. Points are assigned to how many items one needs assistance with and charges are assessed accordingly. 

Other Ways Assisted Living Facilities Can Charge

A facility might use a numeric system from 1 to 3 or 1 to 5 based on the number of Activities of Daily Living (ADLs). The levels of care might be described as minimal, moderate, and maximal or as care assist and care enhanced.

I met with the executive directive of one facility the other day and they base their fees according to how much time it takes their staff to assist the resident with their ADLS.  Most facilities have additional charges for medications, personal hygiene and medical supplies.
 
Regardless of the facility's practice, it's important to understand this ala-carte method of assigning levels of care with fee increments of $300-$400 for each level can add up to $2,000 additional monthly costs.

I have found most facilities to be very forthcoming in explaining their fee structures thoroughly so there will be no surprises later. It is in their best interest as well as the potential resident to understand what is included in the monthly rent and what is considered additional.

More importantly, while the facility can charge whatever the market will bear, the rates must be stated in the Admission Agreement. 
 
Pre-Admission Fees: A Form of Hidden Costs

Pay special attention to all upfront fees! Some facilities call these an "administrative fee," "community fee," or "application fee." These fees can range from $250 to $5,000. Facilities are permitted to charge for such pre-admission fees if they are clearly stated in the admission agreement.

However, facilities cannot charge a security or damage deposit or a cleaning fee.

Ask what each upfront or pre-admission fee covers. Pre-admission fees must be refunded in full (100%) if the resident does not enter the facility and the facility did not perform an appraisal (assessment) or failed to provide a written disclosure of the pre-admission fee charges and refund conditions.

Proportional refunds of pre-admission fees in excess of $500 are required: at 80% if the person does not enter the facility but a pre-admission appraisal was done; at 80% if a resident leaves the facility during the first month for any reason; 60% if a resident leaves the facility during the second month; and 40% if a resident leaves the facility during the third month.

 Capitol Hill
Do Any Government Programs Help a Resident Pay For Care?

 
Neither Medicare nor (for all intense purposes) Medicaid pays for assisted living. However, there is limited assistance for low-income persons.

If a facility resident qualifies for SSI (Supplemental Security Income), a state regulation limits the facility's monthly charge.  

However, fewer and fewer facilities are willing to take the low payment rate. If a person has low personal care needs, some facilities are more willing to admit someone on SSI/SSP.

If a person becomes eligible for SSI after admission, the RCFE must lower its monthly charge to the appropriate SSI rate, either $961 or $981. Section 87464(e) of Title 22 of the California Code of Regulations states: "If the resident is an SSI/SSP recipient, then the basic services shall be provided and/or made available at the basic rate at no additional charge to the resident."

Be on alert when care needs increase because residents on SSI/SSP are more vulnerable than private pay residents for eviction actions.



Tax Deductibility of Assisted Living

Prior to January 1, 1997, the cost of long-term care was deductible only if medical reasons were the primary reason for an individual's placement in a long-term care facility.  If the placement was for personal or family reasons, only that part of the fee, which was directly tied to medical services, was deductible.
 
In 1996, Congress passed and the President signed the Health Insurance Portability and Accountability Act (the "HIPAA"). According to HIPAA, qualified long-term care services are deductible from gross income as an itemized deduction, subject to the limitation that when added to any other unreimbursed medical expenses for the year, only that amount that exceeds 7.5% of adjusted gross income is an itemized deduction.
 
This may seem complicated, but here goes:
As a result of  HIPAA, subject to final regulations to be promulgated by the Secretary of the Treasury, maintenance or personal care services that are required by an individual who is unable to perform at least two ADL's (eating, bathing, dressing, toileting, ambulating, etc.) or suffers from severe cognitive impairment and who requires supervision to protect himself or herself from threats to their health or safety are deductible as an itemized medical expense if those services are provided pursuant to a plan of care prescribed by a licensed health care practitioner.
 
THAT IS A MOUTHFUL!
 
For assisted living facilities that utilize a licensed health care practitioner, (i.e. a registered nurse) to help prepare and plan of care in conjunction with the resident's physician, and for those residents who meet the criteria, it would appear that the entire monthly cost may be deductible.

Depending upon your family's specific situation eligibility for this deduction may create a substantial tax benefit for residents or their provider. If you have further tax related questions, seek the advice of a qualified tax planner or financial adviser or call me for a referral.
 
If you are looking for an assisted living facility for yourself or a loved one, just email or call me. I will steer you in the right direction and can probably save you a lot of money.

Remember, all facilities are not the same. I have toured just about all of them from Santa Barbara to San Diego. You can email me at "susan@mymomnpop.com" , or call me at (310) 897-7434.

Have you heard about my new public seminar tour,
"Raising UP Your Parents?"

Its all about the continuum of elder care and aging, covering everything from home care to understanding the difference between Alzheimer's and dementia. "Click Here" to be taken to my web page for the seminar and you can register for free. Huntington Beach, Irvine and Woodland Hills are coming in October and November.

As an elder law attorney and a former elder law professor, and as a gerontologist with a B.S. in speech pathology, I feel comfortable saying that this seminar accurately represents what you need to learn about the aging process. It can help prepare you for what lies ahead for you, or what you may be currently dealing with.

Don't forget to visit my website, MyMomnPop.com and read the latest blogs. They are filled with cutting edge information about the aging process, elder care, and more.

If you wish to ask me any questions directly, you can email or call, susan@mymomnpop.com or (310) 897-7434.

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