Continuing care for retirees can be costly, even risky

PEACE OF MIND DOESN'T COME CHEAP

November 29, 1992|By Adriane B. Miller | Adriane B. Miller,Contributing Writer

Evelyn Beall, 81, considered herself lucky.

With no family nearby to help with daily chores, she at least had a good friend, someone who liked to drive and helped her shop, a strong woman she could depend on.

And then her friend had a stroke.

"Just like that," Mrs. Beall says. "She was well one day, and then all of a sudden. . . . She's been in a nursing home ever since."

All of a sudden, Mrs. Beall felt uneasy about her situation. She gave up her apartment of 10 years, withdrew her savings from the bank and bought into the Glen Meadows continuing care retirement community in Baltimore County in July. She's had no regrets, she says.

But some groups -- including the Maryland Office on Aging and elder-law attorneys -- say buying into a continuing care retirement community, or CCRC, shouldn't be done impulsively. The entrance fees are usually large. The money you invest could be at risk if the CCRC isn't financially sound. And you may be giving up more independence than you realize.

CCRCs offer a range of services for older people -- from independent living in apartments to 24-hour nursing care. Residents also may have meals prepared for them, with transportation, housekeeping, shopping and banking on site.

But all this comes at a cost. The entrance fee to a CCRC can range from $15,000 to $400,000, payable in full before moving in. Many CCRCs refund the fee when the resident leaves or dies -- but only after management resells the unit.

In addition, residents usually do not own their homes, so they get no tax benefits while paying monthly fees ranging from a few hundred to a few thousand dollars.

"People are under the impression they own something tangible," says David Pessin, an elder-law attorney with Hodes, Ulman, Pessin & Katz in Towson. "But the reality is they only have certain rights. Those rights need to be clearly defined by the facility and explained to the resident."

Many people worry, with good reason, that they could lose their entrance fee, Mr. Pessin said.

"Many agreements provide that you as a potential resident agree to allow your deposit to be collateral for the developers' loans," he said. "If the developer defaults on the loan, the residents could have a hard time getting their money returned."

Also, getting the money back when leaving the CCRC can also be difficult. Not all CCRCs offer a full refund. And even if they do, they may not have to turn over the money right away.

"If [the refund] is timed to the filling of the vacancy after your leaving, what happens if they put up a whole other wing? There is no particular agreement that they will sell yours in priority to anyone else's," Mr. Pessin says.

CCRCs can also raise their monthly rates -- with notice -- perhaps twice or more each year. Annual or semiannual increases may be hard on residents on fixed incomes.

Another issue, Mr. Pessin says, is who makes decisions for you while you are living in a CCRC.

"Very often the medical director makes important decisions about what level of care you require. You need to make sure there is a way to challenge their recommendations."

Say you're in an independent-living unit, and the medical director sees your health deteriorating. He may decide you now need to live in an assisted-living unit or even a nursing unit -- an opinion you and your family do not share.

Carol Baker, Glen Meadows' vice president of administration, says a committee of medical staff, activity staff and family members -- not the medical director alone -- decides when to switch living arrangements for a resident.

"I always work with the families to get input," she says, emphasizing that she doesn't wait for the family to ask to be involved. "I pull the family into it."

Ms. Baker also said her facility tries to resell recently vacated units when they know a family is waiting for a refund. She said she would give the marketing of those units priority over new units the facility is still trying to sell.

Mindy Stewart, Glen Meadows marketing director, said the average length of time to resell a unit and refund the entrance fee to the former resident's estate is about six months.

According to Ilene Rosenthal, chief of housing and continuing care for the Maryland Office on Aging, 26 CCRCs are operating in Maryland, with nine more being expanded or built. Fewer than 250 CCRCs existed in the U.S. in 1970. About 500 were counted in 1988. More than 800 exist now, with 220,000 residents.

The Maryland Office on Aging carefully regulates CCRCs because of the large amounts of money changing hands in exchange for some medical services.

"No one will accuse them of being cheap," Ms. Rosenthal says. "It is expensive to live in a place like this. But people who go into this kind of community are buying insurance. They know whatever happens to them, their needs will be met."

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