Jan L. Warner
WHAT TO LOOK FOR IN LIFE CARE AGREEMENTS
Today, more and more facilities are advertising the ability to allow you to “age in place” -- that is, buy in now and get all the care you need at the same place for the rest of your life.
Before you plunk down your hard-earned cash and sign a contract to buy the new “American Dream,” take a step back, take a deep breath, and begin asking the hard questions. The financial security – or insecurity – of these places should be your greatest concern. Here are some of the questions you should consider asking:
(1) Does the contract provide that you are purchasing a service or a property interest that can be sold? If the former, you have little, or no rights.
(2) Who is financially responsible for the operation of the community, and exactly what is that responsibility? Is the agent financially sound? Get a financial statement and an operations history before signing anything.
(3) What are the assets and debts of the community? What are the monthly fees and what are the procedures for changing them? Remember that while no one wants to face increased fees, it is unrealistic not to expect cost of living increases. Therefore, contractual provisions that don’t allow for -- or limit increases -- in monthly fees may be attractive now, but could be the cause of later financial difficulties for the community. All included services and excluded services (along with the cost of each) should be listed.
(4) Make sure that the agreement refers to the unit you will be occupying and under what conditions you can remain there. Find out whether your contract can be terminated and under what conditions. If you are married, make sure your spouse is protected.
(5) Who makes the decision that you should be transferred to the nursing home component of the community and under what conditions? If you are transferred, what are your rights to return to your unit if you again become able? Are there additional fees if one spouse goes into the nursing home component and the other continues to live independently? Will the independent spouse be required to move to a smaller living unit?
(6) If you buy a life insurance policy or an annuity, you get a 30-day free look without penalty. If you take out a loan, you have the right to rescind within a few days. Here, are you being given a sufficient “kick the tires” period during which you can cancel your participation? If so, what is the financial penalty for canceling?
(7) Can you be removed from the community against your will and, if so, under what conditions and what is the procedure? And are you locked into an arbitration if you have a dispute with the facility? What are your protections against retaliatory eviction?
(8) What are the refund policies? What happens to refunds if a resident dies?
(9) Do residents have the right to form an association? If so, does the association have any right to suggest management policy? Or will you be living under totalitarianism rule?
(10) Are you entitled to deduct the pro-rata share of real estate taxes you pay each year on your personal income tax return?
(11) If the monthly fee is divided between medical and non-medical expenses, can you deduct the medical portion on your tax returns?
(12) What happens if you need nursing care and the community nursing component is filled? Will the community pay for your care elsewhere until there is room for you?
(13) Are there restrictions against remarriage if a spouse dies?
(14) What health, property, and other casualty insurance coverages do you have to provide as part of being a resident, and the amount of coverage required?
BE SURE TO ALWAYS HAVE A COMPETENT LAWYER REVIEW ANY CONTRACT BEFORE YOU SIGN IT. AND REMEMBER: IF IT SOUNDS TOO GOOD TO BE TRUE, IT PROBABLY IS.
© 2002 NextSteps®, Life Management®