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NaCCRA Forum: General

Charity or Insurance?
Ed Welch

Many CCRCs promise that if a residents runs out of money, they will continue to provide the care and services needed. They talk about this as "charity". Is it really charity or is it more like insurance? It seems to me that charity is when you give something that you do not have to give. The services provided under these circumstances are made under a contract not out of someone's generosity.

The CCRC charges you a fee and promises to provide services even if you run out of money. They hire an actuary to calculate how much to charge and what requirements to place on who is admitted. Isn't that more like insurance that charity?

Susan Farkas

Ed, as a prospect I have looked at many contracts. I have yet to see one that "promises" something in case one runs out of money. The usual statements sound like: " The determination of eligibility, type, and amount of financial assistance is within the sole discretion of (CCRC name) and subject to the limits of (CCRC name) financial capacity, in its sole discretion. (CCRC name) is under no legal obligation to extend financial assistance to You and has the right to terminate this Agreement if you cannot satisfy Your financial obligations".

In addition, even for evaluation of eligibility for any assistance, the resident has to prove a list of things and if he/she is qualified, then he/she might be asked to move to a smaller residence and if the contract has any refund ability, the aid comes from there.

Based on what I have seen, I would not call what they MIGHT offer "insurance", it is more like charity....

Did you see any contract which guarantees financial assistance in case someone runs out of money?

Linda Kilcrease

Susan, thanks for your thoughts. I did speak with an attorney. It became clear that the resident contract we sign has nothing for the resident, it is geared to protect the CCRC. All the "promises" by Sales and Marketing, written at the website and in brochures, and said to get you to move in, means nothing. If it is not in the contract, it does not exist. My state Pennsylvania only has protections for nursing homes (insurance dept) and assisted living which even has a bill of rights (human services department). Nothing for those in independent living. The one "regulation" is financial, and documents are submitted. So, folks you are on your own. If management does not respond or change, if you like so many feel you are treated as a child (to be seen and not heard) it is because they do not have to do anything. I have seen a change from residents rising up with talk of hiring an attorney. That worked. But most residents are very elderly and frail, and do not get involved in speaking up.

Linda Kilcrease

Resident of a CCRC

Susan Farkas

Linda, I am very sorry about the issues you are encountering. Sometimes I am wondering if those who are happy residents are "happy" because they were lucky not to encounter problems or because they decided to just take things as they are (as they have no control over anything).... I hope that you get the help you need.

Susan Farkas

Linda, you are absolutely right based on everything I know. The problem is that there are no great options for those of us preparing for the next stage of our lives. Our society doesn't care too much about the old generation and our laws do not protect us. To the best of my knowledge due to its incorporation status the NaCCRA cannot lobby and most states do not have organizations to lobby for CCRC residents and many have very limited regulation and enforcement for it. So old people are left on their own means and when you are old and sick, you cannot fight for rights. The younger generation doesn't look ahead and is very busy with their own lives, careers, families, etc. These issues are not on the radar of elected officials and are not anyone's top priority. Most likely they will not be addressed or improve a lot during our lifetimes.

I wish it wasn't like this, but I think that we just need to acknowledge it and live with it with the rare exceptions of states where brave and active volunteers fight for rights.

Charles Nadler

At Wind Crest, an Erickson Senior Living Community, they first draw down the balance of your deposit. If that runs out they then turn to a Charity funded by the residents and also by the billionaire owner.

Mary Kazlusky

I live in Heron's Key, a level A CCRC, in Gig Harbor, WA. We will be taken care of at Heron's Key regardless of whether or not our money runs out prior to death. A good portion of our entry fee and another good portion of our monthly fee covers this insurance. It is, in fact, long term care insurance, and we are able to take a deduction on our Federal Income Tax forms every year to reflect payment of that insurance. It is not charity.

However, we also have established a benevolence fund, which can be accessed by those residents who run out of money through no fault of their own (except for living beyond the actuarial table), Donations to the fund are tax deductible and those who end up receiving the funds go through a rigorous vetting process to insure that they qualify for funds. In this instance it is a charity which is paying the bill. Such a fund helps keep monthly fees lower for current residents than would be if funds were not available for such use.

Susan Farkas

Mary, this is very interesting and quite different from what I have seen until now. Is there an actual insurance company involved? Does the residency agreement state what you mentioned about the portion of the entry fee and of the monthly fee being used to cover the insurance? If a resident has this written guarantee in the contract (that even if they run out of money they will be taken care off), then why is there a need for the benevolence fund?

Susan Farkas

I learned something interesting today related to this topic, from Rick Baugh (WaCCRA):

IRS Ruling 72-124 (from 1972) requires that a not-for-profit ”home for the aged” (that includes CCRCs) has to provide financial support for those who run out of money.
I do not know what takes priority when the contract states something else.

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