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Old 05-06-2010, 10:35 AM
 
Location: WA
5,641 posts, read 24,906,512 times
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This is a valuable (although a bit depressing) thread on an issue that many of us may face. We are in our 60's and do not have coverage which would have a large impact on the budget, and I do worry over it a bit sometimes.

My father suffered a stroke in his eighties and never recovered, going from hospital to recovery facility to a nursing home over a couple of years before passing. He required too much care for us ever to consider moving him back home.

When the funding was running out (insurance and Medicare) at the recovery facility I went on a search for a nursing home that would accept Medicare patients (or even Medicaid if I could ever get him qualified). I was shocked at 1) how undesirable most of these places are (some I could not imagine putting any relative into, and 2) how expensive they were. I eventually negotiated with an acceptable facility but the price was so high that it could not have been long term. My experience was almost ten years ago and I expect the situation is even worse today.

I have felt good that I have saved and planned for our future but in this case we are not prepared simply because the prices and choices present no attractive options. Unfortunately the longer we wait the few options we have.
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Old 05-06-2010, 12:15 PM
 
Location: Ponte Vedra Beach FL
14,617 posts, read 21,436,134 times
Reputation: 6794
Quote:
Originally Posted by TuborgP View Post
Another option if you can afford it.
Continuing Care Retirement Communities (CCRCs)

The life care option can be dada boom no more problems
No more problems except the place can go bust (which has happened to some places). In which case (absent a restructuring or a buyout by another entity) you are an unsecured creditor and can wind up with nothing.

Think about it. What is the CCRC doing? Taking your money - investing it - and hoping to pay for residents' care as they age in place. Interest rates are X - and the rate of medical care inflation is a whole lot more than X. We've spent pages here discussing how to DIY - and no one is confident he/she can do it. Why do you think a CCRC can do it (especially in the kind of markets we've had the last decade or so)?

Another factor to consider is a place that may have great independent living units may have a lousy ALF and/or SNF. It may suit your needs at age 70 - but not at age 85.

Anyway - here is a link to a story about a large company that went into bankruptcy last year:

Erickson's Bankruptcy and the Future of CCRCs - Caring For Our Parents
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Old 05-06-2010, 12:40 PM
 
31,680 posts, read 40,976,802 times
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Quote:
Originally Posted by Robyn55 View Post
No more problems except the place can go bust (which has happened to some places). In which case (absent a restructuring or a buyout by another entity) you are an unsecured creditor and can wind up with nothing.

Think about it. What is the CCRC doing? Taking your money - investing it - and hoping to pay for residents' care as they age in place. Interest rates are X - and the rate of medical care inflation is a whole lot more than X. We've spent pages here discussing how to DIY - and no one is confident he/she can do it. Why do you think a CCRC can do it (especially in the kind of markets we've had the last decade or so)?

Another factor to consider is a place that may have great independent living units may have a lousy ALF and/or SNF. It may suit your needs at age 70 - but not at age 85.

Anyway - here is a link to a story about a large company that went into bankruptcy last year:

Erickson's Bankruptcy and the Future of CCRCs - Caring For Our Parents
I am very familiar with the bankruptcy risk and even more familiar with the restructuring challenges with Erickson. Erickson like Del-Webb/Pulte tried to become to big in a limited/crowded market. What they are trying to do is what insurance does and that is to spread risk over a bigger market of consumers.

Erickson borrowed heavily to develop new campuses and was overwhelmed by its debts when the meltdown of the housing and stock markets made it difficult for retirees to sell assets and raise the cash needed to move into communities. There were also questionable staffing issues that perhaps overlapped personal needs with needs of the business. It is just like buying into an active 55 community you need to do your homework.
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Old 05-06-2010, 03:14 PM
 
Location: Ponte Vedra Beach FL
14,617 posts, read 21,436,134 times
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Quote:
Originally Posted by TuborgP View Post
I am very familiar with the bankruptcy risk and even more familiar with the restructuring challenges with Erickson. Erickson like Del-Webb/Pulte tried to become to big in a limited/crowded market. What they are trying to do is what insurance does and that is to spread risk over a bigger market of consumers.

Erickson borrowed heavily to develop new campuses and was overwhelmed by its debts when the meltdown of the housing and stock markets made it difficult for retirees to sell assets and raise the cash needed to move into communities. There were also questionable staffing issues that perhaps overlapped personal needs with needs of the business. It is just like buying into an active 55 community you need to do your homework.
The Erickson bankruptcy has left many questions unanswered:

May 2010 ABI Journal - 80 - 0080

I'm not sure how a CCRC spreads the risk. The place is built - and most people who tend to move in are of a certain age (usually younger retirees living independently). Then everyone who lives in the place tends to get older. More and more need ALF or SNF care. While this is going on - the physical facility is getting older - and needs more maintenance. While the majority of people in the place aren't getting richer. IOW - the place is getting increasingly more expensive to operate - and increasingly less attractive to younger retirees. This is concentrating risk IMO - not spreading it.

FWIW - I've seen similar scenarios in certain active 55 communities (like places where everyone was a golfer when they first moved in - but 20 years later the golf course is an expensive maintenance nightmare that few people use) . But at least in those places you tend to own your house/villa whatever. Which is a lot different than giving some corporation a "refundable" deposit that is dependent on someone new buying your "right" to live in the CCRC (and many CCRCs don't refund anything after you've lived there for X years).

Although I think that LTC insurance may be right for some people under some circumstances - I cannot imagine reviewing any type of CCRC documents for a client and advising them to "buy in". Note that there are independent senior rental facilities in my area (I'm sure they exist all over the country). And I think renting is the way to go assuming one no longer wants to own (if the company that owns your rental goes belly up and closes - the most you're out is part of a month's rent and perhaps a small deposit you paid when you moved in). If and when one can no longer live independently - one can consider ALFs and SNFs and the like (places like those where my father lives have a clause in their leases to allow you to get out of your lease if you're no longer able to live independently). Robyn
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Old 05-06-2010, 04:45 PM
 
Location: Ponte Vedra Beach FL
14,617 posts, read 21,436,134 times
Reputation: 6794
Quote:
Originally Posted by cdelena View Post
This is a valuable (although a bit depressing) thread on an issue that many of us may face. We are in our 60's and do not have coverage which would have a large impact on the budget, and I do worry over it a bit sometimes.

My father suffered a stroke in his eighties and never recovered, going from hospital to recovery facility to a nursing home over a couple of years before passing. He required too much care for us ever to consider moving him back home.

When the funding was running out (insurance and Medicare) at the recovery facility I went on a search for a nursing home that would accept Medicare patients (or even Medicaid if I could ever get him qualified). I was shocked at 1) how undesirable most of these places are (some I could not imagine putting any relative into, and 2) how expensive they were. I eventually negotiated with an acceptable facility but the price was so high that it could not have been long term. My experience was almost ten years ago and I expect the situation is even worse today.

I have felt good that I have saved and planned for our future but in this case we are not prepared simply because the prices and choices present no attractive options. Unfortunately the longer we wait the few options we have.
No attractive options is the right answer for most people. IMO there are 3 options. You have enough money so you don't have to worry about it. You have enough money to buy LTC insurance - and suspect because of personal/family health history you're likely to use the insurance before you get old enough where your premiums go through the roof.

Or you wing it. And you can "wing it" in various ways. Like if something bad happens when you're younger - your spouse may be in a position to care for you - and you can use some of the money to hire people so the well spouse doesn't wind up in 24/7 caretaker "jail". This happened with my inlaws. My MIL was very sick at a relatively young age (like 74). My FIL took care of her - but needed time to do things like go to the grocery store - and play some golf (he was a wonderful golfer). My MIL was very passive-aggressive when he left her for 10 minutes - but he did it - and preserved his sanity. When we sold his house years later after he'd been living in a SNF near us for a whie - we found a diary that he had kept during the years of my MIL's illness (about 6). It was poignant to say the least - she had some very unpleasant physical conditions.

If you have children - there is a difference between imposing - and offering to compensate them for services. Many people have kids who aren't in wonderful financial situations these days. If you have some money - offer to pay them (but do it in the form of "gifts" - less than $13k per person per year - so they won't have taxable income). I think there is a lot less resentment between parents and children - and especially among siblings when one is doing all the work and the others are doing nothing - when the caregiver is given fair compensation for services rendered.

And if worse comes to worse - like you need a SNF - there are drastic options if you think you're going to run out of money - like divorcing the spouse who needs the SNF - and qualifying them for Medicaid. But keep in mind that the average length of stay in a SNF is 2 1/2 years before death. We were friends with the CEO of my FIL's SNF - and he had a great idea IMO. Something like Medicare for SNFs. Paid for by withholding taxes. The cost for SNF care is much easier to predict from an actuarial POV for a large group of people than medical care. So it is similar to SS - where you can tweak things now and then - and put everything on the right footing. Health care expenses are almost impossible to predict from an actuarial POV - SS is easiest - and SNF care is in the middle. Robyn

P.S. Although it is slightly OT - this is a great website where "seniors" can look into the benefits that might be available to them:

https://ssl1.benefitscheckup.org/
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Old 05-06-2010, 05:20 PM
 
31,680 posts, read 40,976,802 times
Reputation: 14424
Quote:
Originally Posted by Robyn55 View Post
The Erickson bankruptcy has left many questions unanswered:

May 2010 ABI Journal - 80 - 0080

I'm not sure how a CCRC spreads the risk. The place is built - and most people who tend to move in are of a certain age (usually younger retirees living independently). Then everyone who lives in the place tends to get older. More and more need ALF or SNF care. While this is going on - the physical facility is getting older - and needs more maintenance. While the majority of people in the place aren't getting richer. IOW - the place is getting increasingly more expensive to operate - and increasingly less attractive to younger retirees. This is concentrating risk IMO - not spreading it.

FWIW - I've seen similar scenarios in certain active 55 communities (like places where everyone was a golfer when they first moved in - but 20 years later the golf course is an expensive maintenance nightmare that few people use) . But at least in those places you tend to own your house/villa whatever. Which is a lot different than giving some corporation a "refundable" deposit that is dependent on someone new buying your "right" to live in the CCRC (and many CCRCs don't refund anything after you've lived there for X years).

Although I think that LTC insurance may be right for some people under some circumstances - I cannot imagine reviewing any type of CCRC documents for a client and advising them to "buy in". Note that there are independent senior rental facilities in my area (I'm sure they exist all over the country). And I think renting is the way to go assuming one no longer wants to own (if the company that owns your rental goes belly up and closes - the most you're out is part of a month's rent and perhaps a small deposit you paid when you moved in). If and when one can no longer live independently - one can consider ALFs and SNFs and the like (places like those where my father lives have a clause in their leases to allow you to get out of your lease if you're no longer able to live independently). Robyn
The big bankruptcy issues with Erickson and several others has become that the monthly assessments have been going up just like many time shares. Also you can only get out of your contract if there is someone to replace you and that list is short. The rental operations offer more liquidity but don't usually have the upper layers of medical care benefits. It is a viable concept just that like everything else to many companies jumped in and the product became over built.
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Old 05-06-2010, 06:06 PM
 
Location: Ponte Vedra Beach FL
14,617 posts, read 21,436,134 times
Reputation: 6794
Quote:
Originally Posted by TuborgP View Post
The big bankruptcy issues with Erickson and several others has become that the monthly assessments have been going up just like many time shares. Also you can only get out of your contract if there is someone to replace you and that list is short. The rental operations offer more liquidity but don't usually have the upper layers of medical care benefits. It is a viable concept just that like everything else to many companies jumped in and the product became over built.
My father's rental has no upper level medical care - just some ALF beds that are appropriate for "independent" seniors for a short period of time (like post-op). It's a Brookdale facility. It had a 2 year waiting list (which you have to take with more than a few grains of salt) when he moved here in 2006. Now it is perhaps 1/3 vacant. If older people can't sell their houses - they can't move to "elder care" places.

His place is pretty nice though. A 2 br/2 bath single story villa with a garage. About 1400 sf under A/C. For about $3400/month including about 30 meals a month - and transportation to a lot of places -cleaning - utilities - security - etc. Pretty good living situation for him IMO. Robyn
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Old 05-06-2010, 08:03 PM
 
31,680 posts, read 40,976,802 times
Reputation: 14424
Quote:
Originally Posted by Robyn55 View Post
My father's rental has no upper level medical care - just some ALF beds that are appropriate for "independent" seniors for a short period of time (like post-op). It's a Brookdale facility. It had a 2 year waiting list (which you have to take with more than a few grains of salt) when he moved here in 2006. Now it is perhaps 1/3 vacant. If older people can't sell their houses - they can't move to "elder care" places.

His place is pretty nice though. A 2 br/2 bath single story villa with a garage. About 1400 sf under A/C. For about $3400/month including about 30 meals a month - and transportation to a lot of places -cleaning - utilities - security - etc. Pretty good living situation for him IMO. Robyn
I am glad he enjoys it and if it works for him then it is a good fit. Part of the problem is greed and Erickson was greedy. They over built and did so highly leveraged. My quick read is that there are two ways to come up with the upfront money for entry. One is to sell your home that has appreciated considerably and the other is to have the assets independent of your home. Prior to the housing melt down there were plenty of folks who had falsely high appreciation in their homes to could sell them and pay the entry fee that way or who had the assets to get in without selling. However the melt down eliminated much of the equity rich only pool. At that point they were over built. They had a knack of building them in areas that had wealthy communities near by 1-2 hours drive that had over appreciated and until the meltdown had a ready pool close by. Del Webb and other 55plus communities are feeling that same pinch.
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Old 05-11-2010, 04:34 PM
 
18,671 posts, read 33,290,630 times
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Interesting point about Erickson and organizations like it.
Erickson was supposedly going to build two places in the Denver area and cancelled the second one, are still working of filling Windcrest (sort of in Highlands Ranch, I think).
The Erickson place north of Boston (Brooksby Village) is one of the earlier ones, and I think is usually full or very close to it. I have thought of it for my old old age if need be (and likely could sell my current house for more than enough of entry fee). Since I don't care about leaving an estate to anyone, however the fee got refunded, whenever, is fine with me- I'll be gone, I assume. My estate is going to various charities.
Come to think of it, Windcrest is next to Highlands Ranch (upscale?) and Brooksby Village next to the nice and expensive seaside towns north of Boston. The one south of Boston, Linden Ponds, is in a very upscale old community- Hingham- and there are other seaside towns that are also well-off. Makes sense as a marketing strategy.
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Old 05-11-2010, 05:48 PM
 
Location: Ponte Vedra Beach FL
14,617 posts, read 21,436,134 times
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What if the place you gave a lot of money to just went "belly up"? So sad - no refund. You're just another unsecured creditor (way down the line). Forgot about who might inherit your money - think about how you might be affected. Robyn
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