It's not escrow, it's not a down payment, its a rip-off?
July 27, 2013 5:01 AM Subscribe
My wife's aging parents are moving into an apartment in a retirement community which also has assisted living on-site. They are paying $5,000 a month for the apartment they will be renting. They are also being charged a $350,000 fee that will be held by the organization until all the assisted living costs costs incurred are paid off. The money then reverts to the heirs.They even have a closing yet no property is changing hands. A lawyer has looked at this contract and it is apparently legal. Does anyone know what this $350,000 fee is called? Is it a common practice in assisted living facilities to make aging persons pay this much up front for care?
Sounds like a bond. Doesn't seem that unusual to me. Where are you located?
posted by dfriedman at 5:51 AM on July 27, 2013
posted by dfriedman at 5:51 AM on July 27, 2013
I agree with mooza. It sounds like the Australian aged care bond system. The provider takes a large deposit based on the resident's existing assets which they can earn interest on. This helps defray the considerable costs incurred by providing residential aged care services of a reasonable quality.
posted by singingfish at 5:52 AM on July 27, 2013
posted by singingfish at 5:52 AM on July 27, 2013
In the us, many so called "CCRC"s have this. (Continuing care retirement community). Many don't refund anything unless you die/leave within the first few years.
posted by kestrel251 at 5:56 AM on July 27, 2013 [1 favorite]
posted by kestrel251 at 5:56 AM on July 27, 2013 [1 favorite]
Is this one of those "in through the penthouse, out through the basement morgue" places? Because if so, my grandparents also did this and the very large down payment was usual. This was a very swanky, reputable place that has been around for a long time.
posted by DarlingBri at 7:01 AM on July 27, 2013
posted by DarlingBri at 7:01 AM on July 27, 2013
The usual scenario for these facilities is that you have just sold off the family home, and are flush with cash at the outset. Your care will not be expensive for the next ten years; when you do need care, it's right there for you, and already paid.
Averaged over a normal expectancy of twenty years, it seems like a bargain. However, $5000 a month for rent had better come with some serious amenities for able-bodied seniors.
posted by halfbuckaroo at 8:03 AM on July 27, 2013
Averaged over a normal expectancy of twenty years, it seems like a bargain. However, $5000 a month for rent had better come with some serious amenities for able-bodied seniors.
posted by halfbuckaroo at 8:03 AM on July 27, 2013
Response by poster: DarlingBri and halfbuckaroo are close. It is a in through the penthouse swanky place. However, what I want to know is what this practice is called legally or otherwise in The US, so I can google it.
posted by Xurando at 8:37 AM on July 27, 2013
posted by Xurando at 8:37 AM on July 27, 2013
Sorry, answer the question. I looked up a couple of these facilities, and their on-line balance sheets listed these as Entrance Fees. They also show the amount listed as "refundable," which is probably what they have to keep on hand to pay out to the estate. Check out the income they make from the deposits of the entrance fees.
posted by halfbuckaroo at 9:12 AM on July 27, 2013 [3 favorites]
posted by halfbuckaroo at 9:12 AM on July 27, 2013 [3 favorites]
Yes, search for Entrance Fees, buy in or purchase fees, here for instance.
posted by Ms. Next at 9:47 AM on July 27, 2013
posted by Ms. Next at 9:47 AM on July 27, 2013
I helped my mother find an asssisted living residence last year, and these fees are common but not universal. (location: Austin TX)
posted by immlass at 10:22 AM on July 27, 2013
posted by immlass at 10:22 AM on July 27, 2013
Here's a bit more information on how standard those entrance fees are and how they work, using my grandparents' place in Austin as an example. For their 5K or whatever a month they got a two-bed apartment, one meal in the very nice dining room per day, and it was brought up on the days they didn't want to go down. It included housekeeping and maintenance. It included yoga studio and swimming pool on-site. Oh, and transportation, regular excursions and endless bridge.
As they got older, it included 24-hour nursing, and basically on-site hospital care through the Life Care plan, which is what the entrance fee covers. As far as I'm concerned, it was the best money they ever spent and on balance was an absolute bargain in terms of covering their care costs. The fee did not change as they moved from independent living to assisted living to 24 hour care, and they both died there at home.
posted by DarlingBri at 11:30 AM on July 27, 2013
As they got older, it included 24-hour nursing, and basically on-site hospital care through the Life Care plan, which is what the entrance fee covers. As far as I'm concerned, it was the best money they ever spent and on balance was an absolute bargain in terms of covering their care costs. The fee did not change as they moved from independent living to assisted living to 24 hour care, and they both died there at home.
posted by DarlingBri at 11:30 AM on July 27, 2013
If the contract is clear that they will receive lifelong support and care, no matter how long they live, then it may well be a bargain. I tend to agree that $5,000 a month for just assisted living at the outset is pricey. I suspect that the charges are front-loaded. They expect that the entrance fee will be used up pretty soon.
posted by megatherium at 12:26 PM on July 27, 2013
posted by megatherium at 12:26 PM on July 27, 2013
A lot of these arrangements will continue to provide care for the residents even if they run out of money because they outlive their assets. That may be the case with this one - my in-laws lived in housing like that.
posted by leslies at 7:21 PM on July 27, 2013
posted by leslies at 7:21 PM on July 27, 2013
This thread is closed to new comments.
posted by mooza at 5:42 AM on July 27, 2013