Elder Care: The Road to Growing Old Is Not Paved
It is rare to find such a clearly written and concise guidebook to the?confusing patchwork of programs, services and faciliti...
Read moreAs important as it is to plan ahead for the need for long-term care, things often don't happen that way. A senior falls and breaks a hip or has a stroke, and suddenly there is a scramble to find a nursing home or other long-term care facility. To meet a growing demand and lured by fast money, so-called elder care referral services to help in such situations have sprung up around the country, exploding into a multimillion-dollar although unregulated industry.
Most offer consumers their services for free, but there is a hidden price: nursing facilities and other adult care homes typically pay the referral service a sizable commission for any placement. In Washington state, for example, the facilities generally pay the placement agencies the equivalent of one month's rent, on average about $3,500.
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This means that the service steers seniors to facilities they contract with, often without regard to the facility's quality. In an investigative report in 2010, the Seattle Times found that placement companies in Washington state had referred seniors to facilities that had documented histories of substandard care, including "residents with dementia locked in rooms to prevent wandering; mentally ill adults drugged into submission to control behavior; and bed-bound seniors abandoned without assistance for up to 16 hours."
Industry Leader Viewed As Lucrative Investment
The nation's largest senior-placement firm is A Place for Mom, a Seattle-based company that contracts with 18,000 elder care facilities in 45 states. Financial analysts estimate the private company has revenues of $50 million a year.
A Place for Mom has embraced a Web-based business model that is becoming increasingly popular among such companies. Consumers looking for an elder care facility in a particular area fill out an online form and are quickly contacted by one of 450 referral "advisors" working out of home offices.
Without any personal contact with the senior or the family, the adviser offers a list of referrals to selected adult homes, assisted living facilities or other institutions, and at the same time sends information about the senior to the facilities. If the senior ends up entering one of the facilities, A Place for Mom collects a commission, averaging about $3,500 in Washington state, according to the Seattle Times, with about $650 going to the adviser.
But the advisors refer consumers only to facilities that have agreed to pay A Place for Mom a commission. "[W]hen I asked them about a home that I heard about but did not see on their site they redirected to others," a commenter on the website alarm:clock, which covers technology startup companies, wrote in 2009 in reference to an article on A Place for Mom.
According to the Seattle Times expose, "A Place for Mom has on its referral list dozens of homes with histories of substandard care, including homes currently on probation for abuse or neglect violations."
But elder referral is big business. In July 2010, the Wall Street global equity firm Warburg Pincus bought a majority stake in A Place for Mom, seeing great growth potential.
One State Cracks Down
In response to the Seattle Times investigation, in 2011 Washington was about to become the first state to rein in these previously unregulated businesses. The legislature had passed a bill requiring referral companies to meet minimum standards, including that they clearly disclose to seniors and their families their fees and terms of service upfront and that they maintain at least $1 million in liability insurance coverage. Washington state's governor Chris Gregoire was expected to sign the measure.
According to the Times, as of 2011 lawmakers in at least a dozen states were studying the bill as a model for change. Although the legislation was supported by many placement companies, consumer advocates and adult home owners, A Place for Mom aggressively opposed the measure, including "spreading distortions about the bill," according to the Washington state ombudsman's office, as quoted by the Times.
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Read moreIn addition to nursing home care, Medicaid may cover home care and some care in an assisted living facility. Coverage in your state may depend on waivers of federal rules.
READ MORETo be eligible for Medicaid long-term care, recipients must have limited incomes and no more than $2,000 (in most states). Special rules apply for the home and other assets.
READ MORESpouses of Medicaid nursing home residents have special protections to keep them from becoming impoverished.
READ MOREIn addition to nursing home care, Medicaid may cover home care and some care in an assisted living facility. Coverage in your state may depend on waivers of federal rules.
READ MORETo be eligible for Medicaid long-term care, recipients must have limited incomes and no more than $2,000 (in most states). Special rules apply for the home and other assets.
READ MORESpouses of Medicaid nursing home residents have special protections to keep them from becoming impoverished.
READ MORECareful planning for potentially devastating long-term care costs can help protect your estate, whether for your spouse or for your children.
READ MOREIf steps aren't taken to protect the Medicaid recipient's house from the state’s attempts to recover benefits paid, the house may need to be sold.
READ MOREThere are ways to handle excess income or assets and still qualify for Medicaid long-term care, and programs that deliver care at home rather than in a nursing home.
READ MORECareful planning for potentially devastating long-term care costs can help protect your estate, whether for your spouse or for your children.
READ MOREIf steps aren't taken to protect the Medicaid recipient's house from the state’s attempts to recover benefits paid, the house may need to be sold.
READ MOREThere are ways to handle excess income or assets and still qualify for Medicaid long-term care, and programs that deliver care at home rather than in a nursing home.
READ MOREMost states have laws on the books making adult children responsible if their parents can't afford to take care of themselves.
READ MOREApplying for Medicaid is a highly technical and complex process, and bad advice can actually make it more difficult to qualify for benefits.
READ MOREMedicare's coverage of nursing home care is quite limited. For those who can afford it and who can qualify for coverage, long-term care insurance is the best alternative to Medicaid.
READ MOREMost states have laws on the books making adult children responsible if their parents can't afford to take care of themselves.
READ MOREApplying for Medicaid is a highly technical and complex process, and bad advice can actually make it more difficult to qualify for benefits.
READ MOREMedicare's coverage of nursing home care is quite limited. For those who can afford it and who can qualify for coverage, long-term care insurance is the best alternative to Medicaid.
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READ MOREDistinguish the key concepts in estate planning, including the will, the trust, probate, the power of attorney, and how to avoid estate taxes.
READ MORELearn about grandparents’ visitation rights and how to avoid tax and public benefit issues when making gifts to grandchildren.
READ MOREUnderstand when and how a court appoints a guardian or conservator for an adult who becomes incapacitated, and how to avoid guardianship.
READ MOREWe need to plan for the possibility that we will become unable to make our own medical decisions. This may take the form of a health care proxy, a medical directive, a living will, or a combination of these.
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READ MOREWe explain the five phases of retirement planning, the difference between a 401(k) and an IRA, types of investments, asset diversification, the required minimum distribution rules, and more.
READ MOREFind out how to choose a nursing home or assisted living facility, when to fight a discharge, the rights of nursing home residents, all about reverse mortgages, and more.
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READ MORELearn how a special needs trust can preserve assets for a person with disabilities without jeopardizing Medicaid and SSI, and how to plan for when caregivers are gone.
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