Wednesday, May 20, 2015
This week I attended the 16th Annual Meeting of the Massachusetts Life Care Residents Association (MLCRA) near Boston. Having last met with the group in 2011, I was impressed with the residents' on-going commitment to staying abreast of legal and practical developments affecting life care and continuing care (CCRC) models for senior living. Their organization has some 800 individual members, representing a majority of the communities in the state.
My preparation for the meeting gave me the opportunity to read one of those troubling "unpublished" -- but still significant -- opinions that shed light on attempts to make consumer protections stick. Here the "contract" trumped the statute.
In a February 2014 decision in Krens, v. 1611 Cold Spring Road Operating Company, a son who sought refund of his deceased mother's $282,579 partially "refundable" Entrance Fee was denied relief by a Massachusetts appellate court, despite the fact that Massachusetts law expressly mandated that a continuing care contract "shall provide" for a refund to be paid "when the resident leaves the facility or dies." The reasoning? The actual contract provided merely that the refund could be paid "within 30 days of actual occupancy of the vacated unit by a new resident." More than three years had elapsed since the mother's passing, apparently without the unit being "resold" or rented, and therefore the CCRC operating company took the position that no refund obligation had been triggered.
May 20, 2015 in Consumer Information, Estates and Trusts, Ethical Issues, Health Care/Long Term Care, Housing, Property Management, Retirement, State Cases, State Statutes/Regulations | Permalink | Comments (1) | TrackBack (0)
Monday, May 18, 2015
Publically-traded Brookdale Senior Living, founded in 1978, has grown to become the largest owner and operator of "senior living" communities in the U.S., including for-profit continuing care retirement communities (CCRCs). Thus, it is good to keep an eye on the finances of Brookdale for those of us interested in the long-term financial health of CCRCs and other senior housing options.
Steve Monroe at Irving Levin Associates notes that Brookdale "was no different than the rest of the market, posting sharp drops in first quarter occupancy" for 2015:
"The legacy Emeritus [a component of Brookdale, following a 2014 merger] properties posted a 110 basis point decline from the fourth quarter of 2014, and a whopping 200 basis point decline from a year ago. The legacy Brookdale properties dropped 80 basis points sequentially and 110 basis points from a year ago. This was not good news, but not unexpected. Oddly enough, the legacy Brookdale properties had a 250 basis point increase in community operating margin to 35.2% despite the occupancy declines. The Emeritus properties had a 90 basis point sequential drop in margin, which makes more sense."
How do you achieve a significant increase in "operating margin" despite "occupancy declines?" A good question to ponder. Steve Monroe continues: "The reasons for the legacy Brookdale improvement were a combination of cost controls and more pricing flexibility. Move-ins have been increasing, which is great, but 'cost controls' always make me nervous, especially with the current acuity creep. Stay tuned."
The reference to "acuity creep" is to the increase in average age and frailty of new residents, compared with past years (especially before the financial crisis of 2008-10). This trend impacts CCRCs in several ways, both in terms of market appeal to healthier potential residents, and operating costs tied to an earlier need for higher levels of care. An additional question may be whether low interest rates have supported a bubble in certain segments of senior housing despite the softer occupancy rates, and whether an eventual return to higher capitalization rates will result in lower values and additional consequences.
Along that same line, the Philadelphia Inquirer published a recent article in their "retirement" news edition, noting "Continuing-Care Retirement Community Choice Requires Diligence," by Harold Brubaker, with tips on what to ask if you are a consumer considering a CCRC option.
Wednesday, May 13, 2015
One option for seniors needing more income late in life is using the equity in their homes, and "reverse mortgages" may make it possible for the older homeowner to stay in the home longer. The Washington Post recently explored the option of having family members serve as the source of reverse mortgage funding. When the Kids Provide a Reverse Mortgage for Mom and Dad outlines potential pros and cons of family-based financing, starting with the mechanics of the loan:
Here’s a simplified example: Say you and two siblings want to help Mom and Dad, who are in their late 70s. You and your siblings are all doing well enough that you have at least some cash to spare. Ultimately, you want to retain your parents’ house for the estate once your parents pass away, keep costs to a minimum and sell the property only when you, not a faraway bank, choose to do so.
So you sit down with Mom and Dad and determine that, at least for the foreseeable future, they will need about $1,500 in additional income a month. You and your siblings agree to apportion the payments among yourselves in some way, maybe a commitment of $500 a month each for a period of years. You also pick an interest rate that achieves a win-win result for you and your parents — say, 3 percent annually. That’s much lower than a commercial lender would charge but higher than what you’ve been earning on your bank deposits or money market funds. There are no required fees upfront — hey, it’s Mom and Dad.
Thanks to Maryland elder law attorney Morris Klein for the pointer to this article.
Tuesday, May 5, 2015
Yesterday I posted about a new report on Americans' views of the "retirement crisis". Another report from the same organization, National Institute for Retirement Security ,focuses on Americans saving for retirement. The Continuing Retirement Savings Crisis is a 30 page report that offers 4 key findings:
- Account ownership rates are closely correlated with income and wealth…
- The average working household has virtually no retirement savings. When all households are included— not just households with retirement accounts—the median retirement account balance is $2,500 for all working-age households and $14,500 for near-retirement households…
- Even after counting households’ entire net worth—a generous measure of retirement savings—two thirds (66 percent) of working families fall short of conservative retirement savings targets for their age and income based on working until age 67...
- Public policy can play a critical role in putting all Americans on a path toward a secure retirement by strengthening Social Security, expanding access to low cost, high quality retirement plans, and helping low income workers and families save…
Monday, May 4, 2015
The National Institute on Retirement Security has issued a new report, Retirement Security 2015: Roadmap for Policy Makers. Americans' Views of the Retirement Crisis. The 36 page report offers 7 key findings
- An overwhelming majority of Americans believe there is a retirement crisis...
- Three in four Americans remain highly anxious about their retirement outlook, but the concern has dissipated slightly as the economy has recovered…
- Even though Americans feel slightly less stressed about their retirement prospects, support for steady and reliable retirement income from a pension is high and growing…
- Americans continue to feel that leaders in Washington do not understand their struggle to save for retirement, and they strongly support efforts by states to set up retirement plans for those workers without access to an employer sponsored plan…
- Americans see retirement benefits as a job feature that is almost as important as salary...
- Americans express strong support for pensions for public employees…
- Protecting Social Security benefits is increasingly important…
The nationwide poll is conducted every two years and "is intended to serve as a tool for policymakers, thought leaders and retirement service providers as they work to stem the retirement crisis and re-fortify the U.S. retirement infrastructure." The full report is available here.
The Employee Benefits Research Institute (EBRI) recently published an interesting examination of financial situations of older Americans at the end of their lives. The report documents:
- the percentage of households with a member who recently died "with few or no assets,"
- the continued importance of Social Security for older households,
- the potential importance of "big data" analytics "to determine how people behave when it comes to health and retirement plans," including the potential to "get better results at lower cost," and
- the fact that the "health sector is considerably farther down the road than the retirement sector in using data analytics in benefits plan design and management."
Sunday, May 3, 2015
My Retirement Paycheck is an interactive website from the National Endowment for Financial Education. The website offers 8 icons on which the user clicks to learn more about the topic. The 8 topics include home & mortgage, insurance, retirement plans, savings & investments, debt, fraud, work and Social Security. Each topic offers information in an easy to understand format and links for additional readings.
Thursday, April 30, 2015
I tend to think of "Elder Law" as a subset of "Laws and Policies of Aging." Given what appears to me to be a steady increase in public concern about ways in which some older persons are exploited financially, it occurs to me that we may be at a point where "fiduciary duty" is becoming a central -- perhaps even the central -- concept for the future practice of Elder Law, overtaking even Medicaid planning and end-of-life health care planning. Seasoned practitioners already know that the "million dollar question" in Elder Law is "who is my client?" -- a question intimately tied to carrying out fiduciary duties as an attorney.
Along that line, I've been digging into my stack of "must read" books, a stack that is always a threat to my safety as it gets taller and taller no matter how fast and furiously I read. I'm very much enjoying a book by Boston University Law Professor Tamar Frankel titled, simply enough, Fiduciary Law (Oxford University Press, 2011).
Early in the book, the author, whose teaching and research interests include corporation governance and regulation of financial systems, proposes a definition of "fiduciary relationships," which I find both intriguing and conducive to discussion. I don't think it is taking too much away from her full book, to repeat the four features Professor Frankel proposes as triggering fiduciary duties. She writes:
April 30, 2015 in Books, Elder Abuse/Guardianship/Conservatorship, Estates and Trusts, Ethical Issues, Health Care/Long Term Care, Legal Practice/Practice Management, Retirement | Permalink | Comments (1) | TrackBack (0)
Wednesday, April 29, 2015
The Insured Retirement Institute (IRI) has issued its 5th annual report on Boomer Retirement Preparedness. Boomer Expectations for Retirement 2015 Fifth Annual Update on the Retirement Preparedness of the Boomer Generation is a 24 page report, and offers the following "key observations":
- Overall economic satisfaction among Boomers dropped precipitously in 2015, to 48% from 65% in 2014 and further down from 76% in 2011.
- The decline in overall satisfaction was more pronounced among retirees, plunging to 45% from 72% in 2014, versus 53% of working Boomers feeling satisfied compared to 60% in 2014....
- Only six in 10 Boomers report having money saved for retirement, down sharply from prior years when approximately eight in 10 had retirement savings.
- A significant number of Boomers continue to struggle financially; in the past 12 months:
- Almost one-quarter of Boomers reported that they have had difficulty in paying their mortgage or rent.
- 19% of working Boomers stopped contributing to a retirement account such as a 401(k) or IRA.
- 24% of Boomers postponed plans to retire.
- The percentage of Boomers feeling extremely or very confident they will have enough money to last throughout retirement has declined significantly, to 27% of Boomers in 2015 from almost four in 10 in 2011.
The report discusses a number of topics including annuity ownership, economic life satisfaction, short term and long term financial outlook, retirement expectations, retirement planning, planning for negative results, and the advantages to using financial advisors.
The report concludes
As a group, the Baby Boomer generation is feeling less confident in their prospects and preparations for a secure retirement, and are more concerned about specific aspects of retirement such as medical expenses, children’s educations, and long term care. Paradoxically, however, many believe they will enjoy a more secure retirement than their parents did, and even those with relatively little saved for retirement and no pensions expect to enjoy travel and leisure activities in retirement in addition to paying for their basic needs and medical costs. While this may be unrealistic for many, the study finds that Boomers who work with financial advisors, and those who own annuities, are far more likely to have set goals, to have saved (and saved more) for retirement, and to feel both more economically satisfied currently and better prepared for retirement.
Monday, April 27, 2015
On April 15, 2015 the SEC and FINRA issued a report, National Senior Investor Initiative. Together the SEC Office of Compliance Inspections & Examinations and FINRA conducted a review of 44 broker-dealers to look at "how firms conduct business with senior investors [65 and older] as they prepare for and enter into retirement." The examinations looked a long list of items in broker-dealer interactions with clients 65 and older, including "how firms address issues relating to aging (e.g., diminished capacity and elder financial abuse or exploitation)..."
This report highlights recent industry trends that have impacted the investment landscape and prior regulatory initiatives that have concentrated on senior investors and industry practices related to senior investors. Additionally, the report discusses key observations and practices identified during the recent series of examinations.
The 42 page report, after providing background on the initiative, discusses 9 topics, including documentation, disclosures, complaints, training, supervision, suitability, marketing, "senior designations" and securities purchased. Each section contains a conclusion as well as "notable practices." The overall conclusion includes this excerpt
The current environment, where traditional savings accounts and other conservative investments are earning historically low yields, may prompt firms to recommend and senior investors to purchase more non-traditional securities, such as variable annuities, non-traded REITs, structured products, and other alternative products. OCIE and FINRA staff are concerned that broker-dealers may be recommending unsuitable securities to senior investors or failing to adequately disclose the related risks. It is imperative that senior investors receive proper and understandable disclosures regarding the terms and risks related to securities recommended to them, particularly non-traditional investments.
Sunday, April 26, 2015
Curious Behaviors That Can Ruin Your Retirement is an interactive program on behavioral impediments to retirement planning. A host leads users through exercises designed to create an “Aha!” moment as they relate to the behaviors. The host then explains how the behavior can hinder retirement planning and how to cope with it. Users can then go to a “Learn More” page with additional information in various media formats.
The link to the tool is available here. It takes about 10 minutes to work through it. Check it out and have your students check it out as well!
Thursday, April 23, 2015
As outlined by The Washington Post, AARP Public Policy Institute has a new "Livability Index" offered as a way to evaluate factors such as safety, security, ease of getting around, access to health care, and housing affordability.
More intangible factors are also assessed, such as WiFi, farmers' markets and "public policies that promote successful aging."
(After following the trauma of the trial in Iowa, I wonder whether "criminal laws on sexual relations between husband and wives if one has dementia" should be added as an express factor?)
Wednesday, April 22, 2015
The Center for Retirement Research at Boston College released their April Brief on How Will Longer Lifespans Affect State and Local Pension Funding? The authors considered whether state and local governments are factoring in the increase in longevity into their budgeting for employee pensions. The authors use two alternatives to explore the answer: "1) if public plans were required to use the new mortality table designed for private sector plans; and 2) if public plans were required to go one step further and fully incorporate expected future mortality improvements." The article first discusses the current climate for these pensions, discusses a scenario illustrating longevity's impact on pensions and then covers the two options.
The authors' conclusion might surprise you. "The question underlying this analysis is whether outdated mortality assumptions are a serious problem among state and local plans. The answer appears to be "no."... In short, public sector plans seem to be making a serious effort to keep their life expectancy assumptions up to date." The brief also has an appendix with a table showing the "life expectancy and funded ratio" for various state and local government pension plans.
Most of my family likes the PBS television show "This Old House." (Not me: I prefer "International House Hunters.") I have a good friend-- we'll call her Louise -- who is getting ready to celebrate her 90th birthday and has the ability to turn a good phrase. For years she has been saying her plan was to stay in her home, a lovely "old house" built in the 1920s, until "whatever happens next." (She also refers to my writings here for Elder Law Prof as my "blobs.")
Recently, however, Louise admitted to considering a new plan. One thing after another in "this old house" was going wrong. First it was her land-line phone that would intermittently crackle and pop, eventually making all calls impossible. Next it was seemingly random problems with loss of electricity to one side of the house or the other. Finally, when everything in the kitchen lost power, she got serious. Soon there was a big trench behind the house, as the electricians tried to locate the problem.
Eventually they found about a 4 foot length of burned wiring in the ground, inside of the buried conduit leading to the house (!). They explained the wiring in and to Louise's house was just "too old." Fortunately, my friend could afford the massive repairs (not cheap), but that still meant living with her daughter 45 minutes away, and commuting to meet with the workers during the weeks without any power. And as she asked, "what's next?" Her house is about 3 years older than Louise.
Louise's story plus a recent article from the Patriot News got me thinking. In Harrisburg, PA, the mayor was proposing a way to help a 92 year-old-woman get help to deal with sewer line repairs from the street to her house that cost $10,000. Helping one person -- the proposal was for $2,000 -- was just the tip of the iceberg (so to speak -- I'm running out of metaphors). The article explained:
Monday, April 20, 2015
The 2015 White House Conference on Aging held two more regional forums, one in Phoenix and one in Seattle. There are two regional forums left, one in Cleveland on April 27 and one in Boston on May 28.
As well, the WHCOA will be sponsoring a webinar on April 23 on retirement security. The website offers the following information about the webinar
With Americans living longer, pension options changing, and fewer workers spending careers with a single employer, the sources of retirement security are also changing. This webinar will provide an overview of best practices to help ensure greater opportunity and ability to enjoy a financially secure retirement. Speakers will include officials from the U.S. Treasury Department, the Women’s Institute for a Secure Retirement, and Harvard University. Registration is required and open until April 22nd.... This is the third in WHCOA’s webinar series designed to raise awareness of the challenges and opportunities for older adults in the U.S. We hope you will join us for this engaging discussion of best practices for a secure retirement.
The webinar is free; registration is required. Click here to register.
Friday, April 17, 2015
Scott E. Townsley, a very bright attorney, an adjunct associate professor at UMBC's Erickson School of Aging Studies, and a principal with CliftonLawsonAllen LLP, invited me to join him recently for a presentation to the 2015 Mid-Atlantic Region Resident Council Conference in Silver Spring, Md. (The lovely D.C. area cherry trees were in full bloom that day.)
Our theme was "Hot Topics in Continuing Care." Scott, a regular consultant to nonprofit CCRCs, used his deep experience in senior housing to outline his perspective on the biggest issues facing CCRCs. In preparation for my part, I reached out to my contacts in resident groups around the country and asked them to share with me their biggest concerns.
We then trimmed down our two respective lists and used a Point/Counter Point approach to the debate. Do any of our readers remember 60 Minutes' James Kirkpatrick and Shana Alexander? (Okay, how about Dan Aykroyd and Jane Curtin's lampoon of the Point/ Counter Point format? I think it is fair to say that we were less political than the first combo, and more polite -- if less humorous -- than the SNL crew. But we had fun.)
With a tip of the hat to David Letterman in borrowing his "top ten" format, here is a very distilled version of my list of Resident Concerns:
10. What does it really mean to be a nonprofit CCRC in 2015?
9. Do we need to worry about conversions of nonprofit CCRCs to for-profit?
8. What is the right response to the trend that residents are older and more disabled, even when first entering the community?
April 17, 2015 in Consumer Information, Dementia/Alzheimer’s, Discrimination, Health Care/Long Term Care, Housing, Property Management, Retirement, State Statutes/Regulations, Web/Tech | Permalink | Comments (4) | TrackBack (0)
Thursday, April 16, 2015
The U.S. Department of Labor has released a new proposed rule intended to protect consumers from conflicts of interest among an array of folks who want to give advice about how and where to invest 401(c) and IRA retirement funds. The new rule would impose a "fiduciary duty" standard on those advisors, rather than the current, lower "suitability" standard for investment advice.
A DOL press release explains the goal:
"This boils down to a very simple concept: if someone is paid to give you retirement investment advice, that person should be working in your best interest," said Secretary of Labor Thomas E. Perez. "As commonsense as this may be, laws to protect consumers and ensure that financial advisers are giving the best advice in a complex market have not kept pace. Our proposed rule would change that. Under the proposed rule, retirement advisers can be paid in various ways, as long as they are willing to put their customers' best interest first."
Today's announcement includes a proposed rule that would update and close loopholes in a nearly 40-year-old regulation. The proposal would expand the number of persons who are subject to fiduciary best interest standards when they provide retirement investment advice. It also includes a package of proposed exemptions allowing advisers to continue to receive payments that could create conflicts of interest if the conditions of the exemption are met. In addition, the announcement includes a comprehensive economic analysis of the proposals' expected gains to investors and costs.
The New York Times covers the new rules in "U.S. Plans Stiffer Rules Protecting Retiree Cash," and notes the history of opposition to this kind of reform from -- surprise, surprise -- the "financial services industry." There is a 75-day window for public comments on the latest proposal.
Perhaps my biggest surprise was the remarkably "consumer friendly" presentation of the proposed change by the Department of Labor on its webpage, beginning with this simple video describing conflicts of interest.
From the New York Times on April 14, an article from the business section, As Nursing Homes Chase Lucrative Patients, Quality of Care is Said to Lag.
Promises of “decadent” hot baths on demand, putting greens and gurgling waterfalls to calm the mind: These luxurious touches rarely conjure images of a stay in a nursing home.
But in a cutthroat race for Medicare dollars, nursing homes are turning to amenities like those to lure patients who are leaving a hospital and need short-term rehabilitation after an injury or illness, rather than long-term care at the end of life.
Even as nursing homes are busily investing in luxury living quarters, however, the quality of care is strikingly uneven. And it is clear that many of the homes are not up to the challenge of providing the intensive medical care that rehabilitation requires. Many are often short on nurses and aides and do not have doctors on staff.
Some colorful quotes here ("patients are leaving the hospital half-cooked"), but a lot of this well-written article nonetheless seems like old news to me (okay, perhaps that's because of my chosen research focus), with reporting on trends influenced by operating margins on the "nonprofit" side of care, and "return on investment" for shareholders on the for-profit side. Perhaps "intensity" of the pressures is the theme here?
Tip of the hat to George Washington University Law student Sarah Elizabeth Gelfand ('16) and GW Professor Naomi Cahn for making sure we saw this article!
Saturday, April 11, 2015
One of the first assignments I give to law students in my Elder Law course is to visit a "nursing home" and to see if they can get a copy of the admission agreement or contract. (Most of the facilities in my area cooperate with these student visitors.) The lesson here, however, is revealed when the students bring the documents back to the classroom for discussion. We discover that the majority of the contracts are not for admission to "skilled nursing facilities."
More frequently the facilities in question are licensed as "continuing care retirement communities" or CCRCs, which are big in Pennsylvania, or personal care homes (PCs or PCHs), or assisted living (AL) communities, each of which have different state regulations applying to their operations. These are not "nursing homes," or at least, they are not "skilled nursing facilities." Further, in Pennsylvania, increasingly there may be no label at all -- at least not a label that the public is familiar with -- and that is often by design as the facility or community may be attempting to avoid a "higher" level of requirements.
The usual explanation is that the choice in label is not driven by concerns over "quality" of care, but by costs of having to meet some non "care" related regulation, such as AL state requirements for room size or physical accommodations. The facility makes the case that it can meet the real needs of its clientele without being tied to "higher care" and therefore more "costly" models for senior housing. Fair enough. Caveat emptor. If you are the customer, make sure you do your homework, ask questions, comparative shop, and avoid assumptions based on pretty pictures in marketing brochures. And try to do all of this before an emergency that accelerates the need for a move.
But, there can be significant differences triggered by a label (or lack thereof) that are not readily apparent to the public. A recent Policy Issue Brief published by Justice In Aging (formerly the National Senior Law Center) uses examples from California to shine a spotlight on subtle issues in labeling, as well as on the importance of regulations that are responsive and up-to-date. Merely changing an "identity" or label should not be the basis for failing to comply with minimum standards relevant to the clients' needs.
In How California's Assisted Living System Falls Short in Addressing Residents' Health Care Needs, Justice in Aging (JIA, to make our circle of acronyms almost complete), provides a sample job notice for a California facility and asks "can you spot the legal violations in this Assisted Living job announcement?" The notice, appears to be hiring for a "certified med aide," despite the fact that there is no such thing in California, and more importantly, if the facility calling itself "Assisted Living" is actually a RCFE (residential care facility for the elderly), the California regulations do not permit staff to administer medications. Outside of Medicare/Medicaid standards for skilled nursing facilities -- the "nursing homes" of the past -- there are no national standards for labeling of "assisted living" or the many alternatives.
JIA's issue brief dated April 7, 2015 is part of a series that explores how California's system functions and points to ways it could be modified to help assure residents their expectations and needs will be satisfied.
The lessons in the JIA brief -- with a few tweaks to respond to any given state's set of acronyms -- seem equally relevant in all states.
Wednesday, April 1, 2015
The AARP Public Policy Institute has recently published an Insight Report (March 2015) on older workers and unemployment following the recent economic crisis. The report draws upon surveys of persons aged 45 to 70 affected by unemployment during the last 5 years. The primary focus of the analysis is on "reemployment," including what strategies were used in successful efforts to find jobs.
Lots of interesting information here. Even though the rate of unemployment is lower for older workers, those losing their jobs later in life stayed unemployed longer than younger job seekers, and their recovery jobs reportedly paid less. Some of the findings, however, are of equal relevance to younger job seekers. One set of responses was especially sobering, on a question about possible working life regrets:
"When asked whether there was anything they wished they had done differently over their working lives or careers to better position themselves for dealing with unemployment, 52 percent said 'yes.' The most common answer —65 percent — was a wish that they had saved more money. Also of note, 48 percent wished they had gone back to school to complete or get another degree, and 38 percent wished they had chosen a different field. The unemployed and the long–term unemployed were more likely than the other groups to wish they had chosen a different field. Those who elected that regret also tended to be younger (56 percent were ages 45 to 54)."
Many thanks to Professor Naomi Cahn at George Washington Law for alerting me to this report, and sending a link to related Wonk Blog coverage of the study from the Washington Post -- lots of well-explained graphs from an oral presentation that accompanied the launch of AARP's written report.