Looking at the Details of a Senior Living Contract
Senior living contracts (also called admission or residency agreements) come in many different forms depending on the community, type of care and your state. Though, no matter what type of senior living contract you’re entering into, it’s important to ensure you fully understand it before signing on the dotted line.
Since most senior living contracts are full of industry and legal terms, it can be difficult to understand the complete terms of the agreement, which is why it’s beneficial to have an attorney review it on your behalf. See how you can take a more in-depth look at the details of a senior living contract and read other tips from A Place for Mom’s Legal Expert, Stuart Furman Esq.
How to Look at the Details of a Senior Living Contract
According to Furman, most families do not consult with an attorney before signing a senior living contract because they’re in a moment of crisis – there’s an available spot and the senior living community needs to know if they’ll take it right now. Other reasons include families becoming overwhelmed or not realizing that some aspects of the contract are negotiable.
Furman says that while some elements of a contract – like involuntary discharge – are not negotiable, others – like mandatory arbitration – might be.
“People don’t think they can change the terms,” he says, “but an attorney will help you understand what you’re signing, what the terminology really means and what is and isn’t negotiable.”
Key Things to Consider Before Signing a Senior Living Contract
When it comes to senior living contracts, here are some key things that you should understand before signing:
1. Cost of Living Increases
According to Furman, cost of living increases are often negotiable. The care provider should give adequate notice of a price increase, but it’s good to get that notice in writing.
If you don’t see anything in your contract about cost of living increases then ask the provider when the price will go up and how much notice they will give you. Then ask them to add these terms into the contract.
In addition to these areas, the American Bar Association has an excellent article called “Admissions Contracts for Senior Housing” about how to evaluate the different types of contracts out there. The publication also has a comprehensive list of questions you should ask about:
- Accommodations and fees
- Health care and services
- State regulations and requirements
- The care provider
- The rights of residents
2. Involuntary Discharge
An involuntary discharge is when a resident is forced to leave their community against their wishes. Failure to pay rent is one reason for an involuntary discharge, but there are other health-related situations that are often out of the resident’s control. For example, a resident who has tuberculosis (TB) may be forced to leave their community due to the risk they pose to other residents.
No matter what type of senior living care you’re receiving, the community must meet state regulations which govern discharge situations. Furman, who specializes in elder law in the state of California, states that “Title 22” is a regulation that has defined prohibited conditions in which a resident can’t stay at a lower level of care than they need. In other words, if your care needs exceed the level of care that your community can offer, then you can’t stay. For example, if a resident has a gastric tube then they would need a skilled nurse (registered nurse) on staff to care for them. If their existing community doesn’t have skilled nurses then they may be forced to move. A review of what conditions would force an involuntary discharge and options if that occurs may be a valuable inquiry so that the family can be ready for any future healthcare event.
While certain terms of discharge are not negotiable, beware when this part of the contract is left too vague. Consumer Reports suggests that terms of discharge should be as specific as possible. Furman points out these terms are often left open because discharges happen on a case-by-case basis and a community is bound to follow state regulations. If you feel the contract you’re considering is too vague then ask for clarification or examples.
3. Mandatory Arbitration
A mandatory arbitration provision (sometimes called forced arbitration) is common in senior living contracts. This provision requires disagreements to be settled by a third party arbiter and not in court.
What is arbitration? According to Furman, arbitration was created as a process to help backlogged courts. Essentially, it’s a mini-trial that’s not public and is more relaxed when it comes to rules surrounding the evidence that’s allowed to be presented. Historically, arbitration typically helps the defendant because it limits post action rights and it’s done privately.
If you find a mandatory arbitration clause in your contract Furman recommends crossing it out. This is an area that is often negotiable. Consumer Reports also suggests striking this clause from the contract before signing it, saying that “there’s little risk that your loved one won’t be admitted if you try this. If the management insists that arbitration is mandatory, you can decide whether it’s worthwhile to agree.”
4. The Type of Contract
In continuing care retirement communities (CCRCs) or life plan communities, there are often three types of contracts:
- Type A contracts are also known as extensive or life care contracts. In this type of contract, a resident pays a monthly, pre-determined service fee throughout their life, no matter the type of services they need or care they require.
- Type B contracts are also known as modified or modified fee-for-service contracts. In this type of contract, residents pay an entry fee as well as some of the costs for assisted living and skilled nursing when this care is required.
- Type C contracts are also known as fee-for-service contracts. In this type of contract, residents pay an entry fee as well as the full cost for assisted living and skilled nursing care when this care is required.
The best type of CCRC contract and fee structure will depend on your financial situation as well as your current and anticipated health care needs. McKnight’s Senior Living shares that Type A and C contracts have become more common in CCRCs over the past decade.
When it comes to a senior living contract, like all things, it’s critical that you understand what you’re signing. If you’re on a waiting list for an assisted living, memory care or independent senior living community, then ask for their standard contract so you have time to review it before space becomes available, because you’ll have very little time to do so once a spot is ready for you or your loved one.
Most senior living care providers will be happy to oblige because when you understand what you’re signing, you’ll have fewer disagreements and disputes in the future, which is a win-win for all involved.
One last thing: once you do sign the contract, ensure you get a copy and use it to hold your care provider accountable to the agreements they’ve made to you.
Are you planning on signing a senior living contract in the near future? Which type of senior living care are you looking for? You can contact one of our experienced Senior Living Advisors if you have any questions about senior living options near you.
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