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Dollars & Sense

Assisted Living's Hidden Fees


Marie Sinclair thought it was a perk of her residency at an assisted-living center in Fairfax, Va., when she was offered a van ride to her doctor's appointment. Then she got her monthly bill, which showed a special transportation charge of $65.

"I just couldn't believe it when I saw the bill," said Sinclair, 78. "I thought they were being nice by giving me a ride to the doctor. Nobody told me they charge extra for something like this."

Sinclair now asks friends or one of her bridge partners for a ride when she needs to go to the grocery store or doctor. She can't afford many extra charges on top of the hefty $3,680 per month she pays for her apartment and three meals daily. "I love free things," she says, "but there sure aren't many of them in here."

Like many older Americans, Sinclair has learned one of the hard lessons of the world of assisted living. Much like a fancy restaurant that charges separately for the main course and every side dish, the assisted-living industry is marked by a-la-carte services.

It's important for older people and their families to understand the potential financial pitfalls when mulling a move to an assisted-living facility. The process of relocating Mom or Dad from a well-loved home to unfamiliar surroundings is fraught with emotion, and family members can be at their most vulnerable.

Assisted living is a catch-all term for housing units established for people who aren't able to maintain themselves in their home or apartment. But these individuals are relatively healthy and don't need special, round-the-clock skilled medical care offered in a nursing home. This increasingly popular form of housing goes by dozens of names: extended care, adult-care residency and board-and-care. In California, they are officially known as "residential care facilities for the elderly," and are regulated by the California Department of Social Services. Some high-end facilities have glossy brochures showing elegant lobbies, fancy furniture and often a photo of a sincere-looking admissions director. Forget all that unless you have an unlimited budget. Concentrate on the details of the contract, paying special attention to any "extra" needs that the resident might require. The first rule is, if it's not offered in the contract, you probably won't get it. Don't count on vague statements by facility managers who promise to take care of all your mother's needs if her health begins to deteriorate. You need to know every specific service they can provide--and how much each task will cost.

Too often, consumers don't know what they are signing. A 1999 report by the General Accounting Office, the investigative arm of Congress, said, "marketing material, contracts, and other written material provided by the facilities are often incomplete and are sometimes vague or misleading [and] only 25% of facilities routinely provide their document to prospective residents before they decide to apply for admission." Contract terms vary widely, and there are lots of potential pitfalls. Security deposits and cleaning deposits are not permitted under California state regulations, but some facilities have been known to request them.

Pre-admission charges, or screening fees, for new residents are legal, but they are also a tip-off that consumers should be aware and skeptical. Most facilities don't charge such fees, which can range from hundreds to thousands of dollars. In fact, one study of California facilities found that only 29% had such fees. They provide nothing other than an additional source of revenue for the facility.

California has 6,200 facilities with a total of 147,000 residents. The basic fees at a typical facility in California range from $1,500 to $2,250 a month, according to a report by California Advocates for Nursing Reform, a consumer group. Less expensive facilities charge about $800 a month, and they are largely for people on Supplemental Security Income, a federal program for the poor elderly. Fancier assisted-living facilities may charge $4,000 a month or more for basic room and board.

For all facilities, regardless of size and amenities, prospective consumers should ask lots of questions to minimize unexpected fees. The Consumer Consortium on Assisted Living developed a guidebook with Metropolitan Life Insurance that suggested some questions families should ask:

* Does housekeeping include only light dusting, and is there any extra charge for cleaning bathrooms, floors and windows? Is there a separate fee for doing personal laundry?

* Do units have separate telephones and how is billing handled?

* Are monthly residence and fees still charged if a person is away in the hospital, or on an extended visit with relatives?

The issue is especially important for the growing number of residents who need more care than an occasional knock on their apartment door or reminders to take their medications.

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