Key Issues to Consider in Assisted Living Contracts

When someone gets ready to move into an assisted living facility there will inevitably be a lot of paperwork involved.  Much of that paperwork is fairly straightforward and need not be a cause for concern.  However, amid the big stack of needed signatures, there is one document you must review carefully before signing.  That document is the admissions agreement.  An assisted living admissions agreement is really a contract.  And like all contracts, there are important provisions you need to understand fully.  In the October 2017 edition of Consumer Reports, Penelope Wang does an excellent job of listing the key provisions you need to understand when reviewing an admissions agreement.  See “Putting the Assisted Living Facility Contract Under a Microscope,” Penelope Wang, Consumer Reports, October 2017.

The first issue Wang lists is the cost of services.  You will need to understand the fees that are listed in the contract and how those fees are calculated.  What is included in the overall fee and what is not included?  Are fees predicated on the level of care needed?  Can you easily add or subtract from the amount of extra services the facility will be providing?  Since most contracts are nominally for a one year period, the fees will likely increase from year to year.  Knowing how the facility’s fees have increased over the past several years may give you a good estimation of how they are likely to increase in the near future.

The second key issue is to understand the concept of a “responsible party.”  As we have addressed in separate blog posts in the past, nursing homes and other facilities are eager to line up other family members who can be financially liable for paying the bills if a resident is ever unable to do so for themselves.   Long –term care is extremely expensive.  So any family member who is willing to be liable for a loved one’s care costs needs to understand just how much those costs can be.  Unfortunately many family members end up signing as responsible parties unwittingly.  That because all too often the contract is never adequately explained to the family before it is signed.  And that is why it is crucial that any other family member who signs the agreement takes care to specify that they are signing as agent under a durable power of attorney, for example, and not in their own name.

The third point to consider is the terms of possible discharge from the facility.  You should expect an agreement to describe the conditions when the facility can insist on the resident’s departure.  And it should provide that there is a required notice period before an involuntary discharge.  That period is typically 30 days.  However, sometimes an agreement will be uncomfortably vague concerning the involuntary discharge terms.  It will be to the resident’s advantage to insist that more specific wording be included so as not to give too much discretion to the facility management.  Several specific circumstances that might be referenced could be nonpayment or the need for care that the facility is not licensed to provide.

Fourth, there is the issue of mandatory arbitration.  If a resident is obligated to settle disputes via arbitration they will be unable to sue the facility in court.  Since arbitrators are usually hired by the facility, many believe that the arbitration process tends to hurt consumers.  If a mandatory arbitration provision is included in the contract you can try to cross it out and/or write in “refused.”  Realize however that the facility is unlikely to allow admittance on those grounds.  If the facility comes back and still insists that the mandatory arbitration provision must be included, then the prospective resident will have to decide how important that is to them. 

If you have any questions about the issues presented above or care to discuss any other planning issues, please call us at 860-769-6938, visit our website at http://www.weatherby-associates.com or email us at info@weatherby-associates.com.

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