The PDF in which this article appear can be found in Bifocal Vol. 46 Issue 4.
April 29, 2025
Housing Options for Seniors: Legal and Financial Considerations
Kathie Brown Roberts, CELA and Bailey Liipfert, CELA
Certified Elder Law Attorneys (CELAs) specialize in elder law, an umbrella term, which in practice includes advanced knowledge in five core areas including health and personal care planning, pre-mortem legal planning, fiduciary representation, legal capacity planning, and public benefits advice. CELAs also assist older adults and their families navigate a confusing array of senior housing decisions and governmental benefits available to help pay for housing and care. From aging in place to assisted living to continuing care retirement communities, each option presents its own set of legal considerations and potential pitfalls.
A study by the Alliance Retirement Income Institute and Jason Fichtner, former Chief Economist at the Social Security Administration, highlights 2025 as the peak of America's Peak 65® Zone—a four-year surge (2024–2027) of Americans turning 65, the largest in U.S. history. This record-breaking trend will persist for 20 years until Millennials reach retirement age.
Economist Robert J. Shapiro predicts that over half (52.5%) of Baby Boomers turning 65 between 2024 and 2030 will have $250,000 or less in assets. With many expected to live 20+ years in retirement, they risk depleting savings and relying primarily on Social Security, which replaces about 40% of pre-retirement income.
These trends underscore the growing need for Medicaid, alternative long-term care funding, and legal guidance on housing and care options:
Transition Planning
Moving an older adult into a senior housing arrangement is a major life transition that requires careful logistical and legal planning. The first step is often a thorough review of the senior's current housing situation and any outstanding obligations, such as a lease that needs to be terminated or a home that must be sold.
An assessment of the senior's physical and cognitive capacity is also important to determine the appropriate level of care and to ensure that they have the legal capacity to enter into any new housing agreements. If the senior lacks capacity, alternative decision-making arrangements like a power of attorney or guardianship may need to be put in place.
The senior's financial situation must also be thoroughly evaluated to verify their eligibility for any funding sources or assistance programs, such as veterans' benefits or Medicaid. A review of the senior's income, assets, and expenses is necessary to create a sustainable long-term budget.
Once a suitable housing option is identified, a detailed review and negotiation of the contract is essential. Key terms to focus on include the scope of services provided, the fee structure, the conditions for transfer to higher levels of care, and the policies around termination of the agreement by either party.
Finally, the senior's estate plan should be reviewed and updated to reflect their new housing situation. This may involve changes to their will, trust, powers of attorney, and advance directives to ensure that their wishes are carried out and that their assets are protected.
Protecting Senior Rights Within Housing Options
A variety of federal and state laws come into play in the context of senior housing options. CELAs are tested on various laws and issues affecting older adults living in senior housing. The Fair Housing Act prohibits discrimination in housing based on age, disability, and other protected characteristics. Senior housing providers must make reasonable accommodations for residents' disabilities, which may include physical modifications to units or exceptions to policies. The Americans with Disabilities Act requires that common areas and amenities in senior housing communities be accessible to those with disabilities. The Age Discrimination Act prohibits discrimination based on age in facilities that receive federal funding. Meanwhile, state landlord-tenant laws provide important protections around issues like eviction, security deposits, and habitability.
Exploring Living Arrangements
Many issues arise withing the context of specific living arrangements:
- Aging in Place
For many seniors, the desire to remain in their own homes is strong. Aging in place can provide a sense of comfort, independence, and connection to one's community. However, it also requires careful planning and support. Legal considerations for aging in place include home modification financing options like reverse mortgages and tax credits, which come with their own legal requirements and risks that must be carefully weighed. In-home care also involves vetting potential caregivers and establishing clear, legally sound contracts. Property tax exemptions or deferrals for seniors may be available but have specific legal criteria. Ensuring adequate insurance coverage and addressing potential liability hazards are also crucial. - Independent Living Communities
Independent living communities, which offer amenities, activities, and low-maintenance housing, are an increasingly popular option for active seniors. Key legal considerations include the complex lease or purchase agreements that govern these arrangements, which should be carefully reviewed with the assistance of an attorney to understand fees, services, and residents' rights and responsibilities. Selling an existing home and transitioning into an independent living community also has significant legal and financial implications, including potential tax consequences and the need to update estate plans. - Assisted Living and Memory Care
For seniors needing support with daily activities or experiencing cognitive decline, assisted living and memory care communities provide a higher level of care. However, the legal issues surrounding these options are particularly complex. Admission agreements are lengthy contracts that outline the services provided, fees, and policies around issues like involuntary discharge. Attorney review of these agreements is advisable to identify potential concerns. Residents' rights, which include protections around privacy, dignity, and freedom from abuse, are governed by state laws and regulations that families should be familiar with.
Memory care communities, offer services tailored to people with Alzheimer's, dementia, or other cognitive impairments, raising additional legal considerations. Attorneys must be able to counsel clients, understanding state regulations, or lack of it, as well as help the client understand the specific care offered. For example, is the facility staffed and willing to handle incontinency or behavior issues? - Nursing Homes
Nursing homes provide round-the-clock skilled nursing care for seniors with extensive medical needs, but the legal and financial issues involved can be daunting. Nursing home admission agreements are complex documents that attempt to govern every aspect of a resident's life and care. Careful legal review is a must, as many contracts include clauses that try to limit the facility's liability or require arbitration of disputes.
Paying for nursing home care is another challenge, with multiple potential sources including personal income and assets, long-term care insurance, and government benefits. However, navigating the eligibility rules and coverage limitations of Medicare and Medicaid is extremely complex. Medicaid has strict income and asset limits, and the spend-down requirements and look-back periods for asset transfers vary by state. Planning to ensure Medicaid eligibility while preserving assets for spouses and heirs often requires specialized legal knowledge. Meanwhile, monitoring and advocating proper standards of care in nursing homes is an ongoing concern, as violations of federal and state quality regulations are sadly common. - Continuing Care Retirement Communities (CCRCs)
For some seniors, the "tiered" approach of CCRCs, or Life Plan Communities, offer an appealing continuum of care from independent living to nursing care. However, the legal and financial considerations are the most complex of any senior housing option. CCRC entrance contracts are lengthy, detailed documents that govern the resident's rights and obligations throughout their entire stay, which may last decades. The contracts often involve substantial upfront fees, in exchange for the promise of lifetime care. But what happens if the resident runs out of funds? Ensuring that the terms of the contract are fair, and that the refund provisions are clearly understood, is essential.
Another key issue with CCRCs is the long-term financial stability of the provider. Because the CCRC model involves making commitments far into the future, the financial health of the organization is crucial. Thorough due diligence, including examination of the CCRC's reserves, debt levels, occupancy rates, and actuarial projections, before signing a contract is needed. Clients should understand that their deposits will be lost or severely reduced if the CCRC goes into bankruptcy and that religious or social institutions founding the CCRC will not be guarantors.
Financial Considerations
Paying for senior housing is a major concern for older adults and their families. The costs can be substantial, especially for options like assisted living, memory care, and nursing homes that involve high levels of care. Seniors' income from sources like Social Security, pensions, and investments is often insufficient to cover the full costs, requiring additional resources.
In many cases, seniors must tap into their assets, including savings, investment accounts, and home equity, to afford senior housing. The equity from the sale of a longtime home is often a key funding source. However, this requires careful planning to manage the proceeds, consider tax implications, and ensure that the senior has suitable alternative housing lined up.
Long-term care insurance is another potential funding source, but the policies are often complex, expensive, and have significant limitations. Premiums and benefits vary widely, and many policies have elimination periods, coverage caps, and other restrictions. A thorough review of any long-term care policy is essential to determine what housing and care costs it will cover.
For many seniors, family contributions from adult children or other relatives become necessary to make senior housing affordable. However, this raises many legal and financial issues for the family, including gift tax implications, Medicaid eligibility concerns, and the long-term impact on the contributing family members' own finances.
Conclusion
The legal and financial considerations around senior housing options are complex and consequential. Working with experienced elder law attorneys and financial professionals is essential to navigate this landscape. As our population continues to age, proactive planning and informed decision-making around senior housing will only become more crucial.