PDF DownloadHousing Options for the Older Client
By Lawrence A. Frolik, Walter T. Burke, and Michael A. Kirtland

Probate & Property Magazine: November/December 2008, Vol. 22, No. 5

Real Property|Trust & Estate


Lawrence A. Frolik is a professor of law at the University of Pittsburgh School of Law and the author of Residence Options for Older and Disabled Clients (ABA Publishing). Walter T. Burke is a founding partner of the Albany, New York, firm of Burke & Casserly, P.C., and chair of the ABA Senior Lawyers Division. Michael A. Kirtland is the managing partner of the Colorado Springs, Colorado, firm of Kirtland & Seal, group vice-chair of the Trust & Estate Division Elder Law, Disability Planning and Bioethics Group, and Section liaison to the ABA Senior Lawyers Division.

O n reaching retirement age, many people think about changing their housing accommodations. The present house may be larger than they need or it may be too expensive to maintain in light of limited retirement income. Some want to move to a warmer climate or to be near their children. Others have specific requirements such as a home without stairs. A few older clients may feel the need for supportive services available in an assisted living or continuing care retirement community.

Whatever a client’s needs and interests, a change in housing is fraught with emotional and financial challenges, and most clients will be focused on these immediate concerns. Yet a move to a new residence also presents both opportunities and risks for the client’s health and safety. When meeting with an older client who may be considering a move, the attorney should be aware of the many issues to be considered, issues that are too often ignored or not perceived by the client.

Age-Restricted Housing

Lawyers with clients past age 60 are likely to hear some of them considering a move into age-restricted housing, perhaps a large residential community like Sun City, Arizona, or possibly a condominium that allows sales only to older purchasers.

The popularity of age-restricted housing is reflected in various types of housing available only to the elderly. Such housing includes apartment buildings, retirement hotels, condominiums, mobile home parks, retirement subdivisions, villages, and even entire towns. The opportunity to interact with others who have passed through many of the same life experiences or who are facing similar opportunities or challenges makes such housing attractive to many older persons.

Age-restricted housing is so popular that it is specifically permitted by the federal Fair Housing Act (FHA), 42 U.S.C. § 3601 et seq., which permits age discrimination in housing “intended for, and solely occupied by, persons 62 years of age or older” or “intended and operated for occupancy by persons age 55 or older.” Id. § 3607(b)(2)(B), (C).

If the housing is exempt because it is intended solely for those age 55 or older, it must

  • have at least 80% of the occupied units occupied by at least one person age 55 or older,
  • publish and adhere to policies and procedures that demonstrate the intent to have the units occupied solely by those age 55 or older, and
  • comply with rules issued by the federal government that provide for verification by reliable surveys and affidavits that the housing meets the age requirements

Id. § 3607(b)(2)(C).

Some couples with a younger spouse prefer housing that requires only one person to be age 55 or older. Others like that option because it allows for a greater diversity of ages, but the housing is still occupied predominately by older individuals.

Individuals who want a more homogenous age profile usually prefer housing that requires all units to be occupied by residents age 62 or older. Such housing does not permit a couple to live in any unit if one of them is under age 62. The only exception to the 62-or-older rule is employees and their family members who live in the facility and perform substantial duties directly related to its maintenance or management. 24 C.F.R. § 100.303 (2008).

Congregate Housing

Many older clients consider moving into some form of group housing, often looking for supportive services. One popular term is “congregate housing,” which describes residences that provide private living arrangements, usually small apartments or cottages, and common areas for dining, socializing, and other activities. Residents live in their own apartments, so they can maintain a feeling of autonomy while being freed of the burdens of home ownership.

Most congregate housing consists of age-restricted condominium living combined with housekeeping for each unit. The common areas typically include meeting rooms and a poolroom, library, craft shop, swimming pool, and tennis court. Congregate housing resembles a planned community (although usually with condominium apartments rather than single-family detached homes or townhouses), with the common areas keyed to the interests and needs of the residents. Some congregate housing projects are operated by a residents’ council (much like a planned community); others are managed by the owner of the common areas. Depending on the arrangement, the residents either own or lease their units. If they own their units, they are subject to a monthly fee similar to any condominium owner.

Congregate housing provides a noninstitutional living environment with a modest amount of support. The residents must be healthy enough to live on their own and be self-sufficient because congregate housing usually does not offer health- care, in-unit assistance, or other forms of support. Individuals who need daily personal assistance are not candidates for congregate housing and should consider alternatives such as adult day care, assisted living, or continuing care retirement communities.

Assisted Living

Assisted living facilities are one of the fastest-growing forms of housing for the elderly, numbering more than 30,000 nationwide and housing more than a million residents. Assisted living is characterized by a homelike atmosphere that features individual rooms furnished by the resident (a few facilities offer shared rooms, but these are not popular even though they are less costly); common areas for recreation, socializing, and physical therapy; a common dining room that usually has sit-down meal service; and numerous staff, including nurses.

The term “assisted living” is in part a marketing term that replaces such older terms as “board-and-care home,” “rest home,” “old-age home,” and “personal-care home.” Board-and-care homes bring to mind small boarding homes, while assisted living facilities are larger, more modern facilities with more residents, more common areas, and more individualized care. The best assisted living facilities combine individual services and support for activities of daily living in a safe and attractive setting.

Residents of assisted living facilities almost always have individual apartments or rooms, although two residents may share a bathroom. The units are not large and usually do not provide cooking appliances, though some facilities do have small built-in refrigerators, microwave ovens, and sinks. Residents normally furnish their own living units, so the units are often filled with excess furniture and collectibles that the resident could not bear to leave behind.

There are one or more dining rooms, in which three meals are served daily. In many facilities, a bedtime snack is also provided, both for nutritional reasons and to monitor the residents. During hours other than mealtimes, the dining room often serves as a common meeting room for recreation or for concerts, lectures, demonstrations, or religious gatherings.

Facilities frequently have an on-site beauty parlor/barber shop and perhaps a small store for incidentals such as candy and toiletries. Many facilities have special rooms for physical therapy classes. For most residents, Medicare pays for the cost of the therapy.

Most residents need assisted living because they cannot perform one or more activities of daily living (ADLs), which are a set of indicators of the ability to care for oneself. Used throughout geriatrics and gerontological literature, ADLs are commonly defined as

  • toileting,
  • bathing,
  • eating,
  • dressing, and
  • transferring (the individual’s ability to get out of a bed or out of a chair on his or her own).

An individual who cannot perform one of these tasks without assistance is said to have an ADL deficit. Such individuals are good candidates for assisted living because they need custodial care or personal care, not medical care as provided by a skilled nursing home. Of course, many people have ADL deficits because of a medical condition, but the key distinction is whether the medical condition can be handled without the individual’s living in a nursing home.

State laws determine the kinds of residents who may be housed in assisted living facilities and usually prevent such facilities from admitting individuals who are bedfast because these individuals typically require a degree of healthcare that can be provided only in a licensed nursing home. See Robert L. Mollica, National Academy for State Health Policy, Aging in Place in Assisted Living: State Regulations and Practice 6–9 (2005), available at www.nashp.org/Files/aging_in_assisted_living.pdf (discussing Oklahoma regulations). State license requirements also prevent assisted living facilities from offering higher levels of healthcare, though most facilities can assist residents to take their medications. For many elderly, the need to be reminded to take medication and the need to be sure to take the right amount of medication may be reason enough to move into assisted living.

Assisted living facilities often house individuals with dementia on separate floors or wings of the facility, although a few new assisted living centers are dedicated solely to serving persons with dementia. Some facilities use ankle bracelets that trigger an alarm if a resident passes through a door leading out of the area. Others s ecure an entire floor or wing to prevent residents from wandering off-site. Corridors can be designed in a square to permit residents to walk and wander without leaving the premises. Inner courtyards permit access to the outdoors while keeping residents in a secure and safe environment.

A quality assisted living unit, on average, costs 50% to 60% of the cost of a nursing facility in the same geographic area. The cost of assisted living varies greatly depending on the quality of care and the degree of luxury offered. Generally, the facilities’ per diem rates range from $50 to $150.

Long term care insurance may pay benefits for a resident of an assisted living facility. Most newer policies pay for institutionalized care whether provided in assisted living or a nursing home—if the insured person has two or more ADL deficits. Most long term care policies also pay benefits for assisted living residents if the beneficiary suffers from a severe cognitive impairment, usually meaning dementia or Parkinson’s disease.

On entry to the facility, residents sign a contract in which they agree to pay a monthly fee. For the most part, such agreements are not subject to government oversight or regulation, so prospective residents must be sure that their contracts provide the type of services they want and expect. Some assisted living facilities also charge an “entrance fee,” which may not be refundable.

A prospective resident should carefully examine the admission contract to determine the services that are included and those that will be provided only with an extra fee. There is no standardized contract for an assisted living facility, so the contents, legality, and readability of contracts vary greatly from facility to facility. Any contract of admission should include a list of the services that the facility will perform for the base monthly rate as well as a list of additional services that can be purchased on a per diem or monthly basis. Because the resident may have to move temporarily into a hospital, the contract should state for how long and at what cost the room will be held. If the facility provides special units for dementia, the contract should state who makes the decision about whether the resident must move into such a unit.

Continuing Care Retirement Communities

Continuing care retirement communities (CCRCs) have become very popular, particularly for middle- and upper-income elderly. They attract individuals who wish to (1) live in a community with facilities designed for older people, (2) enjoy recreational and social activities with their peer group, (3) know there will be adequate support if they need assistance with daily living, and (4) have nursing home care available to them, often at a fixed or below-market rate. Individuals move to CCRCs with the expectation that they will be provided appropriate care for life. A move into a CCRC is usually the last move that the individual or couple will ever make.

A prospective resident signs a contract whereby the CCRC agrees to provide housing, a certain level of activities, and healthcare support in return for the resident’s payment of an entrance fee and monthly occupancy fees. Most CCRCs provide all utilities (except phone service), house cleaning, maintenance and repair of the unit, linen service, recreational facilities, organized clubs and entertainment, on-site nursing assistance (even for residents of the independent living units), and some meals. CCRCs typically include evening meals as part of the basic occupancy fee. Such meals are served in a restaurant setting. In more upscale CCRCs, the dining facilities can be quite elegant. Breakfast and lunch may be available for an additional, per diem payment. Many CCRCs offer additional services on a fee-for-service basis, such as special in-unit personal care assistance for independent living residents who do not wish to move to the assisted care unit.

CCRCs provide different levels of care, based on individual need. Typically, when residents move in, they are able to live independently. As they age or become infirm, they may gradually need assistance with daily living and, if necessary, nursing home care. The admission fee (usually high, but often refundable) helps support the capital costs of the CCRC and, more importantly, serves as a form of healthcare insurance as the facility draws down entrance fees to help pay for the care of its residents.

One of the chief attractions of CCRCs is that, in most cases, their fees do not rise or rise only modestly if a resident whose health declines must move from an independent living unit to the assisted care or even the skilled nursing care facility. The admission fees provide a pool of money to pay for the higher costs of providing care for these residents. A portion of a nonrefundable admission fee may be tax deductible as a medical expense under Code § 213. This insurance aspect of the CCRC is very popular because it both limits future exposure of the residents to the high costs of assisted living or nursing home care and ensures them an assisted living or nursing home “bed” should the need arise. Couples often move into a CCRC to assure that if one spouse must enter the nursing home, the other spouse will be living nearby.

Most CCRCs that offer nursing home care participate in Medicare and Medicaid. To protect itself from residents’ divesting resources to qualify for Medicaid, the CCRC may insist that residents promise not to divest assets below a set amount. A Maryland court, however, refused to enforce such an agreement when the resident was admitted directly into the nursing home facility of a CCRC. Oak Crest Village, Inc. v. Murphy, 841 A.2d 816 ( Md. 2004). The court cited state law that prohibited conditioning admission to a nursing home on any agreement that the resident would not otherwise engage in for lawful financial planning reasons, including divestiture for the purpose of qualifying for Medicaid.

The contract that individuals sign on entering a CCRC, often called a “residence and care agreement,” describes the types of care and obligations owed by the CCRC and the fees to be paid by the resident. There is no “standard” contract, though if such contracts are subject to state law they may be somewhat uniform among CCRCs within that state. There are three types of contracts: extensive agreements, modified agreements, and fee-for-service agreements. They are distinguished by how they treat payments for health care.

Under an extensive agreement, the community offers unlimited specified health services. Regardless of the level of care a resident needs, the monthly fee is not raised unless all the residents’ fees are raised, which in actuality usually occurs annually.

A modified agreement has an annual cap on the number of days in assisted living or the nursing home provided at the monthly fee. If the resident requires such care for longer than the cap, an additional daily fee is charged.

Increasingly common is the fee-for-service agreement, under which the monthly fee pays only for independent living and the resident pays for additional health-related services as they are provided. Under this plan, however, residents face the possibility of significantly higher fees if their health deteriorates. Consequently, some individuals who enter a CCRC under such agreements maintain long term care insurance, which helps pay the difference between the monthly fees for independent living and for the nursing home.

No federal regulations govern independent living or assisted living as offered by CCRCs. The nursing home components of CCRCs, however, are subject to regulation by the federal government because these components accept reimbursement for the cost of the nursing home care from Medicare.

States regulate CCRCs in various ways. One common method of regulation is by a state’s department of insurance, on the basis that the CCRC provides insurance-like coverage because the up-front fee can be considered a prepayment of health costs. Many states have laws that govern contracts for care or room and board for a year or more. E.g., 40 Pa. Cons. Stat. § 3201 et seq. Although not specifically designed to regulate CCRCs, these laws do apply and may offer some protection or rights to CCRC residents. These laws sometimes provide residents (1) the right, under certain conditions, to cancel the contract, (2) protection from arbitrary discharge and transfer, (3) the right to healthcare even if the resident becomes insolvent, and (4) financial safeguards for the entry fee.

States heavily regulate the nursing homes in CCRCs, as they do all nursing homes. Some states also regulate assisted living providers, so the CCRCs are subject to any regulations that apply to freestanding assisted living entities.

State laws usually require complete disclosure of the community’s contractual obligations and, probably, its ownership and the residents’ payment obligations. E.g., N.Y. Pub. Health Law § 4600 et seq. Often, the laws require that the admission contract detail the services to be provided. State laws may also create other rights for residents. E.g., Fla. Stat. Ann. § 651.083.

States may regulate transfers within the CCRC. For example, a resident may object to being forced by the CCRC to move from an independent living unit to an assisted living unit or to the skilled nursing care facility. State regulations may provide standards or procedures that help to determine whether the resident’s health has deteriorated enough to justify the move. Some CCRCs give the resident the option of either moving to an assisted living unit or remaining in the independent living unit and, for a fee, receiving additional assistance. This permits the resident to remain in what has become home but still receive daily assistance.

State law may regulate the conditions under which a CCRC may terminate the contract with the resident and force the resident to move out of the CCRC. Absent state regulation, the contract of admission governs.

Private Caregivers

Many older persons who wish to remain at home require personal or custodial care rather than home healthcare. The duties and training of the providers of these services vary depending on the needs of their employers. They can be called caregivers, attendants, companions, homemakers, or housekeepers. Their duties focus on personal care within the home such as helping with bathing, feeding, cooking meals, cleaning, shopping, and providing transportation. They may also help the older person get out during the day by walking with them or assisting them in a wheelchair or with a walker.

Personal attendants or caregivers are not necessarily licensed or trained, nor do they have any particular qualifications. Older persons who receive help in the home must be concerned about their physical safety, emotional well-being, and financial security because when an older person invites someone into the home, that older person is at risk of abuse, neglect, and exploitation. Even if the caregiver is licensed by the state, the older person is not assured of his or her personal safety.

An older person who wants in-home care can hire someone independently or through an employment agency, a state or local government entity, or may rely on a geriatric care manager or agency to provide a caregiver. Hiring a caregiver directly, without going through an agency, may seem to be the easiest solution, but it involves significant risks including exposing the older, vulnerable person to thieves, con artists, embezzlers, and other exploiters.

Personal interviews of a potential caregiver require inviting strangers into the older person’s home, presenting the opportunity for criminal activity or later exploitation if the individual proves to be unreliable or engages in criminal activities. The use of a local employment agency, while costly, at least ensures that the applicants’ qualifications will be examined and that credit and criminal checks will be performed. (There is little reason to use an employment agency that does not guarantee such background checks.)

In many communities, geriatric care managers or agencies are available to plan services for older persons. Some care managers merely produce a plan; others help find individuals to carry out the plan; and in a few cases, managers may refer applicants or actually subcontract individuals to provide services. The cost of a geriatric care manager or agency varies greatly. Individual care managers usually charge an hourly fee to design a plan of needed services and an additional fee to help locate and hire a caregiver. A geriatric care agency performs similar services and may even be able to provide a caregiver who is under contract with the agency, though the cost in such cases is usually higher than if the caregiver is hired directly. In most cases, using an agency is preferable both for reasons of safety and the quality of the caregiver. The agency should be asked about whether a deposit is required before service begins, the frequency of billing, and how the agency handles complaints. If, for example, the individual is unsatisfied with a specific caregiver, can the individual ask for a change of personnel? What are the rights of the individual if unsatisfied with the services provided? Are refunds for poor service possible? Who is the supervisor and to whom should requests or complaints be directed? What happens if the caregiver does not show or calls in sick? The agency should explain how it checks the background of its employees and should be prepared to provide the potential employee’s file, so the older person can inspect the prospective caregiver’s qualifications. Before agreeing to hire an agency-provided caregiver, the individual should arrange for a personal interview because compatibility of the client and the caregiver is critical.

An older person who hires a caregiver directly, even if recommended by an agency, should prepare a written contract that clearly explains the duties and obligations of the caregiver and the responsibilities of the older person as the employer. If the caregiver is hired through a geriatric care manager or a geriatric agency, such a contract should be the norm.

From the employer’s standpoint, a written contract is extremely important and should cover three essential points:

  1. the obligations of the employee,
  2. the responsibilities of the employer, and
  3. the termination rights of both parties.

Hiring a household caregiver may create an obligation to withhold and pay various payroll taxes, including unemployment compensation and Social Security. The duty to pay such taxes hinges on whether the caregiver is an employee or an independent contractor. If the caregiver is an independent contractor, the older person has no obligation to pay payroll taxes, but he or she must provide an IRS Form 1099 to the caregiver, with a copy to the IRS, at the end of the taxable year. In most instances, however, a caregiver will be an employee with the attendant requirement to file the many federal and state tax forms. For many, that burden is enough to warrant hiring a caregiver through an agency that will take care of the paperwork.


Attorneys who deal regularly with older clients need to understand their client’s housing choices because where an older person lives and the appropriateness of that housing play critical roles in the client’s quality of life. To be an effective counselor requires knowledge about those housing options, an understanding of what they offer to an older client, and a willingness to assist the client to select housing that best suits the client’s values and needs.


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