Financial Surprises Retirees (and Those About to Retire) Want to Avoid
If you’re looking for a safe nursing home for your loved one, the federal government’s new comparison tool is helpful starting point, but long-term care experts advise digging a bit deeper.
The Centers for Medicare and Medicaid (CMS) in October introduced an eye-catching alert icon on their online Nursing Home Compare tool to signal that a particular facility had recently been cited for abuse or neglect. Before the icon’s debut, consumers could learn about a nursing home’s history of abuse by looking through its health-inspection reports, which are also available on Nursing Home Compare.
The icon, a white hand within a red
circle, appears for facilities cited in
the past year for abuse that led to
harm of a resident and/or those cited
in each of the past two years for abuse
that could potentially have led to a
resident’s harm. CMS said that the
symbol, updated monthly, is meant to
supplement its five-star rating system
and help consumers “develop a more
complete understanding of a facility’s quality.”
The Wall Street Journal reported last month that 760 of the database’s 15,262 Medicaid- and Medicare-certified facilities — nearly 5% — had been marked as such.
“Our new abuse icon helps patients make the best choices for their care, incentivizing nursing homes to compete on quality,” CMS administrator Seema Verma said in a statement emailed to MarketWatch. “While fewer than 5 percent of the more than 15,000 nursing homes participating in Medicare and Medicaid will be subject to the icon, CMS nevertheless urges all providers to focus on preventing abuse.”
Robyn Grant, the director of public policy and advocacy at the National Consumer Voice for Quality Long-Term Care, said she thought the new icon would serve to grab public attention. It also serves as an important incentive for nursing homes to examine their policies and procedures and work to prevent, respond to, and report abuse and neglect, she told MarketWatch.
“Abuse is just a persistent and pervasive problem in nursing homes,” Grant said. “I just think we do need something that’s startling enough to get people’s attention.”
But the warning drew complaints from the American Health Care Association (AHCA) and LeadingAge, two nursing-home industry associations. The groups argued that the icon gave the wrong impression — the visual urges consumers to avoid a facility altogether rather than investigate it further, they said — and didn’t account for facilities having taken corrective action after a citation.
“We feel that that icon is not helping a consumer, and that there’s much more information about an organization either being compliant or noncompliant,” Janine Finck-Boyle, LeadingAge’s vice president of regulatory affairs, told MarketWatch. She questioned whether consumers would actually look any deeper to learn about a facility after seeing the bright-red icon.
Mark Parkinson, AHCA president and chief executive, suggested in a statement that the icon had the potential to create “unnecessary worry” and “decrease access to care.”
Icon controversy notwithstanding, abuse in nursing homes frequently goes unreported. The Health and Human Services Department’s Office of Inspector General this year estimated that one in five high-risk hospital emergency-room claims for Medicare beneficiaries living in nursing homes in 2016 “were the result of potential abuse or neglect.”
“We determined that [nursing homes] failed to report many of these incidents to the Survey Agencies in accordance with applicable Federal requirements,” the OIG review added.
If you’re looking for a nursing home for a parent, grandparent or other loved one, you might be preoccupied with any number of safety concerns: abuse and neglect, falls, infection or even unnecessary use of antipsychotic medication. But experts say there are steps you can take to help minimize risk. Here’s what you can do:
Check Nursing Home Compare, but seek additional context. The government site lists the 15,000-plus nursing homes nationwide that participate in Medicare and Medicaid. Some 97.5% of nursing homes in the U.S. were Medicare-certified in 2016, while 95.2% were Medicaid-certified, according to a February report from the National Center for Health Statistics.
While the database can help narrow down possibilities, there are lots of other factors to take into consideration, Grant said. For starters, read the facility’s actual survey report and then ask the facility what it has done to correct any problems and ensure they don’t happen again, she said.
Lisa Laney, an Asheville-based aging life care professional and board member for the nonprofit Aging Life Care Association (ALCA), agreed that Nursing Home Compare was a “starting point.” “There’s nothing better than firsthand knowledge from someone who’s had a family member in that community recently,” she said. “What that facility was like last year may be totally different from this year.”
Visit the facility — and not just during its optimal moments. “You should always set up a tour with an admissions person, and then you should go back without the admission person, because you want to see what really goes on,” said Debbie Fins, another aging life care professional based in Worcester, Mass., who also sits on ALCA’s board. Late morning on Saturday or Sunday will give you a sense of a facility’s “weakest point” in terms of staffing, Laney said.
Observe how staff and residents interact; whether residents seem engaged in activity or just slumped over with nothing to do; whether residents appear well-groomed; and how long it takes for staff to respond when a resident needs help, Grant said. At mealtime, pay attention to whether residents have a choice in what they eat, how food is served, and whether aides are assisting those who need help eating, Fins said.
Use your nose, Fins added: People have accidents, but is there a strong odor of urine or staleness in the air? Do people smell like they haven’t been cared for?
Research how well a facility is staffed. Ask about staff turnover rate, Laney said. “The biggest complaint we hear, bar none, is that there aren’t enough staff to take care of residents,” Grant said. Nursing Home Compare provides staffing charts for comparison.
Staffing can have a big impact on safety, Grant added: Neglect can stem from an inadequate number of people — often overworked and overwhelmed — available to provide care. Abuse, however unjustified, can occur when staffers are under tremendous pressure due to workload.
Experts recommend 4.1 hours of “direct-care” nursing time per resident a day, a number that includes time spent with nursing assistants, licensed nursing staff and registered nurses, Grant said. The New York-based Long Term Care Community Coalition offers state-by-state data on facilities’ direct-care staffing levels.
Meet with the nursing-home administrator and director of nursing. “They’re the two most important people for establishing the culture of that entire workforce,” Laney said. Take notice if the higher-ups seem unapproachable or cold, she said, as that could provide a window into how they treat staff.
Assess the potential for abuse. Ask about the facility’s policy for male staff members providing intimate care for female residents, Laney said, and how it handles such situations on short-staffed days. Ask what staff members’ anti-abuse training entails, Finck-Boyle added — as well as how exactly abuse allegations are reported and investigated, how family members are notified of an incident, and what preventive measures the facility takes.
Check CMS’s list of special focus facilities (SFFs), or nursing homes with “a history of serious quality issues” that receive extra attention from CMS. The government lists nursing homes that have been recently added, have or haven’t improved, and qualify as SFF candidates, among other categories. “All things being equal, if you have a lot of candidates in an area, I would probably stay away from the special focus facility,” Grant said.
Contact your national, state or local long-term care ombudsman program, a network that advocates for nursing-home residents. Ombudsmen can provide information on their experiences with various facilities, Grant said, and give you a general sense of the types of complaints they’ve received and how responsive a facility has been.
Consider a facility close to family and friends. “Finding a place that’s geographically convenient for people to visit regularly is something to keep in mind,” said Fins. “The more family or friends are visible in a facility in general, the better care people get.” Facility staff will know that “someone’s watching,” she said, and a family member can also pick up on subtle changes like weight loss or behavioral shifts.
If you wind up choosing a facility far away from family, try to enlist help from a care manager (who can act as an advocate for folks caring for aging family members), neighbors or fellow churchgoers, Laney suggested. And consider that pairing your loved one with a roommate could potentially provide “another set of eyes and ears,” particularly if she or he has conditions like memory impairment or trouble communicating.
Seek insight from a nursing home’s family council, a voluntary group composed of residents’ family members who voice concerns and advocate for improvements. Ask during a tour of the facility whether there is an active family council and who its leaders are, Finck-Boyle said.
Don’t be seduced by bells and whistles. “For someone living in those four walls, the only thing that matters is the quality of the staff that’s taking care of them — period,” Laney said. “The beautiful landscaping outside your window doesn’t matter if there’s nobody to help you pee in a timely fashion, and with dignity and compassion.”
If your loved one has dementia or Alzheimer’s disease, ask whether staff are trained in the basics of Alzheimer’s and dementia care, and provide care based on a person’s individual needs, said Doug Pace, the director of mission partnerships for the Alzheimer’s Association. “It is about balancing safety and autonomy for those folks,” he said.
Ask about the facility’s policy on using antipsychotic medications and its non-pharmacological approaches to care, Pace added. Patient advocates today warn about the dangers of misusing antipsychotic medications to treat dementia patients’ behavioral symptoms.
To the extent possible, start your research in advance. “If you have a loved one who is declining, and you are concerned that in the future they’re going to need nursing-home care, now’s the time to be looking — not when they’re in the hospital and you have to make a decision in 24 hours,” Fins said.
Bankrate
10 ways to get out of debt
If you're always frustrated that your budget never quite works out the way you want it to, maybe your problem lies in the straightforward concept and yet murky world of budget percentages.
That is, perhaps you're thinking in dollars and not sense. You know you're going to spend a certain amount of money in a given month on groceries or gas, for instance, but you haven't asked yourself if that's too
high of a percentage for your budget.
For instance, it may seem reasonable
to pay $500 a month for your grocery
bill, but if that was 45% of your
monthly income, any economist
would tell you that you're spending
too much and need to start clipping
coupons and looking for sales.
Budget percentages can help
improve your budget and cash flow, and reduce a lot of financial stress.
Breakdown of budget percentages
There's no right or wrong way to do this. Nobody's going to haul you into a financial jail if you're breaking these rules, but many experts suggest splitting up your budget in this way:
Housing: 25%
Insurance (including health, medical, auto, and life): 10%
Food: 10%
Transportation: 10%
Utilities: 10%
Savings: 10%
Entertainment (anything fun): 10%
Clothing: 5%
Miscellaneous: 10%
Again, that's one way to do it. Some financial experts suggest donating money, which may ultimately be the "miscellaneous" category. Or maybe "miscellaneous" should be "debt," if you have a lot of debt payments, like credit cards and student loans. If it makes things easier for you, you could eliminate "utilities" and lump them in with "housing," and possibly make the percentage higher, from 25% to 35%, since the utilities go hand in hand with where you live.
Think of these categories as buckets. That is, you may want to count your mortgage payment in the housing department, but also your property taxes, homeowners association fees and really anything that contributes to your expenses of keeping a shelter over you and your family.
The idea here is that you want to try and account for as many regular expenses as possible and put them in some category – so you are keeping track of everything. Some things that can't be categorized, like the goofy knickknack you bought at a flea market, would likely go into "miscellaneous."
Make sure the math adds up. Kind of obvious, but it should be said. If your budget percentages add up to, say, 120%, or even 101%, and you follow the financial path you've laid out, you'll struggle with your cash flow and will lose money every year.
For instance, Stephanie Hammell, a wealth advisor of Provence Wealth Management Group, suggests that everybody's housing percentage – which would include things like housing association fees and property taxes – should be less than or equal to 28%, as opposed to 25%.
"If you're above that, you know that you better be budgeting less in other areas to make up for that shortfall," she says.
Be realistic. You might be tempted to eliminate "entertainment" or reduce the clothing budget to next to nothing. That may work for a while, but you're probably setting yourself up for failure, according to Fred Hubler, founder and president of Phoenixville, Pennsylvania-based Creative Capital Wealth Management Group.
"Many people who budget think of it like a diet. They'll restrict spending like they restrict eating. When you're on a diet, there's a part of your brain that will justify eating the chocolate cake at two in the morning because you've been restricting your calories all day," Hubler says.
Money can work the same way, Hubler asserts. If you cut back on buying the fun stuff, eventually you may splurge and end up overspending and wrecking your budget.
Remember taxes. That is, Hubler says, as you're determining your budgeting percentages, your budget should look at your finances after taxes are removed from your paycheck – and not before.
Simplify your budget percentages. If splitting up your budget into a lot of little budget percentages seems confusing, you could customize your budget so that it's far simpler. For instance, Ryan Moore, founder and CEO of Kingman Financial Group in Corpus Christi, Texas, likes to go with what he calls his "three-bucket approach: 30% for tomorrow, 30% for taxes and expenses, 30% for today." Do that, he says, and you'll have 10% leftover for rewards.
Moore says that the bucket for tomorrow is the money you save for retirement, your emergency fund, your life insurance and anything that relates to the future.
The bucket for taxes and expenses is, well, taxes, and expenses that are important and you need to pay, even if you could survive without them – such as your homeowners insurance and car insurance.
"These are the things that will be a constant in life," he says.
"The third bucket I call the today bucket. Thirty percent applied to housing, automobiles, clothing and daily necessities," Moore says.
He adds that you may be thinking that 30% of your budget for today's expenses is too little, and that you'll need to raise it higher, but Moore asserts, "if you set this thought as a guideline, then you are almost guaranteed to achieve the purpose of budgeting, leading you to financial freedom."
Budgeting is all about guidelines, and it's OK to color out of the lines, as long as you're aware you're doing it. The important thing is following a formula that's right for you, whether that's divvying up expenses into budget percentages or buckets or something else. In other words, what your budget looks like often isn't as important as the fact that you are budgeting.
Budget guidelines
If you retire before you’re eligible for Medicare and don’t have coverage through a spouse’s employer or other group plan, you’re on your own for health care—and it may not be cheap. Quit working at age 55, for example, when you’re still 10 years away from Medicare eligibility, and your coverage in the individual market may cost hundreds of dollars more than Medicare each month. “Having private insurance is just so expensive,” says Tiffany Beard, a financial planner with Wealth Enhancement Group, in Jacksonville, Fla.
That’s particularly true if you don’t qualify for premium tax credits on the Affordable Care Act insurance exchanges. Early retirees may be able to tweak their retirement drawdown strategy to qualify for those tax credits.
If you had employer health coverage and you’ve stopped working, you may be eligible for Cobra coverage. But be sure you understand you’ll be paying 110% of the entire cost, not just the smaller premium you paid while working. And Cobra is often limited in length; you may only be eligible for a year to 18 months.
Louise Bryant, 59, founder of Financial Spyglass, a fee-only comprehensive planning firm in Rye, N.Y., and her husband both have small businesses and are no longer on their previous corporate health plans. Until recently, they paid $3,400 each month in Cobra premiums, which was much higher than their monthly health care cost under their corporate health coverage. And finding a plan on the Affordable Care Act exchanges hasn’t been easy. Even getting the information you need to coordinate with your doctors can mean numerous phone calls, emails and even office visits. “It’s a lot of work to wade through the options for coverage after Cobra and before Medicare as small business owners,” she says.
How to tackle it: Check with your state to see how long you may be eligible for Cobra. For instance, if your coverage is from an employer based in New York state, you may be eligible for up to three years total of coverage under Cobra rather than the more typical 18 months. Bryant eventually found a plan for 2019 for $1,896, or $948 each, per month to cover herself and her husband. As of December 2019, her husband is covered by Medicare. And she has found one plan for 2020 that her doctors accept as “in network” that will be $1,137 a month. “It can work,” she says.
Alternatively, find a part-time job with health benefits; Beard says one client started working at a Publix grocery store for the benefits. If you have a health savings account, fund it to the maximum now so you can use it in retirement.
Surprise No. 4: I Retired Early, and Health Care is Expensive and Hard to Get
You thought you had estimated your spending needs carefully before retirement, but you’re tapping your nest egg more often than expected. There’s the out-of-pocket costs for the hip replacement you didn’t expect or for the air conditioning unit that finally gave out. Watching your money dwindle away interferes with what are supposed to be your carefree years. Retirees regularly underestimate their costs in retirement, planners say. New Orleans retiree Susan Garcia, for example, says she “didn’t want to work until age 84” and tried to plan carefully for retirement with her husband, who had retired about 15 years before she did.
But they still encounter expenses they can’t always plan for, such as a new roof on the house and other maintenance issues.
How to tackle it: Creating a retirement spending budget and sticking to it are just as important as in your working days or when you were raising a family. Include everything from expected future costs for long-term care to everyday spending. Garcia and her husband, for example, researched local assisted-living facilities with their financial planner, Lauren Lindsay, to see what they could afford, and then included some $4,000 a month for care in the budget. Garcia also now factors in money for emergency maintenance and other needs, which offers some peace of mind, she says.
Surprise No. 5: My Nest Egg is Disappearing Faster Than I Thought it Would
You may feel set for retirement as you start out, but covering health costs in your early years can look much different than paying for care when you are older and ill. Even if you have long-term-care insurance, it will cover only a portion of your care. Many people also wrongly assume Medicare covers long-term care—but it doesn’t, except in very limited circumstances. And waiting until a spouse or parent needs help before figuring out how to pay for it may leave you scrambling for solutions and forced to pay even more for emergency help.
Sherry McKinney, a financial planning professional with Stearns Financial Group, in Greensboro, N.C., dealt personally with the long-term-care-cost dilemma. Her mother had spent down her assets, and McKinney was going to step in and pay the costs of assisted living for her. Her mom fell and ended up in nursing care instead, “but when you are facing the payment of $3,000 to $4,000 a month, it is daunting and concerning,” McKinney says. “I had no idea that my mom would be in this weird zone where she makes too much money to qualify for assistance, but nowhere near enough to pay the cost of assisted living.”
How to tackle it: If you have an extended family and it’s financially possible, you may need to have a family meeting and figure out whether everyone can pitch in for care. McKinney’s family—all four adult children and 10 adult grandchildren—decided to ask all its members to consider helping, even just a small amount on a monthly basis. She also regularly sees her own clients doing the same.
Alternatives can include having the children purchase a life insurance policy with a long-term-care rider for their parents, keeping in mind that this needs to be done before care is needed. The children who pay the premiums on the policy should be designated as beneficiary of the life insurance in the event the parents don’t need long-term care, McKinney says. Also, investigate whether you or a loved one might be eligible for veterans benefits or other assistance. Start your search at BenefitsCheckup.org.
Surprise No. 6: Long-Term Care is More Costly Than I Imagined