Competency 16 Section 3

Question 1

1. A continuing care retirement community (CCRC) is a facility that provides residents with housing and services that range from independent living to care for living at the end of life.

Answer 1

True. (LO 16-3-1)

Question 2

2. Clients will be eligible for admittance to a CCRC regardless of their health condition.

Answer 2

False. Clients may not be eligible for a CCRC if they are in poor health. (LO 16-3-1)

Question 3

3. Married couples may have different health care needs as they age and the CCRC can accommodate this

Answer 3

True. (LO 16-3-1)

Question 4

4. A type B/modified agreement CCRC contract provides for a monthly fee regardless of the level of care for life and an upfront fee that is the largest (all else being equal) of all types of CCRC contracts because the client is prepaying some medical expenses

Answer 4

False. A type A/extensive contract provides for a monthly fee regardless of the level of care for life and its upfront fee is the largest (all else being equal) of all types of model s because the client is prepaying some medical expenses. The type B program/Modified Agreement is a contract where the client gets a certain amount of time in nursing care and then pays the market rate for nursing care. The type B program is not as comprehensive as the type A program. It only provides levels of medical care for the same price for a limited time. (LO 16-3-1)

Question 5

5. A type A/extensive CCRC contract can substitute for long-term care insurance

Answer 5

True. (LO 16-3-1)

Question 6

6. In a fee-for-service CCRC contract the client will pay the market price for each level of care he or she receives

Answer 6

True. (LO 16-3-1)

Question 7

7. CCRCs typically do not provide many amenities for residents

Answer 7

False. CCRCs provide a variety of amenities including: meals, social events, transportation, on-campus pharmacies, recreational facilities, gyms, housekeeping and security and emergency care. (LO 16-3-1)

Question 8

8. The monthly fee for a CCRC is locked in at purchase and will not rise as long as the client remains in the facility

Answer 8

False. Monthly fees usually increase on an annual basis and planning for this is an important consideration. (LO 16-3-1)

Question 9

9. The levels in CCRCs are typically independent living, assisted living, and skilled nursing home care.

Answer 9

True. (LO 16-3-2)

Question 10

10.Facilities, fees, and services vary widely from CCRC to CCRC. For example, fees may be refundable or not refundable, monthly fees will vary depending on the dwelling unit that is chosen, and both the upfront fee and the monthly fee will vary depending on the degree of health care services that are offered

Answer 10

True. (LO 16-3-2)

Question 11

11.In an equity model, CCRC residents do not pay an entrance fee, however, they pay monthly fees that increase to market rates as they require higher levels of care.

Answer 11

False. In an equity model CCRC residents pay an initial fee deemed to be an acquisition cost for their dwelling unit. They also pay monthly fees. When they move to a higher level of care, the facility “resells” their unit and the resident receives their initial investment back. If the CCRC is unsuccessful in selling the unit or sells it for less than its original cost, the client bears the loss. It is a type D CCRC contract where residents do not pay an entrance fee, but instead pay monthly fees that increase to market rates as they require higher levels of care. (LO 16-3-2)

Question 12

12.Pre-purchased long-term care (LTC) insurance can assist residents of a type B, C, D, or equity CCRC because the LTC insurance will step in to cover the additional costs associated with assisted living and skilled care

Answer 12

True. (LO 16-3-2)

Question 13

13.The CCRC facility should be accredited by the Commission on Accreditation of Rehabilitation Facilities (CARF) because their review is extensive and addresses the fiscal soundness of the facility as well as safety, management, and other factors

Answer 13

True. (LO 16-3-2)

Question 14

14.As long as the client is relocating to be with or near family, he or she will find it easy and inexpensive to leave a CCRC facility

Answer 14

False. Clients need to know that voluntarily leaving a CCRC is an expensive proposition. If there is a possibility that they might want to move closer to family or if they are thinking of a change in climate, they need to take that into consideration before they enter the CCRC. (LO 16-3-2)

Question 15

15.A portion of the entrance fee and the monthly fees for a type A/extensive care CCRC facility include payment for prepaid health care and thus qualify for the medical deduction on schedule A of the 1040 tax form.

Answer 15

True. (LO 16-3-3)

Question 16

16.The planner and client should optimize the tax advantages by selecting the appropriate year to pay the entrance fee for a CCRC

Answer 16

True. (LO 16-3-3)

Question 17

17.The type B CCRC facilities may or may not recognize a health care component in their entrance fee or monthly fees and thus may not yield any deductible medical expenses.

Answer 17

True. (LO 16-3-3)

Question 18

18.The equity model CCRC entrance fee is 50 percent deductible as a medical expense

Answer 18

False. Because the entrance fee for the equity model CCRC is basically a deposit on a unit, there is no tax saving relating to health care. (LO 16-3-3)

Question 19

31. Residents pay an initial fee deemed to be an acquisition cost for their dwelling unit. They also pay monthly fees. When they move to a higher level of care, the facility “resells” their unit and the resident receives their initial investment back. These statements describe which type of Continuing Care Retirement Community (CCRC)? (LO 16-3-2)
A. Equity models
B. Fee for service models
C. Type A models
D. Type B models

Answer 19

31. The answer is A. With fee for service models (answer B), residents pay an entrance fee and monthly fees. When they move to a higher level of care, they will pay current market rates for that level of service, which will result in higher fees. With type A models (answer C), entrance fee and monthly fees include a prepayment of health care benefits. Monthly fees do not increase because of a resident’s move from one level of care to another. With type B models (answer D), entrance fees and monthly fees must be carefully considered in the terms of the contract. They may include either a discount for higher levels of service or a period of time when there are no changes in fees for the higher level of care

Question 20

58. Which of the following statements about applying to a continuing care retirement community (CCRC) is (are) correct? (LO 16-3-1 & 16-3-2)
    I. Timing the client’s application is an important consideration. In some cases, clients should consider applying to get on a waiting list.
    II. The client needs to be pre-screened to see if they are healthy enough for a CCRC.
    A. I only
    B. II only
    C. Both I and II
    D. Neither I nor II

Answer 20

58. The answer is C. Both statements are correct.

Question 21

84. All of the following statements about a continuing care retirement community (CCRC) are correct EXCEPT (LO 16-3-1)
    A. A CCRC is a facility that provides residents with housing and services that range from independent living to care for living at the end of life.
    B. Clients may not be eligible for a CCRC if they are in poor health.
    C. In fee for service CCRCs, the client will pay the market price for each level of care.
    D. Type A/extensive contract CCRCs provide the client with a certain amount of time in nursing care and then the client pays the market rate for nursing care

Answer 21

84. The answer is D. The type A/extensive contract provides nursing care for life. The upfront fee is the largest (all else being equal) with this model because the client is prepaying some medical expenses. On the other hand, Type B/modified agreements provide the client with a certain amount of time in nursing care and then the client will pay the market rate for nursing care