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Living Without Limits

Podcast #3: Is the juice worth the squeeze?

What are the financial, social and health benefits of living in a life care community like The Arboretum Villas at Plymouth Place? Chris Manderfield, a CPA at CliftonAllenLarson, or CLA, discusses all the hot topics including tax codes, estate planning, health security and how living in a life care community can add years of enjoyment to your life. “You can’t necessarily always put a number on life enjoyment, but to put yourself in a setting where you can continue to grow is just really great,” said Chris.

FOLLOWING IS A TRANSCRIPT FROM THE PODCAST:

Nitsa Foundos:
Hello. Welcome to Living Without Limits our fun and informative podcast about the Arboretum Villas at Plymouth Place here in La Grange Park, Illinois.

I’m your host Nitsa Foundos and joining me today are Mr. Jay Biere, CEO of Plymouth Place and the Arboretum Villas along with a special guest, Chris Manderfield, CPA, at CliftonLarsonAllen Allen or CLA in Oak Brook, Illinois.
Welcome Jay and Chris.

Jay Biere:
Okay. Nitsa, thank you. Chris, I really want to thank you for being a great partner and so glad to have you here today at the podcast and to partner with you.

Chris Manderfield:
Absolutely. Happy to be here. Thank you so much for having me.

Nitsa Foundos:
Today’s podcast is really about the financial, social and health benefits of living in a life care community. Like The Arboretum Villas. And there’s so much to know. That’s why we’re excited to have Chris joining us today. Chris, please tell us about yourself.

Chris Manderfield:
Yeah. My name’s Chris Manderfield. I am a healthcare principal with CLA or CliftonLarsonAllen, and I focus on senior living in care and other healthcare providers. My background is traditional accounting and finance. By trade, I’m technically a CPA, but I spend 100% of my time working with healthcare providers. I really love the work that they do, and I focus here in the Chicagoland region. Been doing it for about 17 years now.

Nitsa Foundos:
How long have you been overseeing Plymouth Place?

Chris Manderfield:
Yeah. We’ve had the fortune of knowing Plymouth Place for probably about eight years or so now, and so have been helping them with a variety of services when the need comes up.

Nitsa Foundos:
That’s great, Chris. Before we move further, I want to explain to our audience what a life care plan is really all about. Jay, I think you should take this one. What do you think?

Jay Biere:
Yes. Life plan, what is that? Another way to say it is we are a continuous care retirement community. Of course, people come in independently and live well through all the experiences, whether that be culinary, wellness, exercise, physiology, all the things that are happening, but as we know, we age in place and then there’s opportunity for people to go to what we call the higher level of living. That would specifically be assisted living, memory care, transition unit, rehab on an outpatient basis and inpatient, and skilled care. Of course, the opportunity here is really to care for you and to live well.

Nitsa Foundos:
Jay. I really like that explanation, and there’s no sooner time than to invest in yourself and in your future. This is all about planning.

Jay Biere:
Yes, very much so. A lot of people don’t know about this, and Chris is going to talk about this just in a little bit with regards to the specificity, but the IRS does allow for a tax deduction with regards to a portion of your monthly service fee and the non-refundable portion of your entry fee.

Nitsa Foundos:
So Chris, what are the financial benefits of living in a life care community like the Arboretum Villas? Could you help us out a little bit?

Chris Manderfield:
Happy to do that. We’ll try to keep this pretty high level and not get real into the weeds and the details and bore everyone with tax code. As Jay alluded to, there’s some specific guidance that’s out there as it relates to the tax impact for individuals that can be a really big benefit for them should they choose to live in a life plan community.

One of the most significant relates to the monthly service fee. The monthly service fee is going to be the amount that an individual pays on a monthly basis, and that covers a variety of the services that they receive. Because of some of the nuances of the tax code, there’s actually a portion that allows an individual to deduct a portion of that monthly service fee on their individual tax return.

Jay Biere:
We know last year the deduction was about 35%. If you will, and clarify this, Chris, 35% of your monthly service fee can be deducted from your taxes. Is that correct?

Chris Manderfield:
That’s right. Yeah. You would certainly want to make sure you’re working with a tax professional and go through that analysis, but you would take a look at what’s the total amount that you paid in monthly service fees, and then you would look to see what is the portion that’s deductible and go through that analysis and that could potentially roll into your individual tax return to reduce your taxable income.

The same portion of the tax code that relates to the monthly service fee, you would look to apply to the non-refundable portion of the entrance fee. Maybe this would be a good opportunity just to share with our listeners a little bit about the entrance fee model and how that works and what is an entrance fee because there’s some nuance to it.

Nitsa Foundos:
Well, you know, there’s two contract types that we offer our Arboretum Villa recipients and on the entrance fee portion. The entrance fee portion, they could have a 90% return of capital or a 70% return of capital. Chris, with the 10% or the 30% of the refund that they would not receive is that tax deductible too?

Chris Manderfield:
It is. Yeah. When you sign an entrance fee contract and a life plan community, that contract is going to have a portion of the entrance fee that’s refundable and a portion that’s non-refundable. That’s a big decision to make because that refundable portion inherently as the name says is going to come back to the individual, they’re estate, they’re beneficiaries at some point. Making the decision about how much you want refunded and how much you want to be non-refundable is a big part.

Nitsa Foundos:
Well, here’s the thing. Look what’s happening with the housing market. We know that over time, three to five years, things are going to change dramatically. When in fact, if they move into a community like ours, like the Arboretum Villas sooner, they’re absolutely protecting their biggest asset. That’s the proceeds of their home because it remains intact in the entrance fee. There’s not any risk of losing that money over time. This is something that I generally go over with our clients so they understand that.

Chris Manderfield:
Yeah, absolutely. It starts to become part of your estate planning of because this is a refundable entrance fee, how do you want to use that?

Jay Biere:
All said, I know people have options and that’s important. Obviously, we believe this is a great option for people to consider, but of course what’s important is they come and talk to us about what those options may be, whether it’s the 90%, 70% refundability, the options and so forth.

Chris Manderfield:
There’s really big benefits besides just the tax deductibility. Those benefits include potential future discounts on additional levels of care should you need them. There’s some financial security of knowing that if I need additional care down the road, I’m not going to necessarily have to pay at a premium market rate.

Nitsa Foundos:
Oh, my goodness. Well, let’s put that in perspective. Shall we? If you need a nursing home care facility, the monthly out of pocket expense is around $12,000 a month. Let me tell you that if you let that set in and you figure about, okay, so my home is worth this, this is what I have in assets, this is what I have in savings, you can go through that money very, very quickly. The average stay in a nursing home is two to three years. You calculate that. Do you have enough to live comfortably in a community?

If you did a detailed accounting of everything you cover to live in your home versus what you would pay living in a full continuum of care and having the umbrella of the life care component to protect you as you age in place, there’s nothing like it. It’s a huge financial opportunity that most people don’t understand and don’t realize. Wouldn’t you agree, Chris?

Chris Manderfield:
Yeah, absolutely. Choosing to move into a life plan community, it just provides so many opportunities on the go forward basis because you have that comfort and security of additional healthcare that can be provided if you need it and it doesn’t have an abrupt transition.

Nitsa Foundos:
Yes. It’s a piece of mind contract, and that’s really what we drill down to.

Jay Biere:
It’s kind of interesting as you think about the analysis, I think it might be threefold. One, what is the risk return with regards to what you’re investing in? Two, what kind of lifestyle do I want, if you will?

I guess maybe the last question, Nitsa, Chris, would be this very stunning as you think about it is what is your life worth? Because that’s really the decision. As you get through that, you come to the decision, “You know what? It’s time. I’ve worked so hard in my life. I’ve done all these things. It’s time to invest in me and in fact help my family so they don’t have to worry about what’s going to happen to mom and dad.”

Nitsa Foundos:
Jay, you’re absolutely right. I think the benefit of a life care community focuses on three areas. You’ve got the wellness, the health, and the social, and that’s so important.

Jay Biere:
I like the social.

Nitsa Foundos:
Why is that?

Jay Biere:
Here at Plymouth Place, we have a lot of fun. There’s so many events going on, and one exciting thing actually in the fall is we’re going to Ireland. We do really extraordinary things. Chris, you’ve been around Plymouth Place a long time. Now of course with the Arboretum Villas and what’s happening, what comment would you have from your perspective as you’ve seen us from a distance?

Chris Manderfield:
Yeah. Jay, it’s just really exciting to see what’s going on with the Arboretum Villas and the opportunity that’s being provided for individuals to really take those assets that they’ve developed over a period of life and actually invest them in something that they’re going to have great return on. You can’t necessarily always put a number on life enjoyment, but to put yourself in a setting where you can just really continue to grow is just really great.

Nitsa Foundos:
Do you know, Chris, that if you live in a community that has a strong, robust social calendar, that you will live two years longer?

Chris Manderfield:
I believe it, absolutely. I talk with organizations all over the place and I regularly hear that an individual moves into a life plan community, and all of a sudden a switch almost flips and now they’re getting engaged. They’re making new friends at a later stage in life. They’re doing different things that they never had an interest in before because the opportunity’s there to do it.
Jay Biere:

I really appreciate this discussion because I think this is a really important decision for those who are thinking about moving into the Arboretums and considering making that their new home because there’s lots to think about, lots to consider, again, as you think about managing your risk, managing your finances, managing your future wellbeing, and certainly most importantly your lifestyle and what you desire.

Chris Manderfield:
Yeah. Absolutely, Jay. I think what it comes down to is individual making a decision about how do I want to live my life during this period of time when I have flexibility? Being in a community like the villas would allow you to have as much structure or as little as you want. Maybe you want to partake in a little bit of these activities. Maybe you don’t. You have that flexibility. You can live independently, you can have additional care if you need it.

Jay Biere:
Boy, what I’ve seen, and Nitsa, you’ve seen this, a lot of people say, “Well, I’m going to wait.” Is waiting a strategy? Nitsa, what would you say about that?

Nitsa Foundos:
I think the hardest part that I have with that is that that is not a strategy that can actually hurt their chances because at the end of the day, this life benefit does revolve around making sure you’re coming to the community in good health. You want to enjoy all of the services and amenities that are provided for you while you cannot wait until a medical episode and then feel it’s time.

Chris Manderfield:
Absolutely. Yeah. Make a decision at a point in your life when you’re ready to do more and different things. You’ve worked hard. You’ve generated resources, so make a plan for it. You’ve obviously done that throughout your whole life. Don’t stop doing that now.

If you just wait for something as Nitsa said to come up, that’s going to control your situation. You take control of the situation and say, “What do I want to do? What sort of lifestyle do I want to live? Let’s make a good decision.”

Nitsa Foundos:
Jay, here’s a trivia question for you, what is the average age of our villa founders?

Jay Biere:
Well, right now I know it’s about 68 to 72. I think people are making wise decisions.

Nitsa Foundos:
Well, Chris, they’re coming to us younger, which is really refreshing,

Chris Manderfield:
Yeah. The way I would think about it is what are you doing today to better your wellness? What are the types of activities that you can do that’s going to add to your life expectancy to create a more healthy lifestyle? Having some of the structure that’s available in a life plan community like the Arboretum Villas is great because all of a sudden you have activities that are going to prolong your life.

Jay Biere:
Chris, that information is so good. We so value your partnership. What you’re saying in the end is the juice worth the squeeze?

Chris Manderfield:
Absolutely, Jay.

Jay Biere:
Okay.

Chris Manderfield:
That qualifies for the Jayism?

Nitsa Foundos:
It is the Jayism. Holy molly.

Nitsa Foundos:
If you’d like to know more about the financial, social and health benefits of living at the Arboretum Villas at Plymouth Place, we’re always here and happy to answer all of your questions. You can always reach us at 708-482-6634, or please visit arboretumvillas.org and check out our events page for upcoming lunch or dinner presentations.

Jay Biere:
We will do that, Nitsa. Thank you as always, and Chris, thanks so much for joining us today.

Chris Manderfield:
Yeah. Thank you, Jay. Really appreciated coming out here and chatting with the two of you and hearing more about the Arboretum Villas.

Nitsa:
Thank you so very much for tuning into Living Without Limits. We look forward to talking with you all again and until then I’m Nitsa Foundos

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