Cost of living increases in adult family homes are called COLA “Cost Of Living Adjustment.” This helps you combat inflation – as prices go up, your dollars buy less.

However, because no one likes seeing their cost go up, I encourage you to implement a cost-of-living adjustment program thoughtfully.

cost of living increases in adult family homes
Cost of Living Increase in adult family homes for 2023 – Source: Bureau Of Labor Statistics.

6 Best Practices For Cost of Living Increases In Adult Family Homes.

I’ve done cost of living increases in my adult family homes (COLA) for many years. Mostly it has gone very smoothly, but occasionally, there is resistance. I’ve learned that if you do it right, a cost of living increase will help you offset the inevitable rising costs and help you fund quality care and services, therefore keeping your residents and clients happy. Do it thoughtlessly, and you will get clients complaining about your poor or greedy practices!

Is a cost of living adjustment for you?

Cost of living increases are very helpful because your residents can remain with you for long periods of time at a particular rate while your costs keep going up. For example, if a resident moved in four years ago at $6,000 and is still at that rate today, you have fallen behind financially because your purchasing power has likely diminished considerably by the inflation rate, and your $6,000 buys fewer goods.

Cost of living increases are helpful in helping you manage rising costs without falling behind and are independent of the care fee.

Best practices to implement cost of living increases.

  1. Make sure you keep the COLA separate from the cost of care.
    1. This is important when your clients understand that their rate is based on their care level. A COLA is not based on how much care they require.
  2. Have your COLA policy clearly explained in your residency agreement and disclose all details prior to moving in.
    1. When you have the initial conversation about the cost for care, tell them about the COLA so they won’t be surprised if they missed reading your policy in the residency agreement.
  3. Specify the COLA is not related to the resident’s care needs.
    1. Fee adjustments based on care level should be managed separately from COLAs.
  4. Remind your clients in advance before implementing your yearly COLA.
    1. Avoid implementing the COLA at the last minute or without a reminder notice. Have it planned at a specific time of year, each year, and do your best to avoid implementing the COLA near the Holiday season or Tax time!
  5. Keep it reasonable, preferably based on the Consumer Price Index data… usually 1.5 to 3.5% per year.
    1. Consider sharing some information in your reminder notice about increased costs, like licensing fees, groceries, payroll and LNI taxes, utilities, PPE, etc.) via a nice newsletter.
    2. Use percentages rather than specific dollar amounts.
    3. Be factual, positive, and professional.
  6. The best thing to share with your clients is this:
    1. What quality and valuable services have you been providing to them this year? Remind them of what they are getting and what you are doing for them.
    2. How will you provide more value to your residents and families this next year? COLAs are about keeping up with rising costs, but people don’t really care about that – it’s your problem, not theirs. They will feel better when they can see their money being spent on things that benefit them directly, maybe bathroom remodels, professional activities, or fresh paint in their room.
  7. Deliver on your promises!

Following these best practices for implementing Cost of Living Increases in your Adult Family Home will help you implement an easy COLA routine that is well-received.

To your success!

 

 

 

 

 


Joseph Spada
Joseph Spada

Adult Family Home Consultant, geriatric nurse, owner of Spada Care Homes, Ohana Hale Senior Living, and Savanna Healthcare; DSHS instructor of the AFH Administrator Training; speaker; author.

    2 replies to "6 Best Practices For Cost of Living Increases In Adult Family Homes"

    • Francis Mark Villa

      Hi Joseph,

      My name is Mark i am one of your students back in fall of 2019, we are trying to do a COLA do you have any sample letter to share?

    • Sally Webster

      Good information. We already have this practice spelled out in our contract.

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