Direct Payment for Residents: A Smart Move?
Jan 31, 2025
Managing payments in an assisted living facility can feel like a juggling act. With a variety of residents, families, and care needs, figuring out the best payment system is critical. One option gaining attention is direct deposit—a method where payments are electronically transferred straight to your facility’s account.
But is direct deposit the best fit for your assisted living business? Let’s dive into the pros, cons, and strategies to help you decide.
Check out the video too:
What Makes Direct Deposit Convenient?
Direct deposit is a simple, secure way to collect payments. Here’s why it works so well:
- Timely Payments: No more waiting for checks to arrive or clear. Payments are automatic, so you’ll always get them on time.
- Fewer Admin Tasks: Since funds go straight into your account, there’s less paperwork to handle.
- Reduced Risk: Forget about lost or misplaced checks. Direct deposits are safer and more reliable.
For facilities handling Medicaid or private pay clients, direct deposit can streamline operations and make life easier for both staff and families.
Should You Set Up Direct Deposit?
Before making the switch, consider these important factors:
- Costs
While direct deposit is convenient, it can come with fees—typically around $20 per transaction. For smaller facilities, these fees can add up quickly. -
Demographics
Not all families—or residents—are comfortable with digital banking. Some may prefer traditional payment methods, like checks. -
Care Adjustments
Resident payments often fluctuate based on care needs. For example:
- A resident needing minimal care might pay $3,200/month.
- If their care level increases, the bill could rise to $3,500/month or more.
You’ll need a system to communicate these changes clearly to families.
How to Implement Direct Deposit Successfully
If direct deposit feels like a good fit, follow these steps to make the transition smooth:
-
Talk to Your Bank
Discuss fees and options with your bank. Some may waive fees for higher transaction volumes, saving you money. -
Communicate with Families
Be upfront about any costs or changes. Transparency builds trust and prevents surprises down the road. -
Highlight the Benefits
Market direct deposit as a perk. Phrases like “Seamless, no-fee monthly billing” can attract families looking for hassle-free payment options. -
Draft Clear Contracts
Explain how payments will work, especially if they fluctuate based on care levels. A clear contract avoids confusion and sets expectations.
When Direct Deposit Isn’t the Right Fit
If direct deposit doesn’t suit your facility’s needs or budget, that’s okay! Many facilities stick with traditional payment methods, like checks or online payment systems.
The key is to choose a system that works for your business and your residents’ families. Whether it’s direct deposit or another option, clear communication and planning are what really make a payment system successful.
Final Thoughts
Direct deposit can be a game-changer for assisted living facilities by improving cash flow and reducing administrative tasks. However, it’s not one-size-fits-all. Weigh the costs, consider your residents’ preferences, and ensure you have a system for managing fluctuating payments.
With a little planning, you can create a payment process that’s simple, secure, and effective—whether it includes direct deposit or sticks to tried-and-true methods.
Next Step?
Ready to take the next step in your assisted living journey? Download our Business Plan Checklist to ensure you have all the elements needed for a successful business plan. This tool will help you outline your business strategy, identify key goals, and prepare for a profitable venture.
Need help figuring out where to start? Join the next Roadmap Challenge and build your launch plan with me.
Show full transcript 👇
Transcript
00:00:00
getting paid via direct deposit is convenient especially when dealing with medicaid or an mco um and when you're receiving those checks worth tens of thousands of dollars it just makes a lot of sense but what about paid via direct deposit is convenient especially when dealing with medicaid or an mco and when you're receiving checks worth tens of thousands of dollars but what about doing direct deposits when you're dealing with your residents and their families we're gonna get that into that in
00:00:30
today's video hi everybody i'm brandon gustafson i own and operate two assisted living facilities and i created this channel to help people like you learn the ins and outs of investing in assisted living welcome to assisted living investing [Music] hey everybody welcome back to the channel in our last video we talked about what is ach i'm just kind of giving an overview of what ach is and how it works if you want to learn more about that go ahead and watch that video today we're going to get into should you
00:01:11
set up direct payments for your residence in an assisted living facility that's one of the big questions so the first question is can you set up direct deposit for your residents and their families and the answer is is yes in a in a previous video i we talked about the secret of of how medicaid payments work in assisted living and from that video you know that you also get paid uh by the residents when you're dealing with medicaid so go ahead and watch that video i'll reference it up above but in a private
00:01:42
pay facility you're going to be only getting paid by residents so you'll need to be getting monthly checks from your residents regardless of the type of facility if you're a private pay or a medicaid facility you're going to be getting paid by the resident their family their payee that money is going to be coming in to you with so many payments coming in doing direct deposit might be something that you should look into especially for added convenience uh to your residents uh to their families and you know it
00:02:11
gives you some extra security you're not carrying around 10 15 checks worth 2 000 or you're not relying on a on your administrator to do that it just it goes into your account it's there a little bit more secure secure most banks are going to have a direct deposit option for you they'll have mobile deposit they'll have something that you can set up an ach payment so that people could do those those payments on there as well um so they're you're gonna find that there's a lot of those types of options
00:02:44
with different bank accounts um to directly deposit those funds into the bank account for you so yes you can set up direct deposit for your residents and their families so that's good to know good to know the the the next question though is should you set up direct deposit for your residents and their families that's a big question right just because you can do something doesn't mean you should do it so we're going to get into that a little bit right now just because you can doesn't mean you
00:03:12
should and there are some key conveniences for doing direct deposits into your residence for the residents and their families their payees but there's also going to be fees associated with that service sometimes so that's something you want to talk to your bank about and figure out what types of fees you might encounter if you wanted to set up direct deposit for for them to submit those payments to you for us we found that it just didn't make sense for us to do it the fee was around 20 per transaction at
00:03:45
at our bank for doing that it was just a little too much for us to handle at this point and we talked to some of the residents and their families and they weren't willing to swallow that cost either and so we just kind of came to the agreement um you know if if we had all of our residents wanting to do it we'd figure out something that would allow us to do it there were only a couple of them that were interested in it so we decided you know it's too much for us nobody else wants to pay it we're just going to keep
00:04:11
going forward with the with the current process that we have so in our situation we didn't do it you can look at it with your your bank with time have conversations with your residents um decide if you're going to have a fee associated with direct deposit um even if the bank doesn't do it it might be a way for you to get a little bit of additional income and those types of things so that's kind of how we handled it i would think if you wanted to do something like that you would term it as
00:04:36
a convenience fee for direct deposits whether or not you're passing that fee along to the resident or you're just doing a convenience fee for setting up that direct deposit um you know but from us as we are going through that process we got a pretty definitive no from from our residents situation might be different though as in most cases so you you might be okay eating that fee yourself uh you might have really high private pay residents that expect that type of a service and so you probably
00:05:08
should should have that type of of option for them to make their payments your residents and payees they might be okay paying the fee and your bank might not even have a fee so you just want to make sure you're having conversations figure out exactly if there are fees how you're going to handle those fees what it's going to look like and then from there you can make a decision on how you want to move forward just take time to figure out your options and then make your decision based on your circumstances the best
00:05:36
information i can give you um for how you should handle that should you allow direct deposits for your residence what about private pay facilities i mentioned this just briefly above but a big part of the reason why um we decided not to go with our direct deposits is you know for our residents the the fee that was associated was just a little too much we're a medicaid facility we're small our margins are a little bit tight so we can't swallow that our residents are there on medicaid so they just don't
00:06:07
have a ton of income and and so they don't have the ability to pay those types of fees and so people just weren't willing to to do a premium that's why we decided not to at ours but if you're a high-end premium private pay facility then you may want to look at this option you know your residents their families they may consid they may just want that type of an option um it it is something that just is an added perk that you can use to advertise for your residents to bring people in
00:06:39
um you can advertise that uh it might be something that they expect that they anticipate so you just kind of want to look at your your market who your residents are and figure out what's going to be best for them before you make that decision you know a way that you could advertise that if you are saying you know we're we accept automatic payments or something like this you could say something along the lines of no fee monthly direct deposit direct payments to simplify your billing process you can
00:07:09
put something like that on your website one thing to note though if you do this is that payments from your residence and their payees can fluctuate based off of the amount of care that you are providing to the residents so you know they come into the facility and they're pretty self-sufficient they came from an independent living facility and they can do a lot of stuff by themselves and six months to 12 months down the line they now need a lot of assistance and you would write into your contract
00:07:38
with the resident that they have to pay you based on the amount of care that you're providing them as you increase your care you're going to charge them more money for the amount of work that you're having to do and so if you're setting up this type of a direct deposit make sure this is clear to your residents that that monthly fee is going to fluctuate based on the care that you provide to your residents so you just want to make sure everything is clear there that it may not be the exact same amount you
00:08:05
know say you're charging 3 200 a month for your resident when they first come in and all of a sudden they need a whole lot more care um and now you've got to charge them 3 500 a month um just let them know it's not going to be the exact same amount it is going to be dependent on the care that they need you want to make sure that you're communicating that to them so it doesn't come a surprise or become an issue but having that conversation up front is going to just benefit you in the long
00:08:33
run um as you're kind of getting that set up so just want to make sure that that you're clear on that and how that process would work make sure you comment down below if you have questions about that and and what that would look like uh next time we're going to be talking about small business bank fees to be aware of um so i've talked a lot about using some of these you know getting a getting a good local business a good local bank to kind of help you out with things but there are going to be fees involved and
00:09:01
you can take that into consideration as you're going through so i'm going to get into that a little bit in our next video to learn more about investing in assisted living make sure you visit me on assistedlivinginvesting.net i've free content up there can set up a consulting call free resources as well and then follow me on all my other social media platforms and just remember it doesn't take a lot just a little bit keep going step by step by step keep making progress if you do that i promise
00:09:25
you you will be successful thanks for watching [Music] you
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