Planning for the future, as we age, can be a daunting challenge. Few look forward to the day when living in the traditional single-family home or even a condominium becomes impractical due to care needs. The good news is that there are more and more attractive retirement living options with various types of attributes. For many, moving to a retirement community may be a net positive in quality of life because of all the benefits and amenities that make day to day living easier, freeing time for more enjoyable pursuits.

Helping clients plan for this transition has become an important area of our practice and deserving of more communication and discussion. This introductory article focuses on one type of retirement community, called Continuing Care Retirement Communities (“CCRCs”). CCRCs offer a continuum of living and care options and may be thought of as a relatively comprehensive solution.

In this article, we will explore the following topics:

1. Why Choose a CCRC?
2. Peace of Mind for Families
3. Financial Considerations
4. Contracts
5. In-Person Visits
6. Waiting Lists

Why Choose A CCRC?

CCRC facilities generally have an independent living option that might consist of single-family homes (sometimes called cottages) or units in a multi-family building. The independent living facilities are maintenance-free. For those who travel or are otherwise gone periodically they can just lock their unit and not worry about anything while they are gone.

In addition to independent living, CCRCs also offer assisted living and skilled nursing care options that may vary by location. Some of these services can be used while the resident is living independently.

Residents live independently as long as they want and are able but then have the option to move into the assisted living facilities available there. Knowing that these options for assisted living and then skilled nursing care will be available when needed may afford great peace of mind and simplify planning dramatically for residents and their supportive families.

CCRCs offer numerous services and amenities. Typical services offered include:

• Meals including a central dining area
• Transportation
• Lawn care
• Gardening
• Garbage and snow removal
• Housekeeping
• Social activities
• Laundry
• Some utilities
• Health monitoring services
• Emergency call monitoring
• Security

Most CCRCs also offer services to residents such as outings to cultural events and a variety of group social options that cater to the varied interests of residents.

The social dimension of CCRCs should not be underestimated. We know that the quality of our relationships is critical to health and happiness as we age and are a factor in longevity. The CCRC community offers companionship that many seniors may otherwise be lacking in their lives.

In summary, a CCRC is a full-service option that can serve as your home from the time you move in and live independently through the rest of your life if you so choose. The assisted living and other care options are there to support you if needed.

Peace of Mind for Families

Adult children worry about their parents on a variety of levels. Will they be alone as they age? Will they have access to any care they might need over time? CCRCs offer an alternative for their parents that addresses most of these needs and can help give children peace of mind that their parents will be well cared for.

This can be especially important in today’s world where parents and their children often live in different parts of the country. And even if they are in the same city, parents generally don’t want to be a burden on their children, so this can be a good option for all.

Financial Considerations

The decision to move to a Continuing Care Retirement Community has a major financial dimension and should be undertaken with a great deal of due diligence and care. Typically, you will pay an entrance fee to join the community with some agreement for the usage of your individual housing unit. There will also be ongoing fees for maintenance and other services provided. CCRCs are not inexpensive, so anyone considering a CCRC must be able to afford this initial entrance fee and the ongoing monthly costs as well.

The initial fee represents a significant financial investment. In many cases the source of funds used for the CCRC entrance fees will come from the sale of your home. You will want to be sure that these proceeds are spent wisely.

What is the reputation and financial condition of the company or non-profit running the CCRC? Is it financially stable? Over the years there have been some CCRC communities that have run into financial difficulty including bankruptcy. Request and review several years of the facility’s financial statements with the help of your advisor and accountant. In addition, your state may regulate CCRCs. Do some research to find out what information is available on the CCRCs under consideration from the state regulatory authority.  

If you have long term care insurance, consult with your insurance and financial advisors to learn what CCRC costs will be covered, if any. There may be some coverage, but the coverage will depend on both your insurance coverage and the type of CCRC arrangement. Likewise, you will also want to consult with your accountant or financial advisor to learn whether you may be eligible to take a tax deduction for some of your costs.  

Contracts

Contracts and arrangements vary widely. You should have an attorney who is well-versed in these types of communities review the agreement before signing. There are several different contract arrangements that will vary by facility.

• Life contracts will provide residents with unlimited access to the medical care available with little or no increase in their monthly costs. This will be the most expensive contract arrangement. These full-service arrangements are referred to as type-A contracts in industry parlance.
• Modified or type-B contracts are like the type-A contract, but only some medical services are included in the initial fee. If additional medical services are required, they would be billed at prevailing market rates at the time.
• Fee-for-service contracts, or type-C arrangements do not include medical services in the initial fee, medical services are billed at market rates and on an as-needed basis.
• Type-D agreements are simple rental agreements that require no upfront entrance fee but do guarantee access to the facility’s medical services at market rates.

At a minimum, the contract should address the following:

• Residences, what does your entrance fee cover?
• Monthly or ongoing Fee schedules
  • What is covered, are there any caps on fee increases? In your review of the financial history of the facility you will want to ask a lot of questions about the historic inflation of? the ongoing fees.
• Health care coverage, what’s included and covered by your entrance fee and what service would carry an extra charge?
• Cancellations and refunds
• Services
• Insurance requirements
  • There are mixed thoughts in the industry as to whether you will want to maintain or obtain a long-term care policy when entering a CCRC.
• Conditions for transfer within the community to other levels of care, and a description of the CCRCs responsibility should a resident become unable to pay fees.

An important area to understand is under what conditions will you be entitled to a refund of the entrance fee. Some CCRCs offer no refund of the entrance fee, while others will offer a portion as a refund depending upon the circumstances and the length of time you occupied the unit. The entrance fee can be considerable and if you need to move out of the community earlier than planned for medical or other reasons, what portion of your initial investment will you get back? In a similar vein, is there any sort of refund if you die?

Check It Out In-Person

Before deciding on any CCRC facility spend as much time there as possible and ask extensive questions.  Walk around and meet some of the residents. Ask them about the facility, what they like and what could be improved. Eat in the central dining facility. Meet key staff members.

Waiting Lists

Those interested in CCRCs and other retirement communities are often surprised that there may be a substantial wait time before a suitable unit is available. Different retirement communities have different practices, but most maintain a list of interested buyers. A deposit secures a place on the list, and there is a protocol for the decision-making process when a unit becomes available.

A big take-away is that this process may take considerable time and reward those who plan.

Summary

Where you will spend your retirement and in what type of community you will spend it in is a critical decision. Whether for you or your parents, we are here to help you analyze and review any community that you are considering. We understand CCRCs and can help you ask the right questions. Moreover, we can add a third-party perspective to the process that might help you uncover some issues that you hadn’t considered.

Please contact your RSWA Wealth Advisor Team with any questions you may have about this article. Feel free to forward the article to anyone who may find it helpful.

Dave Robinson, author of this article, retired on 12.31.22.