Continuing Care Retirement Communities (CCRC)

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Overview

A Continuing Care Retirement Community (CCRC) is a senior living option that offers a continuum of care from Independent Living to Assisted Living to Nursing Care, all in the same facility or on the same campus. Residents enter into Independent Living and are guaranteed higher care should their needs change. This assures residents that they can age in place safely and comfortably within the same community.

CCRCs can be ideal for the right person, but they are not for everyone. They are expensive and require financial screenings. Potential residents must have sufficient income or assets to pay their monthly fees long term. Given the high costs, it is important to seek the advice of a trusted financial planner or elder law attorney before making this lifelong commitment. Also, potential residents are screened for medical issues and, generally, only relatively healthy people are allowed to buy into “life care” and “modified contracts” (see more in the “costs” section for explanation of these contracts).

Best Suited For

Individuals or couples with a higher income/assets who are capable of living independently (without assistance with Activities of Daily Living, ADLs), are interested in community living, and are focused on “aging in place.”

Costs

CCRCs generally involve a rather large buy-in fee to the community that pays for the home or apartment, and additional monthly fees that pay for the level of care they receive. There are three kinds of contracts:

Life Care or Extended Contracts have a high initial price, but guarantee that the monthly costs will never go up. Residents buy their home in the community (which may range from $150,000-$,500,000). In addition, they  pay a monthly fee (which may range from $1000-$3000 per month). This fully covers their care until they pass away, whether they remain in their home or spend their final years in Nursing Care or Memory Care. When residents do pass on, the home is sold and the estate is refunded most (between 80-90%) of the original purchase price. For those with the financial resources, this can be a great way to safeguard a portion of the estate for heirs, while guaranteeing care at a set price. Some Life Care Communities also have a policy that, if the residents become unable to pay their monthly fees due to financial hardship, the community will absorb that cost. This is not the norm, however, and most CCRCs have stringent financial requirements that potential residents must meet.

Modified Contracts have the same expensive initial buy-in but, in general, the monthly fees are not as costly as those with Life Care contracts. Residents start with relatively low monthly fees, which increase as care needs increase. Long-Term Care may be discounted for residents, and, in some cases, residents receive a specific number of days in long-term care free of charge. But when that time allotment expires, monthly fees may change radically. A person who pays $2000 per month while living independently may end up suddenly paying $7000 per month or more when they require nursing care. As with Life Care Extended Contracts, the home is sold when the resident passes away or moves to a higher care level within the community, and again, generally 80-90% of the purchase price of the home is refunded.

Fee-For-Service Contracts may or may not charge an entrance fee. If they do, it may be used to  pay for the cost of care that residents encounter as their needs change. These contracts generally charge market rates for their Long-Term Care; there are no discounts, and no amount of long-term care is free, unless specifically noted and covered by the entrance free.

Advantages

  • Residents are guaranteed access to appropriate care when needed.

  • Families and seniors have peace of mind knowing that, no matter what medical changes seniors experience, they will never have to move to a different community (although they may have to move rooms/buildings within the CCRC). This continuity of care can be a great benefit. 

  • Contracts may have substantial tax benefits.

  • Estate assets may be saved.

Disadvantages

  • Upfront costs are substantial.

  • Health and financial screenings may be required for potential residents, and the results may disqualify you.

  • Community dissatisfaction - If you become dissatisfied living within the community, it may be difficult to terminate the contract because of the initial investment (though some CCRCs have policies in place to return entrance fees or some portion of the fees under certain circumstances).

Insider Tips: What to Look For

One of the most important things to consider when looking into Continuing Care Retirement Community is whether their continuum of care includes Memory Care. For example, a married couple came to us for advice and assistance after they bought in to a CCRC at a high cost and needed to terminate their contract when the wife developed dementia and required a type of care that was not available within their CCRC. The situation was particularly challenging because most of their assets were tied up in their CCRC home, and the community was not contractually obligated to refund any money until the home sold. Therefore, before the CCRC home was sold, the husband had to pay for her Memory Care at another facility, and he had to finance a new place to live himself. It was a very stressful experience for this family. Fortunately, we were able to help him achieve a sound solution, but it took some strategy. It is better to avoid this potential situation and choose a CCRC with Memory Care if this is an option available to you.  

Other life circumstances may arise where an individual or couple wants to leave the community. Before you sign, it is important to understand the process and policies on terminating the contract. Be sure to inquire about a refund on the entrance fee. Ask how money is refunded and under what circumstances. If any part of the contract is unclear, ask questions of the community’s liaison. You might choose to review the contract with your elder law attorney to make sure you understand everything.

Do some additional research to make sure a financially solvent company runs the community. When you or your loved one is looking at investing hundreds of thousands of dollars to enter a community, it is important that they have a sterling reputation and will be able to provide what they have promised, whether it be for the next five years or the next twenty. Find out how long they have been in business, ask to see financial reports, and check for lawsuits against the company.

When touring, speak to other residents and ask about their impressions of the facilities, staff, and social activities.