Should You Consider a Continuing Care Retirement Community?

Retirement can bring about many changes. Deciding where you should live is usually a major retirement decision as well as a major expense to plan for. In the U.S., housing in retirement is one of the top three retirement expenses.  (Healthcare and, surprisingly, transportation are the other two.) The home you shared with your family for many years may no longer fit your needs or your budget. However, you should carefully consider your housing options before pulling up stakes.

One of the many housing choices for seniors are Continuing Care Retirement Communities (commonly referred to as CCRCs).  During the COVID-19 pandemic they may have lost a little bit of their appeal due to limiting visitors. However, there are approximately 1,900 Continuing Care Retirement Communities in the United States, and they continue to be a relevant choice for housing in retirement.  

CCRCs, or life care communities as they are sometimes called, offer maintenance-free housing and lifestyle amenities with a contract for health care services. The goal of these communities is to allow residents to age in place.  CCRCs offer an appealing option for independent seniors who want to enjoy an active, community lifestyle while preparing for the future. They provide different housing options and levels of care on a single property. Most include:  

• Independent Living – This care level is geared to the independent senior. It may include an abundance of amenities such as meal plans, housekeeping services, organized social activities, wellness programs, transportation, library, and beauty salon/barber services.
• Assisted Living – This care level is for people who need assistance with the activities of daily living (or ADLs), which are routine activities that people tend to do every day (such as bathing, dressing, eating, etc.). Assisted living services bridge the gap between independent living and skilled nursing facilities. Residents who need assisted living care are not able to live by themselves. However, they do not require constant care, either.
• Skilled Nursing – This care level provides higher levels of medical care for persons who are unable to perform ADLs without assistance. Skilled nursing is sometimes used for acute short stays after a hospitalization. However, it can be used long-term as well. 
• Memory Care – This type of care provides a secure environment with staff that has additional training in caring for persons with dementia.

Understanding the various types of contracts offered by a continuing care retirement community is an important financial consideration.  There is usually an entrance fee plus a detailed contract that spells out the services provided by the community. How much you get for your money will depend on the range and quality of facilities and services the CCRC offers as well as the type of contract you sign. The four common types of contracts are:

• Extensive Agreement – An extensive agreement (also called a “life care” agreement) is typically the most expensive type of contract and includes housing service, amenities, and unlimited health-related services (including assisted living and long-term care services).
• Modified Agreement – A modified agreement includes the same coverage as the extensive agreement, except that only a specified amount of healthcare or long-term care services are provided. This type of agreement is typically less expensive than the extensive agreement because the resident must shoulder some of the risk of future long-term care costs.
• Fee-for-Service – A fee-for-service agreement is far less expensive than either the extensive or modified agreement but offers little security when it comes to healthcare costs. Healthcare costs or long-term care services may be guaranteed but the resident will need to pay for them out-of-pocket.
• Rental – A rental agreement allows residents to rent housing but does not guaranteed health-related services.

Some additional considerations are finding out how much the fees have increased over the last few years, for what reasons, and how much notification is given. What happens if a resident can no longer cover their monthly fees? What happens if a resident wants to leave after a month, year, or several years? Is a portion of the entrance fee refunded to the estate after the resident passes away?

Exact figures for CCRCs are hard to come by. Assisted living and nursing home cost are published annually, but since there are so many variables to CCRCs there is not much published about prices. However, the entrance fee for an extensive agreement can range between $160,000 to $500,000 or more depending on the type of housing you choose. Monthly rates can run between $2,500 to $5,000.

Once you have determined your needs and decide a CCRC may be a good choice for your retirement housing, it is important to evaluate your options before settling.  The list below can serve as a guide.

1.  Make a list of the communities you are interested in visiting.  It is a good idea to visit a community at least a few times to get a feel for the environment. The first visit should be scheduled with someone at the community who can answer your questions and give you a tour.  The second visit should be unannounced, preferably in the evening or on a weekend. This will give you a second perspective of the community.
2. Get references. One of the best ways to evaluate a facility is to talk with its current residents as well as professional in the community.
3. Involve loved ones. Input from family and friends is important to the success of any transition.
4. Consider ancillary services that may make your transition smoother. For example, Geriatric Case Managers, Medical Social Workers, and Certified Caregivers are experienced in this area.
5. Facilities that are licensed by the state (such as skilled nursing facilities) should be checked for deficiencies. Ask to see the most recent inspection reports.
6. Determine which level of care and contract options best suit your personal circumstances.   
7. Before signing a contract, have your attorney review it.

For many seniors, it comes down to figuring out their monthly expenses while living on their own and comparing them to the costs and benefits of moving to a continuing care retirement community.