Continuing Care Communities and Retirement
Aging in Place With Continuing Care Retirement Communities
The concept of “life care” is a growing area of concern for retirees and their families. Life care refers to the delivery of services for seniors which include housing, health care, and social activities. While many people express a desire to “age in place” to utilize those important life care services, staying at home isn’t always the best option. That’s why many retirees seek the peace of mind knowing they can live independently in a situation where they will still have necessary care services readily available in the future as their needs may change.
Continuing Care Retirement Communities (CCRC) are designed for retirees who want to ease the burden of the transition process of moving from one place to another as their needs change. Continuing care retirement communities have grown in popularity in recent years along with a changing retirement landscape. Much of this appeal is based on the fact that CCRCs provide a wide range of care all in one centralized setting that doesn’t require geographical relocation. CCRCs are a combination of residential and life care facility options rolled into one option that offers a “continuum of care” for residents.
The Continuing Levels of Care
Continuing Care Retirement Communities provide retirees with lifetime housing and priority access to care services. A CCRC is a combination of an independent living community with assisted living, secured memory care for residents with Alzheimer’s, dementia, or other cognitive impairments, and skilled nursing care. The assisted living and nursing home components of a CCRC are usually only available for residents who are transitioning from the independent living units and are not usually available to others outside of the community. This means that residents usually move into the CCRC while they still have relatively good health and subsequently transition to different levels of care as their needs change.
One of the primary reasons CCRCs are growing in popularity is the wide range of services that they provide. These services often include healthcare and supportive or assistive services. CCRCs also provide residents with access to nursing care, social work, dietician services, physician care, pharmacy, PTs, OTs, and other therapies for residents who may experience a minor illness or an ongoing health problem.
Here is an overview of the continuum of care for residents of a CCRC:
Independent living communities are also referred to as a retirement community. Housing options at CCRCs are similar to what is found at a traditional retirement community. CCRC independent living options most commonly include apartment-style living or free-standing residences or cottages. For many independent living communities, amenities include a clubhouse, library, community center, fitness room, swimming, or even a golf course. What distinguishes independent living communities from senior apartments, active adult retirement communities, or communities specifically for those 55 and older are the services provided. Independent living communities often include additional services such as meal service, housekeeping, transportation, and social activities. Recreational activities and programs are scheduled for the enjoyment and overall well-being of the residents.
Assisted living communities are considered non-medical care facilities and often do not have a full-time medical professional on-site at the residence. However, they typically offer around the clock staffing in case of emergencies. Assisted living facilities offer a wider range of personal services compared to independent living. Residents are typically assigned dedicated staff members to attend to their daily needs and help with common chores such as laundry, basic personal hygiene, and light housekeeping. Residents are still expected to require minimal help with important daily activities such as dressing, bathing, or taking medications. Assisted living also requires a certain level of cognitive ability which allows an individual to function in a semi-independent setting.
Nursing homes are medical facilities that provide the most extensive array of medical care services for seniors outside of a hospital setting. Skilled nursing care is provided on-site at CCRCs to provide treatment for residents recovering from short-term conditions. The skilled nursing care facilities at CCRCs are also equipped with qualified medical personnel and accommodations to support residents who require more ongoing or intensive medical care or long-term care services.
The Associated Costs
Living in a CCRC is not for everyone and the costs can be a significant deal breaker for many low and middle-income retirees. Each CCRC offers their own payment plan structure and the fees vary based on location, community size, and overall services provided. The biggest initial expenses are often found in the entrance fee. Most CCRCs have an initial “buy-in” cost that also generally requires a certain health level prior to moving in. Entry fees range significantly from $30,000 up to $1 million, with recurring monthly charges ranging from around $1,000 to $4,500. In many cases, an option exists allowing for the potential refund of a full or partial amount of the entrance fee within a specific time period.
Things to Consider When Paying for a Continuing Care Retirement Community
Most forms of medical insurance do not provide reimbursement for assisted living services. Although, Medicare or Medicaid may cover a portion of the costs for living in a nursing home under certain specific conditions, it will not cover all the costs. The cost of living in a CCRC can be offset certain types of long-term care insurance if you qualify. In general, long-term care insurance policies may cover costs associated with assisted living needs or room and board.
Many retirees use the proceeds from the sale of a home to pay for the upfront entrance fee. Capital gain exclusion rules apply for the sale of a primary residence which may exclude a portion of the proceeds from taxes. But as is the case with the use of any retirement assets such as 401(k)s, IRAs, stocks or mutual funds, you should consult with a tax professional to determine potential tax consequences.
Below are the three fee schedule options most commonly used at a CCRC:
- Extensive Contracts: These are typically the most expensive agreements. They provide residents with unlimited access to healthcare and peace of mind knowing there will be minimal or no increase in the monthly maintenance fee.
- Modified Contracts: This type of contract also offers residents unlimited access to healthcare, but residents pay for healthcare on an as-needed basis. Modified contracts allow for monthly maintenance fee increases to cover healthcare needs. In many cases, the healthcare services are offered at discounted rates.
- Fee-for-Service Contracts: These contracts require residents to pay for all health care costs separately. While this can initially be the least expensive contract option, in the long run, it can end up being quite costly if the resident eventually experiences extensive health care needs.
How to Find a Continuing Care Retirement Community
CCRCs are not licensed or certified by a single governing body. An accrediting body for continuing care retirement communities does exist. Commission on Accreditation of Rehabilitation Facilities (CARF) offers the Continuing Care Accreditation Commission, also known as CARF-CCAC.
Finding quality health care throughout retirement is usually an important aspect of choosing to live in a CCRC. That’s why it’s no surprise you will want to research the quality of care at different locations. For CCRCs with a Medicare-Certified healthcare center, you can begin your search by looking up the CCRC’s CMS rating on the Medicare website under “Nursing Home Compare.”
Another important thing to consider is whether the facility is a for-profit or not-for-profit institution, as that may affect how resources are allocated. There are many major pitfalls to consider so that you may avoid significant headaches that could arise by choosing the wrong CCRC. For example, if a CCRC experiences financial hardship and is forced into bankruptcy, residents may be categorized as unsecured creditors and potentially lose any refundable entrance fees. Another worst-case scenario is the facility may be brought out of bankruptcy by a new owner who drastically changes services for residents. When examining CCRCs it is recommended that you ask for audited financial statements and use a financial professional such as a CPA to analyze those documents. This will help you keep a watchful eye out for potential red flags such as expenses that exceed operating income or liabilities that are significantly greater than assets.
Important Questions to Ask
As with any important financial life decision, you will want to ask informed questions during the search process. Here are some potential questions to consider and also to ask representatives of Continuing Care Retirement Communities:
- What is the current availability for the assisted living and nursing home facilities? What happens when they are full?
- Does the community have a reciprocal agreement with nearby CCRCs?
- Is the CCRC located close to high-quality medical providers and other important places? Are friends and family nearby?
- How much training and experience does the staff have? Are staff members subject to criminal background checks?
- What is the staff-to-patient ratio in each living setting?
- Does the CCRC appear to be well-maintained, clean, and safe?
- Is there a dedicated memory care unit or does the facility provide memory impairment services?
- Are residents who wish to be involved given an opportunity to participate in the organization's decision making?
- Does the CCRC culture match the resident? Is it a formal environment, with dinner jackets required in the dining room, or a casual atmosphere?
- Is the facility a not-for-profit institution?
- Are there any potential situations that would lead to the facility to request the resident leave the community?
If you or a loved one are considering a CCRC, there is no “one size fits all” approach to making this important decision. Just remember that it’s important to make a decision that isn’t just based on immediate care needs. You also need to be engaged and proactive during the search while focusing on future possibilities for life care needs. The CCRC is such an important financial decision that you want to get things right the first without second-guessing your decision during the late stages of retirement.