Most people don’t think about finances and other details. Make sure to do your research and ask the most important questions.
When Peter and Laurie Olsen decided, in their early 80s, that it was time to give up the burden of taking care of their home and yard—shoveling snow, mowing the lawn, cleaning out gutters—they found a retirement community that seemed perfect. Their large apartment overlooked a lake, the complex had a beautiful swimming pool, the dining hall was elegant and the people were friendly.
There was just one issue that they didn’t consider: that as they got older, they would need more medical care. Beyond the two doctors that visited once a week, their perfect retirement community provided nothing in terms of long-term care options such as a nursing care unit. After Peter was diagnosed with Alzheimer’s, they had to move, in their late 80s, into a Continuing Care Retirement Center (CCRC). “Life plan community” is another and more recent name for this kind of care.
CCRCs are becoming increasingly popular, especially with older seniors, because they provide different levels of care at different stages of your life without having to move to a different facility. Generally, CCRCs include units for independent living, assisted living, nursing care and memory care. Newer models have one type of apartment and bring in “assisted services” as clients need different levels of care, thus allowing them to age in place. Different levels of care also help couples, because it is likely one will need more care at some point, so spouses can remain in the same community, if not under the same roof.
Many seniors can’t imagine or don’t want to plan for failing health or injuries in their later years, but experts warn that people need to be prepared. Having to uproot yourself when you’re older, after a serious diagnosis or injury, is not as easy as when you’re younger. Finding the right CCRC takes time. It’s a complicated process involving a spectrum of issues: What community is best for you (or your parents)? What kind of medical care does it provide? How financially stable is it?
Perhaps because CCRCs are designed to meet different levels of care, they can be expensive. Typically, they require an entrance fee as well as monthly charges. Entrance fees can range from $100,000 to $1 million, and monthly charges can range from $3,000 to $5,000, according to AARP, and these costs can increase as residents’ needs change. However, some CCRCs are more affordable, and many are beginning to offer rental contracts with no entrance fees. Financial experts say to prepare for yearly fee increases, at minimum of around 4 percent.
Many CCRCs lure prospective clients with their expensive appearances and impressive amenities: beautiful landscaping with ponds, chandeliers in the entryway and a fireplace in the community area, for example, plus activities that include field trips, movie nights and musical entertainment. But beyond the visuals and all the activities are serious issues that need to be checked.
One major concern is the company’s financial viability. Although infrequent, CCRCs, or the companies that manage them, can have financial difficulties, or even go bankrupt, and residents may never see their entrance fees again. Experts recommend due diligence before parting with your money and signing a contract.
- Review the company’s annual financial report and look for potential problems such as expenses greater than operating income, liabilities that exceed assets or occupancy rates below 85 percent.
- Check the facility’s licensing survey, which indicates how state regulators assess compliance with licensing requirements and complaint investigations.
- Ask how long the CCRC has been in business.
- Find out the number of fee increases over the years.
- If the CCRC is for-profit and could be sold at some point, ask how that would affect a resident's contract.
- Determine the CCRC’s policy for refunds if you leave.
Because the skilled nursing unit is regulated by Medicare, use the website Medicare.gov to find ratings.
Before you sign any contract, have a lawyer or financial adviser review it, and talk to your Certified Senior Advisor. For more suggested questions to ask the CCRC, see sidebar.
Different Kinds of Contracts
Once you decide on a CCRC, a big decision is the kind of payment plan. CCRCs have three basic contract and payment-plan options, although others may be available.
Additional Questions to Ask
Care Patrol, a free senior housing placement service that helps families find independent living, assisted living, memory care and in-home care options, offers its own checklist of questions to ask when assessing CCRCs. Here are a few questions from its list.
Life care or extended contract: The most expensive option, this gives unlimited assisted living, medical treatment and skilled nursing care without additional charges, and with little or no increase in the monthly maintenance fee.
Modified contract: For a lower fee, this contract offers a set of limited services provided for a set length of time. If you need more services, you pay a higher monthly fee that will still be below the average cost of a stay in other skilled nursing facilities in the area.
Fee-for-service contract: You pay for all healthcare costs separately, after paying either no fee or a low fee. Although initially the least expensive contract, costs can add up for those who have a lot of healthcare issues.
What About Medicaid?
No matter how good your finances are now, you may want to prepare for a time when you can no longer pay for your care and need to use government-funded Medicaid. Many people have been forced to move out of their CCRC (or move a spouse or parent) to a place that accepts Medicaid clients.
You’ll want to find out if the CCRC you’ve chosen will accept Medicaid. Many CCRCs limit the number of Medicaid clients because Medicaid pays less than most CCRCs can charge residents. Some CCRCs agree to accept Medicaid down the line if you can show you have enough funds to live in the community for a set amount of time. Also, different states have different requirements. For example, Ohio and Nevada offer Medicaid for assisted living, but Kentucky does not.
Lack of Oversight
One of the big problems when choosing a CCRC is the lack of independent information. While Medicare oversees nursing homes, states are responsible for managing CCRCs and licensing their assisted living components. Only 38 states regulate CCRCs through divisions such as insurance, financial services, aging or elder services, or social services. Twelve states have no regulation, and some only require CCRCs to submit paperwork.
To further complicate the matter, most states don’t make it easy to find the agency in charge of CCRCs, or don’t post inspection records online. To locate your state’s oversight agency, search online for “(the name of your state) CCRC licensing.” Better yet, contact your local Area Agency on Aging.
One state, Washington, just passed a bill that should increase CCRCs’ transparency and oversight. The bill becomes a law on July 1, 2017.
Where to Get Help
Currently, the only independent organization that analyzes and accredits the entire operation of a CCRC, including financial management and healthcare, is the nonprofit accreditation commission CARF International. But the CCRC must initiate the process of getting CARF-CCAC accreditation and go through a lengthy process that requires renewal every five years, so not many places opt to do so. CARF also provides a consumer guide about CCRCs.
Many people turn for help to senior living placement services such as A Place for Mom or Care Patrol. These services, which generally don’t charge for their assistance in helping you find the right community, have their own inventory and grading of CCRCs.
The website MyLifeSite offers a database of information about each CCRC, including contract details. It’s free for basic information, but $35 and up for more exhaustive information.
“Retirement in a Community, but Which One?” March 6, 2015, New York Times.
“How to choose a retirement community,” June 6, 2013, Market Watch.
“The Smart Way to Choose a Retirement Community,” March 25, 2015, Money.
“Choosing a Place to Call Home,” AARP.
“Researching Aging in Place,” April 22, 2015, A Place for Mom.
“Risks and Rewards of Moving to a CCRC,” Dec. 31, 2013, Kiplinger.
“10 things retirement communities won’t tell you,” July 20, 2014, MarketWatch.
“Choosing a retirement community? Be a snoop,” April 22, 2014, MarketWatch.
“Regulation of Continuing Care Retirement Communities (CCRCs) Explained,” July 22, 2013, Mylifesite.
“WA moves to increase oversight of CCRCs,” March 06, 2016, McKnight Senior Living.
Blog posting provided by Society of Certified Senior Advisors