Continuing Care Retirement Communities: What to Know & Consider

One type of independent living community that is gaining in popularity is the continuing care retirement community (“CCRC”). As discussed in more detail in our Independent Living article, independent living is usually the preferred senior living option for healthier seniors who are still able to live alone in an apartment, but need a little bit more assistance with your every-day life. Typically, these communities maintain the property where you live inside and out and also provide meals and social activities. For additional charges, many independent living communities are beginning to offer additional services, including transportation to and from doctor’s appointments and laundry services. Many residents will even hire a home health aide to come into their apartment a few hours a day or week and help them with activities of daily living, such as bathing and dressing. 

For many seniors moving into senior living, one of their objectives is to ensure it is their last move and that they can spend the rest of their lives there. As people entering senior living have gotten older over the years, many independent living communities have adapted by adding assisted living sections to their communities. Nevertheless, the biggest limitation of independent living will always be the fact that at some point in many residents’ lives it simply becomes unsafe and impractical for them to live alone. This also tends to coincide with these residents requiring extensive healthcare and medical services. When residents reach this point, the only option is usually to move to a nursing home. However, you can’t simply move into a nursing home before it is medically necessary. If you want to find a place to live in the senior living continuum while you are still relatively young and healthy and you want it to be a place you can spend the rest of your life, you may want to find an independent living community that also has a nursing home. This is where the CCRC fits in.

A Continuum of Care

CCRC’s typically offer a full array of levels of care, ranging from independent living to assisted living to nursing home care. Many even have memory care units for patients with Alzheimer’s and dementia. Some communities offer all of these services under one roof, while life care communities typically have contracts with other facilities guaranteeing beds for their patients when they are needed. For many people, CCRC’s achieve the ultimate goal of “aging in place”. The CCRC is truly as close as you can get to one-stop shopping for the aging population. 

It is important to realize that if you are trying to be admitted to these communities, they function much like independent living communities at that point in the process. You must undergo a health assessment so that the community can determine that you are healthy enough to live independently and preferably for a long period of time. In fact, many residents live for ten years or longer in the independent living portion before transferring to assisted living or nursing home care. Consequently, CCRC’s are generally not an option if your health is deteriorating rapidly and you are in imminent need of extensive personal or medical services. CCRC’s also do a financial assessment to confirm that you will be able to private pay for as long as possible before exhausting your resources. For these reasons, CCRC’s are categorized as independent living communities even though they provide higher levels of care. 

Types of Continuing Care Retirement Community Contracts

When you go into a CCRC, you will typically be offered the choice between three or four different types of contracts^[1]:

• Type A Contracts: Extensive or Life Care Contracts. These contracts generally permit you to use all available services and transfer to all available facilities in the community for no additional charge. This may end up saving you money if you end up in the nursing home portion of the community.
• Type B Contracts: Modified Contracts. These contracts generally provide you with the same residential services as Type A Contracts, but not all personal and medical services are included in the contract. Many services will subject you to additional fees at market value. Certain contracts will provide for you to be able to receive a limited number of days in assisted living (typically 90 days or less) without additional fees or perhaps at a discounted rate. It is critical that you read the contract carefully.
• Type C Contracts: Fee-for-Service Contracts. These contracts generally provide you with the same residential services as Type A and B Contracts, but you will typically be required to pay additional fees at market value for all additional personal and medical services.
• Type D Contracts: *Rental Agreements. *These contracts are not always available, but they are basically pay as you go contracts with no up-front fees and no additional covered services.

Costs of Continuing Care Retirement Communities

There are generally two costs associated with CCRC’s: an entrance fee and a monthly fee for services. These costs vary widely based on the community you choose and which of the above contracts you choose. In many cases, you also have the option to choose between paying the full entry fee up front and having a portion of it (generally 50% or more) refunded to your estate at death or paying a reduced nonrefundable entry fee. According to the US Government Accountability Office’s report, the average entry fee and monthly fees by contract type are as follows^[2]:

Generally, Type A contracts are most expensive, but they lock in your rates and protect you against the possibility of suddenly needing radically more expensive services. On the other hand, Type C contracts are the cheapest up front, but costs will escalate drastically if you eventually require nursing home services. Type D rental contracts are priced similarly or slightly more expensive than Type C contracts. Again, Type D contracts are often not available. 

Any time you are comparing two CCRC’s, you should confirm whether a portion of their entry fee is refundable and how they determine the refundable portion. You should also confirm which services are included in the monthly fee and which are excluded. If some services are excluded at one community and included at another, you may be comparing apples to oranges in terms of pricing. 

CCRCs vs Other Independent Living Options

Typically, the two major differences between CCRC’s and other types of independent living are costs and the availability of a wider array of services. Below is a chart summarizing some of the relevant issues by community type. 

As you can see above, there is a wide range of costs for both CCRC’s and other independent living communities. In many cases, the costs will be driven by the cost of housing in the community where you are looking and the level of services provided by the community. Since you are basically renting a home, apartment or condominium in many independent living communities, local housing prices in your area will significantly affect pricing of these communities. On average, independent living communities charge between $1,500 and $2,500 per month, but communities in high cost of living areas can be far more expensive. Your costs may also be much higher if you require additional services not included in your monthly fees, such as home health aides and other service providers. The up-front costs of entering a CCRC will likely be the highest of any facility you can choose. In many cases though, you may find the community to be worth it.   

The biggest advantage of most CCRC’s is the wide range of services offered. As previously discussed, most CCRC’s offer independent living, assisted living and a nursing home all in a single location (or at least available to you at other locations). People with Alzheimer’s or dementia may even be able to find CCRC’s with memory care units that will provide for their increasing needs as their condition worsens. These communities offer many seniors the ability to enter a community as early as their mid-50’s and live there for the remainder of their lives. For many, the ability to age in place adds significant value and saves them from the potentially traumatic experience of relocating to an assisted living community or nursing home at a later date. For residents with Type A contracts, they also have the ability to cap their fees and potentially avoid the higher costs associated with nursing home care and related healthcare services. For people who end up living for many years in assisted living or nursing homes at these communities at capped fees, the CCRC may even turn into a more cost-effective option than other independent living communities. Unfortunately, you don’t have a crystal ball and since you are likely to enter the CCRC with minimal health issues and healthcare needs, it is difficult to project the value of possibly capping your nursing home costs in the future. 

Unlike CCRC’s, most other independent living communities are not intended to provide residents with extensive personal and healthcare services. The driving force of this decision usually comes down to whether this is how you choose to live your life for the foreseeable future. If you believe you will enjoy the amenities available at a particular community, you are still able to live independently and you have the financial resources to private pay, then this community may be a great option for you. If you anticipate needing a particular service in the future based on a known health condition, you may want to confirm that any independent living community you are looking at offers that service. If the service is not available, you may want to price out that service in the local community with a home health care provider.    

One final consideration is your long-term financial and healthcare planning for both you and your spouse. Be realistic about whether you can afford the costs associated with the independent living community or CCRC of your choice. Take an assessment of you and your spouse’s age and health before moving into any community. It is usually a mistake to simply plan on spending all of your money until you run out of resources and end up on Medicaid. There are many obstacles to qualification for Medicaid and it likely will not cover all of the expenses necessary to maintain your quality of life. Setting aside a rainy day fund now for unforeseeable healthcare expenses in the future may make a significant difference in your final years.