Are CCRCs Right For You?

You might not have heard the term “CCRC” but you probably have heard of communities like Acts Retirement-Life, Ann’s Choice and others that offer a variety of services, activities and a sense of community for seniors. If you have sufficient assets and you’re looking for peace of mind if you ever need advanced nursing care, you might at some point consider a Continuing Care Retirement Community (CCRC). CCRCs are a great option if you want to move into a community — while you are still relatively healthy in body and mind — and stay there, even if you need more advanced care in the future.

The communities typically offer a variety of living arrangements—you can choose a small apartment or a two bedroom, and sometimes other arrangements as well; multiple dining options, health and wellness centers, a broad range of social activities, complete home maintenance, and best of all, a continuum of healthcare from assisted living to memory care to long-term and nursing care.

Because CCRCs require an entrance fee, of which you may only recover a portion should you leave, and a monthly fee, it’s a major financial decision. A CCRC can appear to be the most expensive senior living option. But if you have the assets, and want almost everything taken care of, it could be the best choice.

A recent article in Forbes magazine poses eight questions you should ask before moving to a CCRC:

Can you afford it? CCRCs are marketed to middle- and upper-income homeowners who typically fund the hefty entrance fee through the sale of their home. Since that fee covers housing and care, estimate what you would get for your home and calculate what you think you might eventually spend on assisted living or skilled nursing care.

Who lives there and what do they do? Ask the age of the average resident and the type of programs the CCRC offers. The typical CCRC resident is 80 or older (though some are much younger) and a community that is post-80 may not appeal to younger residents.

What is the occupancy rate? Look for an occupancy rate of 85% or higher unless it’s a new development, Kiplinger advises.

Is the CCRC financially sound? Ask to look at the CCRC’s financial records, and look for anything unusual, such as a large amount of debt, failure to meet bond obligations or evidence of liabilities exceeding assets.

How much is the entrance fee and is it refundable? About half of CCRCs have a refundable entrance fee that will go to the resident if he moves or to his estate when he dies. Ask how much is refundable and under what conditions.

How much are the monthly fees and what do they cover? You’ll also want to find out how much the fee might rise over time. Ask, too, whether home health care is covered and what health services, if any, are included.

What if my spouse or partner needs a different level of care? One of the advantages of CCRCs for couples is that they can continue living in the same place if, for instance, one needs skilled nursing care and the other is able to live independently.

Who regulates the CCRC? Find out which agency regulates the CCRC and check to be sure the company is in good standing. In most states, CCRCs are regulated by the insurance commissioner, but it can be another agency.

Ratings for nursing homes within CCRCs, which are federally regulated, are available through Medicare’s Nursing Home Compare website.

Kiplinger offers the following tips when considering a CCRC:

  • Pop in for a visit. In fact, many facilities allow you to stay overnight to get a better feel of what it would be like to live there.

  • Talk to residents besides those selected by the CCRC to give you a tour. What do they like or dislike about the place? Are residents’ concerns addressed?

  • Tour the assisted living and skilled nursing facilities. That’s ultimately a big part of what you’re buying.

  • Request a sample contract and financial disclosures up front.  Have a financial adviser review the contract and other paperwork.

  • Ask about staff turnover. It’s a bad sign if, say, the facility has a new director every other year.

  • Check the occupancy rate. Facilities that are consistently at least 90% filled will most likely be able to keep their financial promises to residents. A lower rate over a sustained period is a red flag.

  • Look at the history of annual increases for monthly fees. Fee hikes of more than 3% to 4% a year could signal a problem.

  • Ask how the CCRC plans to meet its future obligations. Or, if the CCRC intends to expand, ask how it will pay for that development and what impact that could have on fees.