Continuing Care Retirement Communities

When the age for retirement and life expectancy were similar, seniors’ decision to retire and remain at home made a lot of sense. Today, as they continue to age in place, many seniors can only guess what their future care needs might be.

Continuing Care Retirement Communities (CCRCs) guarantee their residents lifetime housing, social activities, access to assisted living (e.g., bathing, dressing, and other personal needs), and skilled nursing care that might be needed in the future.

To be accepted as a CCRC resident, seniors must not only be very healthy, but also be able to show their ability to pay continuing contract fees. In determining applicants’ eligibility, CCRCs not only perform medical evaluations, but also require full disclosures of assets and income.

Most urban CCRCs provide apartment units in high-rise buildings, while those in more suburban communities may provide campus-type housing that includes single-family homes or duplexes. As residents’ needs change, so will their assigned units – sometimes only temporarily but, under certain circumstances, long term.

Entrance fees for individual residents currently range from $100,000 to $1 million. Collecting such high fees enables CCRCs to define their companies as being financially secure.  Depending on the contract terms, portions of the entrance fee may eventually be refunded to residents or their estates.

In addition to lump-sum entrance fees, CCRC residents must pay monthly fees that currently range from $3,000 to $5,000. If residents’ needs for assistance or skilled care arise, the monthly charges increase – now to an average of $5,000 to $10,000. In addition, most contracts include a provision for annual increases in the monthly fees.

Although incoming residents must be able to care for themselves, they usually purchase supplementary options such as additional meals, housekeeping, transportation and the opportunity to participate in various social and educational activities.

The three basic types of CCRC contracts are life care, modified, and fee-for-service. All offer independent living coverage at an agreed fixed rate, but each uses a different formula to calculate added costs for assisted living and skilled nursing care:

• Life Care Contracts: Life care contracts offer unlimited assisted living, medical treatment and skilled nursing care. Because a resident’s future care needs will be provided for life without additional charge, life care is the most expensive type of CCRC contract.

• Modified Contracts: Instead of covering unlimited future assisted or skilled nursing care, modified contracts limit the provision of such services to a set length of time.  Once that time limit has expired, additional assistance or skilled care may still be available, but will be provided at much higher monthly fees.

• Fee-for-Service Contracts: Although fee-for-service contracts may appear to be the least expensive CCRCs, they often turn out to be much more costly since assisted living and skilled nursing care services will only be provided at their current, higher market rates.

Under existing California law, prospective residents may visit CCRCs and inspect their different levels of care. Before agreeing to contracts, applicants may also see all licensing and inspection reports and complaint investigation findings of the previous two years.

Seniors considering a lifetime CCRC contract must carefully review the risks, benefits and potential costs. Prudent seniors will obtain professional financial and legal advice.

To find answers to frequently asked questions, visit the California Continuing Care Retirement Community website at calccrc.ca.gov.