Continuing Care Retirement Community (CCRC) Considerations

[Purron]

DH and I are looking into CCRCs. We are not in need of this now. Rather, we’re planning for the day when we may need such a living arrangement.

From the attached NYT article: “What if, after all her careful planning, their retirement community has some kind of financial wipeout? “There you are, 97 years old, the community’s bankrupt, its managers are in jail,” she said. “Now what are you going to do?”

Also from the article: “Before you dive in, it helps to consider the different sorts of fees that residents pay. Type A contracts, as they’re known, are all inclusive. You pay a one-time entry fee, part or all of which may be refundable, plus a monthly rent. In return you get unlimited access to health care services in the facility for the rest of your life. Type C contracts are less expensive up front, and you pay for health services as you need them, at market rates. Type Bs are hybrids of these two. A fourth option: month-to-month rentals with no entry fee.”

For those considering or currently living in a CCRC, how did you evaluate their financials? What type of contract did you choose? Lastly, we’re in Northern Virginia. Any recommendations on nearby CCRCs?

https://www.nytimes.com/2018/03/09/business/retirement-community-financial-health.html

 

[Walt34]

This has been discussed several times:

http://www.early-retirement.org/forums/f38/ccrc-good-bad-and-86089.html

http://www.early-retirement.org/forums/f47/ccrc-reference-material-faqs-86124.html

http://www.early-retirement.org/forums/f29/ccrc-help-92918.html

http://www.early-retirement.org/forums/f38/the-case-for-and-against-ccrcs-89147.html

http://www.early-retirement.org/for...ing-care-retirement-sister-against-84916.html

 

[Purron]

Thanks Walt34. I've been gone for a while so missed these. I'll look them over.

 

[Walt34]

Glad to have you back, it's been a while.

 

[mickeyd]

Welcome back Purron.


DW and I are moving to a CCRC in a few months. I guess we are going in under what is described as Type A in the article. They often have info sessions (with lunch) that describe it all and load you up with info. We also had a sit-down meeting with the CFO of the place to get more specific financial info. They were quite open about all of the costs. I spoke with about a dozen current residents. What do you like best about this place? The people!

 

[MichaelB]

In return you get unlimited access to health care services in the facility for the rest of your life.

To put it politely, I think this is an exaggeration. Residents can get routine care on primary care physician visitation days, as much as the facility deems they need and their insurance will cover. Some specialists will visit, albeit less frequently, so most specialist care needs to take place at a clinic or physician's facility. What they will get in greater quantity is care provided by technicians and not MDs, as this will most likely be provided by the ALF / NH. This probably covers lots of chronic illnesses.

It seems to me most care provided by institutions (assisted living, nursing homes) is structured around Medicare and Medicaid regs, not patient needs. This isn't necessarily bad, but it is something people should be aware of when considering those facilities as options.

 

[Richard4444]

From the attached NYT article: “What if, after all her careful planning, their retirement community has some kind of financial wipeout? “There you are, 97 years old, the community’s bankrupt, its managers are in jail,” she said. “Now what are you going to do?”

This is a very concerning issue - any opinions on this?

Rich

 

[Walt34]

This is a very concerning issue - any opinions on this?

The most famous bankruptcy among CCRCs was Erickson Living in 2009 (there were several other smaller ones that year) but they were bought up by other companies and to my knowledge (I may be mistaken) there was little to no difference in the day-to-day running of the facilities. I'm sure it created a lot of worry among the residents though.

 

[imoldernu]

We moved into our community in 2004, about 6 years after it was begun in 1998. As part of a larger corporate group, the initial financing was substantial, but in the beginning, before the community was full, the independent living apartments (60) were available for shorter stays, by relatives or temporary lodging. Now, all units are usually full, with waiting lists. The turnover rate in independent living , assisted living, "bounce back", nursing home and "memory lane" is constant, but occupancy rate is very strong. The Villas almost always have no vacancies or maybe one or two. Since we are not an Endowment Community, the worry about bankruptcy is virtually non existent. in the first place, we couldn't afford the $500K to $1M upfront.

For an overview, though I'm not into facebook, here's a link to our facebook website.

https://facebook.com/Liberty.Village.of.Peru/

BTW... in the NYT articlecitedin the OP, the MyLife website that is mentioned, is pathetic... and doesn't even cover a single nursing home in my state of Illinois... even though there are literally hundreds of nursing homes here.

 

[audreyh1]

Interesting article from Time that includes information like - median move in age is 81. Continuing Care Retirement Community: Can You Afford It? | Money

I guess one thing that has to be carefully evaluated is whether the facility really has the skilled nursing needed when residents need it. Some discussion in the comments here: https://www.ageinplacetech.com/blog/wsj-offers-bad-advice-move-ccrc-sooner-vs-later

 

[Bamaman]

We put my mother in a CCRC in her late 80's. It cost $177k upfront for what amounted to a security deposit, and it cost $2000 per month rent (including utilities and cable tv). Her plan included 20 meals monthly, and the restaurant was the nicest in the city.with a Dutch chef. She was in a ground floor one bedroom apartment with a full kitchen.

Our problem was that Mom had broken a hip earlier and it was dangerous for her to get up in the night. My sister was a slave to her needs for 5 years, and we ended up having 24/7 sitters watching after her which was very expensive. When she passed, she was down to her last $5k in cash.

The estate got back 90% of her security deposit. Her CCRC is a wonderful operation, but it was quite expensive when private duty nursing had come into play. I would have hated to have known how much their full nursing.home unit would have cost in ultra luxurious surroundings. It is really not an affordable place for the middle class, however.

 

[bmcgonig]

This is a very concerning issue - any opinions on this?

Rich

Here's an article on some CCRC bankruptcies. Seems like they were all taken over. However whether you got your refundable fee back was a hit or miss.

http://lawprofessors.typepad.com/el...pen-to-refundable-fees-in-troubled-ccrcs.html


One option is to play as little up front and as little per month, i.e., dont go for the 90% refundable, and don't go class A. But that's not really optimum for everyone.

Also it's good when your CCRC had a multi year waiting list, like that fancy Casa Dorinda where it's 5 years or so.

 

[ncbill]

IIRC ~$75,000 non-refundable buy-in for grandparents' 2BR/2BA cottage mid-1990s at the top CCRC here in town.

Monthly fee gradually increased until it suddenly doubled one month to next.

The explanation (paraphrased): "older residents are paying half what newer residents are, so we're leveling the playing field."

Still, it worked out well for them...grandad lasted a decade, grandma a decade past him.

 

[Scuba]

One of the biggest things seniors moving into these properties don’t seem to fully evaluate and understand is that the monthly rent can and will likely go up every year. In CA, many properties increase monthly costs 3-5% per year. It’s worth running the numbers out 15 go 20 years and seeing what the monthly costs will be then. For some, especially those with sizable portfolios invested at least 50% in equities, this probably won’t be a problem. But for those with less or fully invested in fixed income, the monthly increases seemed to create stress and some move-outs.

 

[nwsteve]

One of the biggest things seniors moving into these properties don’t seem to fully evaluate and understand is that the monthly rent can and will likely go up every year. In CA, many properties increase monthly costs 3-5% per year. It’s worth running the numbers out 15 go 20 years and seeing what the monthly costs will be then. For some, especially those with sizable portfolios invested at least 50% in equities, this probably won’t be a problem. But for those with less or fully invested in fixed income, the monthly increases seemed to create stress and some move-outs.

To your point--several CCRC "how to pick" resources recommend you request from your properties of interest their change history for monthly rate. The property we are targeting was ready for the question and provided both a graphical and numerical history since opening. Annual rate of monthly fee pretty much followed inflation for the period.

 

[Teacher Terry]

It would be terrible to put down a large deposit and then have to move out due to the monthly fees being too high.

 

[Scuba]

It would be terrible to put down a large deposit and then have to move out due to the monthly fees being too high.

In CA, disclosure of the last 3-5 years of monthly increases is required. However, I think people move in either falling in love with the community or out of an urgent need and fail to evaluate the impact of this on their own finances. Also people underestimate their longevity. People in good CCRC’s do tend to live longer, so it’s important to look at whether one’s portfolio can handle the average increase out through age 95 or 100, not just for a few years.

The increases are typically driven by the cost increases experienced by the provider. Often these exceed CPI because labor, food and energy are the top 3 operating costs.

 

[nwsteve]

It would be terrible to put down a large deposit and then have to move out due to the monthly fees being too high.

Keep in mind that many if not all of the Type A CCRC communities usually have a "benevolent fund" that will assist longer term residents with financial aid so they do not have to move. Each property has its own rules and provisions. This is one reason that the CCRC will closely examine your financials before they allow you to become a resident. Checking this out should be one of the items on your list.

 

[Scuba]

Keep in mind that many if not all of the Type A CCRC communities usually have a "benevolent fund" that will assist longer term residents with financial aid so they do not have to move. Each property has its own rules and provisions. This is one reason that the CCRC will closely examine your financials before they allow you to become a resident. Checking this out should be one of the items on your list.

This is an excellent point. If they are non-profit CCRC’s, they will definitely have this type of fund. It only kicks in if one truly runs out of money though, and divesting assets to the kids is not considered running out of money.

 

[harllee]

DH and I have our names on the waiting list for a very nice CCRC Type A in our area (waiting list is several years long). This CCRC has a Benevolent Fund (with several million dollars in it) to assist residents who have run out of assets so they do not have to move. I asked if the benevolent fund has ever been used and the answer was yes 2 times. Both times it was for women who were well over 100 (I think one was 105 years old) and at least one of them had Alzheimers. Both of theses old ladies had to have round the clock care and had run out of assets but the Benevolent Fund took over and paid for their care.

I asked how the Benevolent Fund got its assets (several million dollars ) and was told it was mainly from bequests and memorial gifts.

This eases my mind to know if I live a really long time and run out of assets I will not be kicked out of the CCRC.

 

[bmcgonig]

DH and I have our names on the waiting list for a very nice CCRC Type A in our area (waiting list is several years long). This CCRC has a Benevolent Fund (with several million dollars in it) to assist residents who have run out of assets so they do not have to move. I asked if the benevolent fund has ever been used and the answer was yes 2 times. Both times it was for women who were well over 100 (I think one was 105 years old) and at least one of them had Alzheimers. Both of theses old ladies had to have round the clock care and had run out of assets but the Benevolent Fund took over and paid for their care.

I asked how the Benevolent Fund got its assets (several million dollars ) and was told it was mainly from bequests and memorial gifts.

This eases my mind to know if I live a really long time and run out of assets I will not be kicked out of the CCRC.

Can you tell us more about this place?

 

[harllee]

The CCRC is Galloway Ridge, south of Chapel Hill, NC where we live. Check out their website. Many retired professors from the University of North Carolina located in Chapel Hill live there.

 

[harllee]

My mother lives in a nonprofit CCRC in a small North Carolina town, it is affiliated with a religious organization. It is not a Type A. She currently lives in independent care and if she has to go to assisted living, skilled nursing or memory care he monthly fees go up substantially. Fortunately she has long term care insurance. Even this CCRC has a Benevolent Fund to pay the expenses of a resident that runs out of money. When mother moved in, she was told no one had ever be "kicked out" because of lack of funds. Most of the nonprofit CCRCs I have looked into have a similar Benevolent Fund.

 

[Scuba]

My mother lives in a nonprofit CCRC in a small North Carolina town, it is affiliated with a religious organization. It is not a Type A. She currently lives in independent care and if she has to go to assisted living, skilled nursing or memory care he monthly fees go up substantially. Fortunately she has long term care insurance. Even this CCRC has a Benevolent Fund to pay the expenses of a resident that runs out of money. When mother moved in, she was told no one had ever be "kicked out" because of lack of funds. Most of the nonprofit CCRCs I have looked into have a similar Benevolent Fund.

Yes I agree, I would be surprised if any non-profit CCRC’s did not have a Benevolent Fund. That is one of the advantages of going with a non-profit CCRC vs a for-profit.

 

[bmcgonig]

The CCRC is Galloway Ridge, south of Chapel Hill, NC where we live. Check out their website. Many retired professors from the University of North Carolina located in Chapel Hill live there.

Thanks! Just looked at it. Nice. Interesting that they ask that you have 2-3 times the entrance fee. I can see having a multiple of the monthly fee but why a multiple of the entrance fee? Probably they all do it but I don't understand it.