CCRC downpayments - how to handle?

[engr]

Hello everyone

I have been retired for approximately four years. DW and I have recently been taking some lifelong learning classes at a nearby university. One class discusses 55 and over housing options (independent living, assisted living, nursing homes, etc. one option was CCRC living. This is also called life care living. Once you are in you can transition between the various stages of life in one location. CCRCs require a rather large down payment up front along with monthly payments. The range of downpayments can range from 100k to 600k. You get what you pay for. If we choose the CCRC route (so that only one move is required,hopefully) we can sell our house for 350k . This leaves a gap of 250k worst case. Has anyone on this board gone through this process and, if so, is there an alternate way of making up the gap besides using retirement savings? I figure I still have 10 years or more before we may need to move but like to have a plan in place. Thanks for your inputs

 

[SecondCor521]

My Dad has been in a CCRC for the past 11 years.

I'd make two comments:

1. Pick a CCRC you can afford. If you net $350K from your house sale, pick a place that has a down payment of less than $350K and monthly payments that work for you. I will note that one of the main drivers of CCRC costs is whether one lives within 100 miles of the coast. If one lives more than 100 miles from the coast, costs for comparable CCRCs can be 50% less expensive.

2. My Dad rents, so his down payment was essentially zero. His monthly payment is higher than if he had made a down payment, of course, but he got to keep the proceeds of his house sale invested. We analyzed it once and the rate of return they impute seems to be between 5% and 7% IIRC. He kept his money invested in the stock market and thinks he has exceeded that rate - albeit by taking on market risk. Additionally, it wasn't very clear what they would do with his down payment money when he transitioned from one care option to another or if he decided to move out of that CCRC for whatever reason, so the down payment has an effect of locking you in.

As it turns out, very few people move out of his CCRC. The few that move out seem to move out because their house doesn't sell, or they have family situations that come up, or they didn't plan their budget very well and have to move to a less expensive option. Most stay until they pass away, often after going into the assisted living or memory care portions.

 

[audreyh1]

Hello everyone

I have been retired for approximately four years. DW and I have recently been taking some lifelong learning classes at a nearby university. One class discusses 55 and over housing options (independent living, assisted living, nursing homes, etc. one option was CCRC living. This is also called life care living. Once you are in you can transition between the various stages of life in one location. CCRCs require a rather large down payment up front along with monthly payments. The range of downpayments can range from 100k to 600k. You get what you pay for. If we choose the CCRC route (so that only one move is required,hopefully) we can sell our house for 350k . This leaves a gap of 250k worst case. Has anyone on this board gone through this process and, if so, is there an alternate way of making up the gap besides using retirement savings? I figure I still have 10 years or more before we may need to move but like to have a plan in place. Thanks for your inputs

We would bridge any gap with retirement savings. That's part of what we saved for during retirement: CCRC or other long-term care and medical expenses.

 

[Walt34]

For my mother, she used the proceeds from the sale of the house to pay the entrance fee and then her regular income from pension, SS, and investments was more than enough to keep her afloat in independent living. When she went to assisted living, a "back-of-the-envelope" calculation showed she could stay there for 10 years before assets were exhausted, and four years in full nursing care if that ever became needed. It wasn't.

FIL waited too long and had to straight out rent but it was still sustainable in independent living. He spent one night in the apartment and then went to nursing care because of a diabetic episode and lasted a bit less than a year.

We plan on using the equity from the house to pay an entrance fee and then regular income to cover monthly expenses.

 

[harllee]

DH and I have our names on the waiting list for a CCRC. When you move in you pay a fairly substantial entrance fee. The CCRC gives you a letter which states that a portion of the entrance fee is considered a "medical expense" for IRS purposes. According to my research, it appears that DH and I can use our Health Savings Accounts to the pay the medical expense portion of the CCRC fee. We have about $100,000 in our HSAs so we plan to use that toward a portion of the CCRC entrance fee. The rest will come from sale of our house and retirement funds.

 

[Silver]

We are also about 10 years out from moving into a CCRC that we have chosen. We plan to move before we sell our current home, (can't stand the real estate showings while living in the home) so we plan to pay the entrance fees from a combination of savings and investments, and then invest the equity once the house sells.

The CCRC we have chosen currently has a $280k entrance fee for the type of apartment we want, and we have been told to anticipate a least a 2-3% yearly increase for the next 10 years. We believe we will be looking at about $360k entrance when we are ready, which is fine.

 

[imoldernu]

Not all CCRC's are the same.

There's quite a bit of misunderstanding here about CCRC's.

I think this article may clear up some of the questions.

https://www.mylifesite.net/blog/post/choosing-a-ccrc-which-contract-model-is-best/

There are Type A, B, and C CCRC's, each of which offers different cost options. Type A and type B require "endowments"
Our CCRC would be considered a Type C.

We have lived in our Liberty Village CCRC in Peru, IL., since 2004.
We live in a Villa, a regular home, and have no buy-in payment. One of 79 homes.
By living here, we are first in line to live in any one of the following:
69 Independent living apartments
49 Assisted living units
69 nursing home units
65 memory care units
All, including the Villas, have access to extensive, modern rehab/exercise facilities, and 40 units called "bounceback" for anyone recovering from any illness, for up to several months.

When it comes time to go into any of the other facilities, the only monies required are 2 months reserve, and one month's rent. For two persons in independent living, about 9K ($3000mo.)... That includes Room, meals, internet and TV, transportation, activities, and virtually everything one may need.

As needs increase, so would rents.... assisted living etc. The current maximum nursing home expense in our community is about $76Kyr.

The current average home (villa ) value is approximately $180K, and vacancies are virtually unknown, as people are waiting.

Our facilities and homes are quite nice, well maintained, with good staffing where help is needed.

I am not sure how many LV's there are now... I think about 15. For more general information, google simply the finest. Some good FAQ's.

Am not trying to sell this, but I think that too many people are put off by the "Endowment" type CCRC's, and turn to local lower quality communities because of the sometimes very high upfront cost.

 

[Scuba]

Hello everyone



I have been retired for approximately four years. DW and I have recently been taking some lifelong learning classes at a nearby university. One class discusses 55 and over housing options (independent living, assisted living, nursing homes, etc. one option was CCRC living. This is also called life care living. Once you are in you can transition between the various stages of life in one location. CCRCs require a rather large down payment up front along with monthly payments. The range of downpayments can range from 100k to 600k. You get what you pay for. If we choose the CCRC route (so that only one move is required,hopefully) we can sell our house for 350k . This leaves a gap of 250k worst case. Has anyone on this board gone through this process and, if so, is there an alternate way of making up the gap besides using retirement savings? I figure I still have 10 years or more before we may need to move but like to have a plan in place. Thanks for your inputs

The entrance fees are typically based on apartment size and location. If you choose a more rural location and/or a smaller unit, your entrance fees will be much lower than a large unit in a coastal location.

 

[gauss]

There's quite a bit of misunderstanding here about CCRC's.

I think this article may clear up some of the questions.

https://www.mylifesite.net/blog/post/choosing-a-ccrc-which-contract-model-is-best/

There are Type A, B, and C CCRC's, each of which offers different cost options. Type A and type B require "endowments"
Our CCRC would be considered a Type C.

We have lived in our Liberty Village CCRC in Peru, IL., since 2004.
We live in a Villa, a regular home, and have no buy-in payment. One of 79 homes.
By living here, we are first in line to live in any one of the following:
69 Independent living apartments
49 Assisted living units
69 nursing home units
65 memory care units
All, including the Villas, have access to extensive, modern rehab/exercise facilities, and 40 units called "bounceback" for anyone recovering from any illness, for up to several months. ...

Thanks! Good to know there are other options.

To clarify the bold section above, the web site indicates that you actually purchase the villa.

Not exactly a buy-in payment, but assets or credit is needed to purchase the villa up front -- correct?

-gauss

 

[harllee]

So are we the only ones planning to use our HSA to pay part of the CCRC buy in (discussed above)?

 

[audreyh1]

So are we the only ones planning to use our HSA to pay part of the CCRC buy in (discussed above)?

Few folks have $100K+ in their HSA?

I expect that’s the main reason.

We plan to drain our HSA to pay for Medicare premiums before We are old enough to move into a CCRC. We would use savings to pay for CCRC down payment and hopefully can take advantage of the medical expense deduction on taxes.

 

[harllee]

I thought by now having $100,000 in an HSA would not be unusual. Both DH and I have our own HSAs, we have had them 10 years plus, putting in the maximum allowable each year and invested in the stock market. We are each 67 and have not taken anything out of the HSAs so far. When I realized I could use the HSAs to help with our CCRC buy in-- that was a real benefit.

 

[nwsteve]

Don't forget that if you are going to a Life Care property, a significant portion of your entry fee is likely deductible as medical expense. For the CCRC we are considering, we are looking at a 35-38% of the entry fee in the year of payment. Plus there is a similar percentage of monthly maintenance fees each. year. Keep in mind it is a medical deduction so you must be itemizing.

 

[youbet]

Few folks have $100K+ in their HSA?

I expect that’s the main reason.

We plan to drain our HSA to pay for Medicare premiums before We are old enough to move into a CCRC. We would use savings to pay for CCRC down payment and hopefully can take advantage of the medical expense deduction on taxes.

Hey audreyh1......... I respect your opinion so would you mind sharing it on this subject? Are you most interested in a type A, B or C CCRC? We were thinking type A (Lifecare) but have been following imolderthanu's comments on his type C experience and also have seen some gotcha's with the type A's. Don't really see the point of a type B.

Thanks.

 

[audreyh1]

Hey audreyh1......... I respect your opinion so would you mind sharing it on this subject? Are you most interested in a type A, B or C CCRC? We were thinking type A (Lifecare) but have been following imolderthanu's comments on his type C experience and also have seen some gotcha's with the type A's. Don't really see the point of a type B.

Thanks.

Not that far along. We have no children so I’ve wanted a facility that smoothly handles more care as needed. Been leaning most toward type A but haven’t researched in detail. DH is 63 and I’m 59, so it’s a ways yet for us.

 

[Bamaman]

We paid $170K cash to get my mother into a CCRC. Had it been two people, it would have been more like $235K. Technically, that was a security deposit. Her one bedroom apartment rent with full kitchen was $2050 per month including 20 meals monthly prepared by a Dutch chef. Upon her death, we received 90% of her deposit into the estate.

The deposits charged were so the CCRC would be assured that their residents (1) had the capacity to pay every month, (2) so they wouldn't get caught having to accept Medicaid on those with no financial resources and (3) to keep the social riff raff out.

If I had to compare the CCRC to a car, it was a Mercedes kind of place. And the restaurant was the nicest facility of any restaurant in a city of a million people.

 

[imoldernu]

Thanks! Good to know there are other options.

To clarify the bold section above, the web site indicates that you actually purchase the villa.

Not exactly a buy-in payment, but assets or credit is needed to purchase the villa up front -- correct?

-gauss

It is just a matter of buying the house. The HOA works with the CCRC main facilities in that we are able to join in any of the benefits offered by the rest of the CCRC parts. Social, transportation, fitness center, and activities events or "Bounce Back". We spend quite a bit of time in all of these offerings. At the moment, DW is playing Bridge in the main building.

We purchased our Villa in 2004 for $140K... Current value is 185-190K... not a great profit, but in total, enough to pay our way for about 5 or 6 years in the apartments, should we decide that life is getting too complicated for independent living in a home. We've seen too many people just 5 or 10 years older than us get buried in trying to stay in the old homestead. It's a reality check.

For the time being, we're very content in living in our 1600 s.f. home. The best part of living here, is the knowledge that if something happens to either jeanie or me, healthwise, that there will be no anxiety about what to do. We feel we're prepared.

While the rest of the Villas are occupied by different ages and interests, there are enough "younger" couples who make up a fairly active society.

The downside of a type C CCRC, is the high cost of nursing home care. We do have some risk if we were to go into that care, that our savings would be seriously depleted after 4 or 5 years. Our LTC $100/day would help some, but we've agreed on the risk. By that time we'd both be well into our 90's. haven't thought that far ahead.

A lot of the questions that have arisen, are answered in the FAQ section of the website.

 

[nwsteve]

We are the process of making the move to a Life Care (Type A) CCRC. Our thinking for choosing the Type A model is based on our personal assessment of these factors:
1. Be able to choose where we spend our senior years as opposed to imposing on our only DD and being at risk having our choice of "what's available" vs what we chose. Early boomers should recognize that as our "bubble" hits later years the demand may well exclude supply of living arrangements when you may be in need.
2. Insurance to ensure we have protection should either of us suffer from a cognitive impairment that requires extensive supervision. No being victim of a court appointed nursing home.
3. Locking in our costs (yes monthly fees will raise but only by inflation) for future care and housing needs including any assisted living and skill nursing needs.
4. Ensure we have a framework that will encourage socialization, and healthful living. (one of the CCRCs we visited shared that their residents were outliving their actuarial tables--in part due to their living environment).
5. Gaining a medical advocate (on staff medical resources) to help sort out medical care and the complexity of finding appropriate medical resources.
6. And not the least, a great deal at a new property desiring to accelerate its occupancy ratios (It helped that the operator is an established non-profit management company of CCRCs).
I am sure there are as many reasons as there are folks looking at the CCRC option, so
YMMV.

 

[youbet]

We paid $170K cash to get my mother into a CCRC. Had it been two people, it would have been more like $235K. Technically, that was a security deposit. Her one bedroom apartment rent with full kitchen was $2050 per month including 20 meals monthly prepared by a Dutch chef. Upon her death, we received 90% of her deposit into the estate.

The deposits charged were so the CCRC would be assured that their residents (1) had the capacity to pay every month, (2) so they wouldn't get caught having to accept Medicaid on those with no financial resources and (3) to keep the social riff raff out.

If I had to compare the CCRC to a car, it was a Mercedes kind of place. And the restaurant was the nicest facility of any restaurant in a city of a million people.

Was this a Type A contract "Life Care" facility?

 

[audreyh1]

We are the process of making the move to a Life Care (Type A) CCRC. Our thinking for choosing the Type A model is based on our personal assessment of these factors:
1. Be able to choose where we spend our senior years as opposed to imposing on our only DD and being at risk having our choice of "what's available" vs what we chose. Early boomers should recognize that as our "bubble" hits later years the demand may well exclude supply of living arrangements when you may be in need.
2. Insurance to ensure we have protection should either of us suffer from a cognitive impairment that requires extensive supervision. No being victim of a court appointed nursing home.
3. Locking in our costs (yes monthly fees will raise but only by inflation) for future care and housing needs including any assisted living and skill nursing needs.
4. Ensure we have a framework that will encourage socialization, and healthful living. (one of the CCRCs we visited shared that their residents were outliving their actuarial tables--in part due to their living environment).
5. Gaining a medical advocate (on staff medical resources) to help sort out medical care and the complexity of finding appropriate medical resources.
6. And not the least, a great deal at a new property desiring to accelerate its occupancy ratios (It helped that the operator is an established non-profit management company of CCRCs).
I am sure there are as many reasons as there are folks looking at the CCRC option, so
YMMV.

Really appreciating your informing posts on this topic!

 

[youbet]

We are the process of making the move to a Life Care (Type A) CCRC. Our thinking for choosing the Type A model is based on our personal assessment of these factors:
1. Be able to choose where we spend our senior years as opposed to imposing on our only DD and being at risk having our choice of "what's available" vs what we chose. Early boomers should recognize that as our "bubble" hits later years the demand may well exclude supply of living arrangements when you may be in need.
2. Insurance to ensure we have protection should either of us suffer from a cognitive impairment that requires extensive supervision. No being victim of a court appointed nursing home.
3. Locking in our costs (yes monthly fees will raise but only by inflation) for future care and housing needs including any assisted living and skill nursing needs.
4. Ensure we have a framework that will encourage socialization, and healthful living. (one of the CCRCs we visited shared that their residents were outliving their actuarial tables--in part due to their living environment).
5. Gaining a medical advocate (on staff medical resources) to help sort out medical care and the complexity of finding appropriate medical resources.
6. And not the least, a great deal at a new property desiring to accelerate its occupancy ratios (It helped that the operator is an established non-profit management company of CCRCs).
I am sure there are as many reasons as there are folks looking at the CCRC option, so
YMMV.

DW and I have toured Type A, B and C facilities in this area. We like the concept of living in a CCRC sometime in the future but the differences between the pay-as-you-go Type B and C and the Life Care Type A contracts are making us dizzy. The more we tour and read, the more intertwined the pros and cons of the different contractual arrangements become.

Really enjoyed your list above, but isn't the only item particular to a Type A Life Care arrangement item #3? Wouldn't you get all the others in a Type B or C situation with the advantage being that you are less locked in should you want to move?

Also, in he facility you'll be moving to, is assisted living done by sending periodic help to your independent living apartment or would you actually move to an assisted living apartment? We've toured places here that do it both ways. We can see advantages to either way.

It seems important to really deep dive into CCRC's before making a final decision between Type A, B or C and then which particular CCRC. But, darn, we're starting to get overloaded with information about various nuances and the process is getting painful.

 

[nwsteve]

Youbet, you are correct that item 3 in my OP is probably the only one that is completely unique to a Life Care (Type A) property. In the facility we are moving to, full Asst Living is done in a dedicated wing. Most of the Type A properties seem to provide help in your unit if the aid is short term or doesn't require higher levels of skill from staff. If the assistance required is going be ongoing and especially if the assistance is for multiple needs, then you will be moved to Asst Living. What we like is that with the type As we seen, both spouses do not have to move if only one has the need. The only increase in cost is for the extra meals required in Asst Living. If you are in a Type B or C, you are faced with a big jump in costs and complexity when your cognitive horsepower may no longer be sufficiently robust to deal with the challenges esp if the spouse has serious medical complications.

Also agree +1000 times that the CCRC choice requires a fair amount of effort to unearth and understand the details before deciding. The book Holistic Living in Life Plan Communities I found very helpful in flushing out the multitude of issues you will want to vet. (got in paperback from Amz).
If you do decide a CCRC is part of your plans, I would recommend you make the refundable deposit to get on the waitlist (the ones we saw only required a $1000). The properties we saw would allow you to pass on open units until you are ready.

 

[harllee]

We are on the wait list for a Type A Life Care CCRC. One reason we are interested in the Type A is that with that kind we can have a handle on future costs if one or both of us need to move to skilled nursing or memory care. We do not have Long Term Insurance so it seems to us the a Type A facility sort of takes the place of LTCI. In fact, the one where we are on the waiting list tells you that you do not need LTCI if you move in there. They pretty much discourage LTCI.

 

[ChrisC]

Youbet, you are correct that item 3 in my OP is probably the only one that is completely unique to a Life Care (Type A) property. In the facility we are moving to, full Asst Living is done in a dedicated wing. Most of the Type A properties seem to provide help in your unit if the aid is short term or doesn't require higher levels of skill from staff. If the assistance required is going be ongoing and especially if the assistance is for multiple needs, then you will be moved to Asst Living. What we like is that with the type As we seen, both spouses do not have to move if only one has the need. The only increase in cost is for the extra meals required in Asst Living. If you are in a Type B or C, you are faced with a big jump in costs and complexity when your cognitive horsepower may no longer be sufficiently robust to deal with the challenges esp if the spouse has serious medical complications.

Also agree +1000 times that the CCRC choice requires a fair amount of effort to unearth and understand the details before deciding. The book Holistic Living in Life Plan Communities I found very helpful in flushing out the multitude of issues you will want to vet. (got in paperback from Amz).
If you do decide a CCRC is part of your plans, I would recommend you make the refundable deposit to get on the waitlist (the ones we saw only required a $1000). The properties we saw would allow you to pass on open units until you are ready.

I think it is very difficult to generalize about the different types of CCRCs, even within the generic types of A, B or C. For instance, I'm seriously looking at what might be generally classified as a Type B community, with equity ownership in your unit, a membership fee equal to 10 percent of the purchase price of your residential unit, and a monthly maintenance fee, which covers almost every aspect of your campus living arrangements (e.g. breakfast is always served and free and then one gets a meal plan of 20 meals a month). It has highly active independent living features with resort-like amenities. But if one glides into needing more care, it offers home-care/ assisted living services in the unit you purchased (at no charge beyond the monthly maintenance fee); and if you later need skilled nursing care, it has an on-site skilled nursing health care center with XX number of beds available for residents in which the cost of care there is at a "discounted rate." Personally, I prefer the Type B or C arrangement especially if there's equity ownership of your unit -- this arrangement works well if you have LTCi to cover home care or skilled nursing care.

 

[nwsteve]

I think it is very difficult to generalize about the different types of CCRCs, even within the generic types of A, B or C. For instance, I'm seriously looking at what might be generally classified as a Type B community, with equity ownership in your unit, a membership fee equal to 10 percent of the purchase price of your residential unit, and a monthly maintenance fee, which covers almost every aspect of your campus living arrangements (e.g. breakfast is always served and free and then one gets a meal plan of 20 meals a month). It has highly active independent living features with resort-like amenities. But if one glides into needing more care, it offers home-care/ assisted living services in the unit you purchased (at no charge beyond the monthly maintenance fee); and if you later need skilled nursing care, it has an on-site skilled nursing health care center with XX number of beds available for residents in which the cost of care there is at a "discounted rate." Personally, I prefer the Type B or C arrangement especially if there's equity ownership of your unit -- this arrangement works well if you have LTCi to cover home care or skilled nursing care.

Beyond the basic three contract types. I totally agree that generalizing about CCRCs can be misleading. Every property has its unique attributes. The property we are going to is managed by a company which runs another property about an hour away in a much larger community. The one we are going to is new so has a pretty young population (ave age 75) the other is a mature property with a long waitlist and ave age of 81. Similar contracts for entry and both Type A but looks and feel are night and day.