How to decide on a CCRC

[Scuba]

What about not-for-profit versus for-profit?

Thanks

The biggest difference I’m aware of is that most for-profit companies will not allow residents to stay if they run out of money. Not-for-profits generally will under certain conditions. If you run out of money because you gave it away, that won’t help you stay.

 

[harllee]

The CCRC where I am moving to is a nonprofit and has a separate trust fund (with millions) to pay for people who run out of money. I asked about the trust fund and was told it is currently being used to support 2 ladies both over 100 who have run out of money. The trust fund also gives scholarships to employees who work there to get their CNAs etc. I have noticed that obituaries for people who live at the CCRC ask for memorials to go to this trust fund.

 

[bmcgonig]

So let’s say we end up in a CCRC and we’re 95 and have significant issues like dementia or just mild cognitive impairment. Maybe we have problems paying bills etc. We have no kids. How do we go about paying the CCRC every month especially if for some reason we move up in care and costs change. Do they have some way of doing this so that everything is taken care of and above board?

 

[braumeister]

So let’s say we end up in a CCRC and we’re 95 and have significant issues like dementia or just mild cognitive impairment. Maybe we have problems paying bills etc. We have no kids. How do we go about paying the CCRC every month especially if for some reason we move up in care and costs change. Do they have some way of doing this so that everything is taken care of and above board?

If you worry about that then you would want a Type A contract, since your monthly fee doesn't change. Very few CCRCs today offer a Type A, so they're not easy to find.

Also, as harllee mentioned above, some of the nonprofits have a fund designed to support long time residents in this situation. A couple I visited actually boasted about the millions they spend each year out of the fund for such a purpose.

Bottom line is that you have to do your homework, which most likely means detailed discussions with the sales reps at the ones you're interested in.

 

[harllee]

So let’s say we end up in a CCRC and we’re 95 and have significant issues like dementia or just mild cognitive impairment. Maybe we have problems paying bills etc. We have no kids. How do we go about paying the CCRC every month especially if for some reason we move up in care and costs change. Do they have some way of doing this so that everything is taken care of and above board?

All the CCRCs I have been involved with require that you have a durable POA and give the CCRC a copy when you move in. My mother is in a CCRC and has some memory loss. I am her POA and have taken over paying her bills. Her POA fees are direct debited from her checking. My DH and I have no children, we have other family members named as our POA.

 

[bmcgonig]

All the CCRCs I have been involved with require that you have a durable POA and give the CCRC a copy when you move in. My mother is in a CCRC and has some memory loss. I am her POA and have taken over paying her bills. Her POA fees are direct debited from her checking. My DH and I have no children, we have other family members named as our POA.

Interesting, thanks. Not to beat a dead horse here, but suppose you outlive those you give your POA to? My mom lived till she was 102. If she didn’t have kids all her relatives were too old or dead to be a POA. Maybe assign it to a local attorney?

 

[Sunset]

Interesting, thanks. Not to beat a dead horse here, but suppose you outlive those you give your POA to? My mom lived till she was 102. If she didn’t have kids all her relatives were too old or dead to be a POA. Maybe assign it to a local attorney?

My guess would be:
The CCRC would apply to the court to become the POA, and all the automatic payments would continue during that time from the checking account where SS, etc are deposited monthly.

If a person was worried, then assign a POA and conditional POA's.

 

[harllee]

I have my sister as my substitute POA (she is 10 years younger than me) and I should probably add my 28 year old niece as a third substitute (she is 28 and level headed).

 

[ChrisC]

If you worry about that then you would want a Type A contract, since your monthly fee doesn't change. Very few CCRCs today offer a Type A, so they're not easy to find.

Also, as harllee mentioned above, some of the nonprofits have a fund designed to support long time residents in this situation. A couple I visited actually boasted about the millions they spend each year out of the fund for such a purpose.

Bottom line is that you have to do your homework, which most likely means detailed discussions with the sales reps at the ones you're interested in.

I would be surprised that any Type A contract would lock it’s monthly maintenance fee to a flat fee, not adjusted for inflation, for residents; it would cause me to doubt the financial acumen of that CCRC.

 

[braumeister]

I would be surprised that any Type A contract would lock it’s monthly maintenance fee to a flat fee, not adjusted for inflation, for residents; it would cause me to doubt the financial acumen of that CCRC.

No, of course I didn't mean to imply that. What I meant is that, although subject to the same inflationary increases as other fees, there is usually no increase when moving from independent living to assisted living, etc.

 

[Sunset]

No, of course I didn't mean to imply that. What I meant is that, although subject to the same inflationary increases as other fees, there is usually no increase when moving from independent living to assisted living, etc.

I see it as:

It's probably more expensive compared to other types in the beginning as the money has to come from somewhere to not charge extra when/if extra services are needed.
I could imagine the pooled effect means for the people needing it, it turns out a great deal.

 

[braumeister]

It's probably more expensive compared to other types in the beginning as the money has to come from somewhere to not charge extra when/if extra services are needed.
I could imagine the pooled effect means for the people needing it, it turns out a great deal.

Exactly.

 

[harllee]

I look at the type A CCRC as being a kind of Long Term Care Insurance policy. You pay more on the front end for much less expensive care on the back end. And you get to live in a very nice place. People at the Type A CCRC where I am moving are paying around $4000 per month for skilled nursing care.

 

[braumeister]

I look at the type A CCRC as being a kind of Long Term Care Insurance policy.

Agreed, it's the equivalent, and is what makes a Type A contract different from all others. Peace of mind.

 

[lucky penny]

I see it as:

It's probably more expensive compared to other types in the beginning as the money has to come from somewhere to not charge extra when/if extra services are needed.
I could imagine the pooled effect means for the people needing it, it turns out a great deal.

Yes, more expensive when you first move in at the independent living level, & part of the entrance fee & monthly fees are deductible as prepaid LTC insurance. But it could turn into a bargain if you later need assisted living, memory care and/or skilled nursing for a long period.

 

[harllee]

A big chunk of my entrance fee for the Type A CCRC I am moving into is considered a medical expense for tax purposes. I am going to use my HSA to pay that portion of my entrance fee.

 

[ChrisC]

No, of course I didn't mean to imply that. What I meant is that, although subject to the same inflationary increases as other fees, there is usually no increase when moving from independent living to assisted living, etc.

Fair enough, but all of the Type B or Modified B or C contracts in my neck of the woods keep monthly maintenance fees the same whether in independent living, assisted living at the unit, LTC with skilled nursing care on a campus center. The only difference for the most part in the Type B or C contracts is that the per diem cost of LTC replaces the monthly maintenance fee for independent living. On the one hand, the Type A contract absorbs the potential cost of LTC by having highly inflated entrance fees, LTC you may never need like claims never advanced under a LTCi policy. On the other hand, a Type B or Type C contract paired with an LTCi gets you to the same place,

I get that you really like the Type A contract; but in my view the benefits of the LTC coverage for the Type A contract are over-hyped and fraught with more business viability risk to the CCRC, which is perhaps a reason why the entrance fees are so high and why the industry appears to be moving away from these contracts.

 

[ChrisC]

A big chunk of my entrance fee for the Type A CCRC I am moving into is considered a medical expense for tax purposes. I am going to use my HSA to pay that portion of my entrance fee.

The better financial play might be to draw from your traditional (non-Roth) tax advantaged accounts to pay for the entrance fee, in which case, the income tax against a likely big draw to pay high entrance fees would be offset against your available itemized deductions, including these tax deductible, prepaid medical expenses from your CCRC entrance fees. I'd pay monthly maintenance fees (a portion of which should be tax deductible again as a prepaid medical expense) with the HSA funds.

You should take a sharp pencil to discern the best financial play -- if you have RMDs already, why not draw down the funds in your RMD affected tax advantage account for your benefit and not hand over to Uncle Sam. Besides, drawing down a huge chunk of funds in a tIRA could possibly diminish future RMD hits (though you might wind up with a spiked-up IRMAA charges for one year).

 

[harllee]

Fair enough, but all of the Type B or Modified B or C contracts in my neck of the woods keep monthly maintenance fees the same whether in independent living, assisted living at the unit, LTC with skilled nursing care on a campus center. The only difference for the most part in the Type B or C contracts is that the per diem cost of LTC replaces the monthly maintenance fee for independent living. On the one hand, the Type A contract absorbs the potential cost of LTC by having highly inflated entrance fees, LTC you may never need like claims never advanced under a LTCi policy. On the other hand, a Type B or Type C contract paired with an LTCi gets you to the same place,

I get that you really like the Type A contract; but in my view the benefits of the LTC coverage for the Type A contract are over-hyped and fraught with more business viability risk to the CCRC, which is perhaps a reason why the entrance fees are so high and why the industry appears to be moving away from these contracts.

In my area the type B and C CCRCs are very different from what you describe. For example, my mother is in a Type B CCRC. Currently she pays $2,300 per month for her independent living apartment and a few services. If she has to go to skilled nursing, it will cost her around $8000 to 9000 per month. This it typical for the Type B CCRCs in my area. She has Long term care insurance that she got years ago but it will only pay about half of the cost of skilled nursing and only for 3 years. The premiums on her long term care insurance continue to increase about 10% a year and she has paid more in premiums than she will ever receive from her long term care policy.

 

[ChrisC]

In my area the type B and C CCRCs are very different from what you describe. For example, my mother is in a Type B CCRC. Currently she pays $2,300 per month for her independent living apartment and a few services. If she has to go to skilled nursing, it will cost her around $8000 to 9000 per month. This it typical for the Type B CCRCs in my area. She has Long term care insurance that she got years ago but it will only pay about half of the cost of skilled nursing and only for 3 years. The premiums on her long term care insurance continue to increase about 10% a year and she has paid more in premiums than she will ever receive from her long term care policy.

I'm not sure our areas are so different, since I think you live in the RDU area and I'm in the CLT area, a few hours away from each other in North Carolina. Obviously, the cost of LTC on a CCRC campus will be greater than the monthly maintenance fee for those taking up residence in the independent living wing. It's not typical in CLT for the cost of LTC to be 3 or 4 times the cost of monthly maintenance fees in Part B type contracts, and in most cases a good LTCi policy will cover the LTC costs in the skilled nursing wing for a specified period.

In the CCRC we're waitlisted, a single person living in the lowest priced apartment unit would pay in monthly maintenance fees, $3,357. If she went into semi-private skilled nursing, the per diem cost for LTC would be $252 or $7,560 monthly. A decent LTCi policy, like the one I purchased in 2003, pays a per diem cost of $322 for LTC for 5 years -- my premiums have increased over the years, and it's currently at $2K annually.

Nonetheless, if you really want to discern differences and dig deeper in Type A and Type B or C contract costs, when LTCi is added to the mix, I suggest you look at the pricing models of the CCRCs in one of the biggest, non-profit CCRC providers in the country. You can start with this one in CLT:https://www.actsretirement.org/comm...8TxPEx8RUpCBzIbO1G_Jo3-THcDKbwyxoCDJwQAvD_BwE

 

[harllee]

My DH could not qualify for long term care insurance when he was in his 50s (due to psoriatic arthritis) so that was never an option for us. The Type A CCRC is perfect for us.