Moved into CCRC today

[SecondCor521]

Being a Tar Heel fan I will forgive your son in law for his degrees from Duke.

Thank you!

One saving grace at my CCRC is the large Trust Fund they have for people who run out of money. They have never kicked any one out for lack of funds. I was told there are currently 2 residents who have run out of money and are having their payments made out of the Trust Fund-- one is 104 and the other is 105. They have out lived their money and reside in the nursing home.

Yeah, my Dad's place works differently. There's no trust fund like at yours, so I'm pretty sure you get kicked to the curb if you can't pay your rent.

On the other hand, there are no financial disclosures or physical/mental tests to pass on the front end. Perhaps there is a cursory check to make sure you're not a serial killer, but otherwise if your deposit clears and you can pay the entry fee, you're in.

 

[Scuba]

Harllee-



Happy for you that this decision is working out. I've always been a CCRC (versus LTCI) advocate. We're a bit younger (60s) but, have done lots of research on CCRCs here in the SF Bay Area. One of the highly rated Life Care contract facilities in our area is currently going through the process of eliminating (actually outsourcing) their Skilled Nursing Care residences. I don't know the details yet but, I have to say that this concerns me when considering this care model. Have you seen this with any CCRCs in your area?



For those who want to do more CCRC research, we have a sticky thread here in the Forum; posted link below.



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

It is very difficult for skilled nursing to operate profitably in CA. Reimbursement rates have been reduced while staffing ratios and other regulations which drive costs have stayed the same or become more stringent. Independent and assisted living have been subsidizing the skilled nursing operation, but can only do that to a certain extent before it no longer makes financial sense.

 

[harllee]

We are a married couple with kids and grandkids and think a CCRC is a good option for us. Why the emphasis on no kids? It seems to us that going into a CCRC would be a great thing for us to do for the kids. I'm concerned I'm missing something here.

I don't think you are missing anything, I am sure that most people in CCRCs have children. I think a CCRC is a good option for anyone. But a number of our friends who do have children and grandchildren say that they do not need to move into a CCRC because their children/grandchildren will take care of them. I wonder what the children/grandchildren have to say about this.

One factor--since we have no children we opted for the option where our estate gets no refund of the entrance fee upon our deaths. I think some people with children opt for the refund option but it makes the entrance fee much higher. You have to run the numbers.

 

[lucky penny]

Thank you!



Yeah, my Dad's place works differently. There's no trust fund like at yours, so I'm pretty sure you get kicked to the curb if you can't pay your rent.

On the other hand, there are no financial disclosures or physical/mental tests to pass on the front end. Perhaps there is a cursory check to make sure you're not a serial killer, but otherwise if your deposit clears and you can pay the entry fee, you're in.

If he runs out of money & the place accepts Medicaid, I believe they can't kick him out & Medicaid gets everything, provided he qualifies.

 

[SecondCor521]

If he runs out of money & the place accepts Medicaid, I believe they can't kick him out & Medicaid gets everything, provided he qualifies.

Good point.

I haven't bothered investigating this aspect yet since at this point he is 87 and running at a sub-2% WR. With his high medical costs, he will be able to have itemized deductions over half his AGI, so much lower taxes. Also, he really doesn't travel any more.

 

[harllee]

There are tax benefits to being in a CCRC. The CCRC will give us a letter at the end of the year specifying the percentage of our entrance fee and monthly fees that are deductible as a medical expense for income tax purposes. I have not been able to itemize deductions for many years so this will be a tax benefit to me. One thing I have to think through is our charitable giving. We have been doing all our charitable giving through our IRAs as a QCD but maybe it will be better for us to take out RMD distributions from our IRAs and then give to the charity so we can itemize our charitable deductions. I do my taxes myself using Turbotax, will have to run some numbers.

 

[braumeister]

There are tax benefits to being in a CCRC. The CCRC will give us a letter at the end of the year specifying the percentage of our entrance fee and monthly fees that are deductible as a medical expense for income tax purposes.

I think that is only for Type A contracts, isn't it?

 

[harllee]

I think that is only for Type A contracts, isn't it?

I don't think it is limited to Type A. My mother is in a Type C fee for services CCRC and she gets a letter each year specifying the amount of her monthly fees that are considered a medical deduction. I prepare her taxes and itemize and take the medical expense portion as a deduction. have been doing it for years and have never had it questioned.

 

[Koolau]

I've spent a lot on medical over the years. I've never reached the minimum to deduct on my taxes. Of course, that may well be because I have good medical insurance.

Here's a site I found on tax deductions for medical. Not sure if it mentions CCRC or not.

https://www.irs.gov/publications/p502

 

[SecondCor521]

There are tax benefits to being in a CCRC. The CCRC will give us a letter at the end of the year specifying the percentage of our entrance fee and monthly fees that are deductible as a medical expense for income tax purposes. I have not been able to itemize deductions for many years so this will be a tax benefit to me. One thing I have to think through is our charitable giving. We have been doing all our charitable giving through our IRAs as a QCD but maybe it will be better for us to take out RMD distributions from our IRAs and then give to the charity so we can itemize our charitable deductions. I do my taxes myself using Turbotax, will have to run some numbers.

Unless your QCD giving is approaching $100K per taxpayer and you still want to give more (rare, but possible), it is generally strictly better to do giving through QCDs rather than Schedule A itemized donations.

There are a few reasons for this:

1. Schedule A deductions are reduced in impact because you get the standard deduction (maybe $27K or so in your case, since I'm pretty sure you're MFJ and at least one of you is over 65 maybe?) for free. If you know you'll be itemizing due to the medical deductions anyway, this is less of a concern but it's still less than optimal. If you're close to itemizing, you could consider a strategy of giving every other year ("bunching") and alternating itemizing and taking the standard deduction. Remember too that the medical percentage from the CCRC will have 7.5% of your AGI subtracted before it starts adding to your Schedule A deductions. That, plus the ~$27K standard deduction makes itemizing a very high bar these days.

2. QCDs reduce AGI; itemized deductions do not. Many other things key off AGI, including state income taxes usually, ACA subsidies (not a concern in your case I'm guessing), eligibility for a number of tax benefits, and IRMAA tiers. It also looks like QCDs would reduce SS provisional income, which would reduce the amount of your SS benefits subject to taxation.

3. A minor issue, but in some cases significant generosity can be limited on Schedule A. As far as I know, those limitations do not apply to QCDs.

I don't think it is limited to Type A. My mother is in a Type C fee for services CCRC and she gets a letter each year specifying the amount of her monthly fees that are considered a medical deduction. I prepare her taxes and itemize and take the medical expense portion as a deduction. have been doing it for years and have never had it questioned.

Ditto my Dad.

 

[SecondCor521]

I've spent a lot on medical over the years. I've never reached the minimum to deduct on my taxes. Of course, that may well be because I have good medical insurance.

Here's a site I found on tax deductions for medical. Not sure if it mentions CCRC or not.

https://www.irs.gov/publications/p502

See the following link in that document:

https://www.irs.gov/publications/p502#en_US_2022_publink1000178972
https://www.irs.gov/publications/p502#en_US_2022_publink1000178988

where it talks about whether you can deduct meals and lodging and mentions "the cost of medical care in a nursing home, home for the aged, or similar institution, for yourself, your spouse, or your dependents."

 

[harllee]

Thanks SecondCor521! You are a tax whiz and saved me a ton of research. This year we will for sure be able to itemize our medical expenses because of the large CCRC entry fee. So we will probably do the QCD for charity as usual. In future years it might be a closer call because our medical expenses will not be as large.

 

[Aerides]

We are a married couple with kids and grandkids and think a CCRC is a good option for us. Why the emphasis on no kids? It seems to us that going into a CCRC would be a great thing for us to do for the kids. I'm concerned I'm missing something here.

You aren't missing anything. Far too many folks think they'll need only the occasional pop in and help with a doctor visit - and can call upon the kids for that. They don't anticipate 24/7 care, or the kind of burden that can place on their children...or, they think they deserve it in return for raising them....

 

[SecondCor521]

We are a married couple with kids and grandkids and think a CCRC is a good option for us. Why the emphasis on no kids? It seems to us that going into a CCRC would be a great thing for us to do for the kids. I'm concerned I'm missing something here.

I took the comment about no kids to imply no concern about having money left over to bequeath to them, which might make one feel more free to spend everything on a CCRC which tend to be nice but expensive places to be. Especially in a Type A where apparently you kind of annuitize things by paying a large up front entrance fee in exchange for a guaranteed place to live for life even if you run out of money.

Some, but not all, people with kids try to balance their own spending with leaving that financial legacy, and the large entry fee and ongoing expenses might seem to conflict with the kids' inheritance.

I'm not opining any which way about CCRCs or kids or inheritances. I'm just pointing out how I took the comment and hoping to help @youbet understand so they can see if they're missing anything or not.

 

[harllee]

It is too hot this week in Chapel Hill so I have left my CCRC and gone to my mountain cabin where it is 20 degrees cooler. The unpacking will wait until I get back. All I have to do is to send an email and let the CCRC know I will be gone so they will not be wondering why I have not pushed the red button in my apartment (has to be pushed every morning by 10 am or they come check on you). I cancelled my dinner reservations and just locked the door and left. Nice not to have to worry about a house and yard.

 

[Walt34]

We are a married couple with kids and grandkids and think a CCRC is a good option for us. Why the emphasis on no kids? It seems to us that going into a CCRC would be a great thing for us to do for the kids. I'm concerned I'm missing something here.

You haven't missed a thing. I was very happy with my mother's choice (and foresight) in applying to move to a CCRC that at the time had a 10-year waiting list. It turned out to be only about seven years. While I would have done all that I could for Mom, it was a terrific relief for all three of us "kids" that we didn't have to do much for her until her last six months, then there were still several meetings with CCRC staff. Also during her last 18 months or so I was handling her finances, but I was still relieved that I didn't have to check on her day to day.

In contrast, DW's father would have done well to move to a CCRC before a diabetic episode (which I firmly believe wouldn't have happened in a CCRC). The diabetic episode put him in a wheelchair and later a bed until he died. He was afraid of "nursing homes" and justifiably so after seeing what his father had endured. Back then they put you in room with a TV and a remote and you waited to die. No amount of visits and persuasion could convince him that things had changed. But for his last two years or so he was totally dependent on DW to drive him everywhere and she basically wore out a car going over there almost every day, 40 minutes each way, until he went into the CCRC full nursing section after the diabetic episode. There's no way DW could have done that and held a job at the same time and the conflict, if she had been working, would have been very difficult on her to put it mildly. It started out slowly, she would go over once a week, then twice, then three and so on.

So I'm firmly convinced that going into a CCRC is one of the best things you can do for your kids. I was, and remain, so grateful to my mother that she had the courage and foresight to do that. But then she had the perspective that HER mother had been a terrific burden on her sisters, who all lived in Buffalo (we were 400 miles away in the D.C. area) and I'm sure she had some guilt that she couldn't do anything to help. So my mother didn't want to do the same for me and my sisters.

 

[ChrisC]

So I'm firmly convinced that going into a CCRC is one of the best things you can do for your kids. I was, and remain, so grateful to my mother that she had the courage and foresight to do that. But then she had the perspective that HER mother had been a terrific burden on her sisters, who all lived in Buffalo (we were 400 miles away in the D.C. area) and I'm sure she had some guilt that she couldn't do anything to help. So my mother didn't want to do the same for me and my sisters.

I've heard this sentiment expressed by many who've had a parent in a CCRC; of course, it helps that the CCRC was very suitable and an enjoyable place for them. As we research and investigate CCRCs, for those in which we are waitlisted, we have our children and occasionally similarly situated friends enjoy lunch and tour the CCRC campus with us. Our children view the primary CCRC in which we're waitlisted akin to a recreational and educational campus for seniors -- there's a steady dose of learning, recreational and social activities and the campus has the feel of a resort, which for some of our similarly situated friends is a turn-off. I suspect in the future you might have families in which there's multi-generations of residents -- we've seen a few children succeeding in the residential units of their parents -- it has happened several times in the one equity ownership type CCRC in our area. On visits to CCRCs we frequently see grandchildren on campus at dining facilities or roaming around with their very middle-age parents, the children of residents, on visits.

I've also noticed quite a few single men and women enter the CCRC -- we see this from the write-ups done by the CCRC newsletters with articles welcoming new residents (and sadly memorializing residents passing away). The two CCRCs we're waitlisted is welcoming to all, and makes efforts to involve the surrounding community -- I would miss my current neighborhood's parade of children during Halloween including stops at our front door, but some of the CCRCs do an outstanding job in bringing children to their campuses and have quite a blast during the holdiay events!

 

[youbet]

If he runs out of money & the place accepts Medicaid, I believe they can't kick him out & Medicaid gets everything, provided he qualifies.

We've looked at a number of CCRC's and none accept Medicaid.

Edit: To be correct, I should have said I haven't seen a Type A CCRC that accepts Medicaid clients. They will, of course, go after any public funding possible, including Medicaid, if a previously accepted, private pay client becomes indigent.

 

[harllee]

We've looked at a number of CCRC's and none accept Medicaid.

No I don't think any true CCRCs accept Medicaid. Most only accept people to skilled nursing, assisted living etc who have lived in independent living apts at that CCRC. But some, like my CCRC, have trust funds that will pay your expenses at the CCRC if you run out of money.

 

[lucky penny]

No I don't think any true CCRCs accept Medicaid. Most only accept people to skilled nursing, assisted living etc who have lived in independent living apts at that CCRC. But some, like my CCRC, have trust funds that will pay your expenses at the CCRC if you run out of money.

I recently visited one that accepts Medicaid, Cathedral Village in Philadelphia. The sales person told me they do not have a trust fund for Life Plan residents who run out of money but in that instance they apply for Medicaid & accept what is provided. I followed up with an email & he said the same thing in writing.

I would certainly want more verification of this if I were considering applying there, but it's not my top choice.

 

[Jerry1]

We are a married couple with kids and grandkids and think a CCRC is a good option for us. Why the emphasis on no kids? It seems to us that going into a CCRC would be a great thing for us to do for the kids. I'm concerned I'm missing something here.

You haven't missed a thing.

I agree. I don’t think you missed a thing. I think the emphasis on no kids stems from the fact that those with no kids do not have any thoughts about an inheritance for their kids.

Personally, I’d like to leave something to my two daughters however, my main goal is to not be a financial burden to them. If I spend all my money and they didn’t need to help me financially, that’s a win in my book. Second burden I’d like not to impose on them is physically taking care of me. Like Walt, I wouldn’t mind burdening my kids with helping me manage my finances or helping me with decisions, but, to be blunt, I don’t want them to have to wipe my butt . . . Therefore, whether it’s a CCRC or some other plan, I feel obligated to do my best to plan for mine and DW’s care as we age.

I’m thankful to harllee and the group for this post as it has got me and DW talking more seriously about our plan. At 62/67, it’s time.

 

[youbet]

Jerry1, harllee, Aerides, SecondCor521 and Walt34......

Thanks for your responses and comments regarding my earlier post! Very helpful.

 

[vafoodie]

Sounds great! What state?

 

[harllee]

Sounds great! What state?

My CCRC is just south of Chapel Hill, NC

 

[ChrisC]

I recently visited one that accepts Medicaid, Cathedral Village in Philadelphia. The sales person told me they do not have a trust fund for Life Plan residents who run out of money but in that instance they apply for Medicaid & accept what is provided. I followed up with an email & he said the same thing in writing.

I would certainly want more verification of this if I were considering applying there, but it's not my top choice.

Some of the more established CCRCs in NC are Medicaid certified and thus have Medicaid residents. You can peruse the CCRCs in NC that have Medicaid certified status from this official NC Guide on CCRCs. https://www.ncdoi.gov/documents/continuing-care-retirement-communities/ccrc-reference-guide/open

There are nuanced reasons for some CCRCs to have Medicaid certified facilities. And perhaps some CCRCs initially created, when first operating, far too many nursing beds it needed to accomodate initial entry classes of CCRC residents and thus permitted "direct admits" in the skilled nursing facility wing of the CCRC to offset the cost of having too many bed vacancies; thus, these CCRCs were willing to take on Medicaid residents.

For those CCRCs that are not Medicaid certified, they seem to walk a careful tightrope of having enough nursing beds to accomodate current and projected needs of the CCRC residents. If a CCRC has too many vacant and unused nursing beds, it could be a drain on its financial resources -- I'd imagine state health regulations might require certain staffing requirements based on number of beds available. On the other hand, if it slowly builds and expands bed capacity, it might result in demand exceeding bed capacity with the result that many CCRC residents have their skilled nursing care outsourced to another SNF, off the campus of the CCRC. One should carefully look at occupancy levels and expansion plans for all wings at a CCRC, especially the skilled nursing wing.

Frankly, we haven't been viewing older CCRCs that have Medicaid certified status. But we are very concerned that a CCRC has Medicare certified status. It's important to us that the skilled nursing wing of a CCRC (and the nomenclature they use around here is "health center" as in Stewart Health Center, Embrace Health Center, or Asbury Health Center -- all part of the CCRCs down here) has Medicare certified status so that it can serve as a rehabilitation facility for Medicare purposes. If you're in a CCRC and have knee or hip replacement surgery, I'd want to be able to do rehab and PT on the CCRC campus and not have to go to another rehab facility.