Agree. What happens to the down payment when the place goes under?
CCRC downpayments - how to handle?
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Great. Then what's the reliable method for finding out the financial soundness of the place with your down payment?
harllee
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
One thing I have done is take a close look the the financial statement of the CCRC I am interested in, looking at reserves, how the obligation to refund the entrance fee is treated, etc. You might want to get an attorney or CPA to look at the financials with you.
I think occupancy numbers are also important. The CCRC we are interested in is full and has a substantial waiting list.
On the question of what happens if you need to go to skilled nursing but skilled nursing is full, our CCRC agreement provides in that case the CCRC must find you an "equivalent" skilled nursing place in another facility and the CCRC pays for it until a bed opens up in our CCRC. This CCRC is a Class A life care community where the cost to you if you go into skilled nursing does not go up (except for additional meals).
The CCRC we are interested in has a Trust fund established to pay the fees of any resident who legitimately runs out of funds, several million dollars are in this Trust fund. The money in the Trust fund has primarily come from memorial funds and bequests from deceased residents. I think this substantial Trust fund is a good thing and a sign of a healthy CCRC.
I asked about how often the Trust fund is used and was told they currently have 2 ladies (each over age 100) who are in memory care whose monthly fees are being paid by the trust fund.
I think occupancy numbers are also important. The CCRC we are interested in is full and has a substantial waiting list.
On the question of what happens if you need to go to skilled nursing but skilled nursing is full, our CCRC agreement provides in that case the CCRC must find you an "equivalent" skilled nursing place in another facility and the CCRC pays for it until a bed opens up in our CCRC. This CCRC is a Class A life care community where the cost to you if you go into skilled nursing does not go up (except for additional meals).
The CCRC we are interested in has a Trust fund established to pay the fees of any resident who legitimately runs out of funds, several million dollars are in this Trust fund. The money in the Trust fund has primarily come from memorial funds and bequests from deceased residents. I think this substantial Trust fund is a good thing and a sign of a healthy CCRC.
I asked about how often the Trust fund is used and was told they currently have 2 ladies (each over age 100) who are in memory care whose monthly fees are being paid by the trust fund.
harllee
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
One more thing--at the CCRC we are interested there are fairly strict requirements for entrance. They closely look at applicants assets and income to make sure the applicant can afford to live there. It is an expensive place, most everyone there has to be fairly well off. It is in a college town with a large teaching hospital and many of the residents are retired professors, physicians, etc.
Applicants also have to pass fairly strict physicals and mental tests. They don't want to admit someone who will need to go into skilled nursing soon. Friends of ours recently applied and could not get in--husband qualified but the wife could not pass the mental exam, it seems she is having memory problems. They found another less strict CCRC that would take her but our CCRC would not. The lesson for us is that we do not want to wait too long to go in--we need to go sooner rather than later.
Applicants also have to pass fairly strict physicals and mental tests. They don't want to admit someone who will need to go into skilled nursing soon. Friends of ours recently applied and could not get in--husband qualified but the wife could not pass the mental exam, it seems she is having memory problems. They found another less strict CCRC that would take her but our CCRC would not. The lesson for us is that we do not want to wait too long to go in--we need to go sooner rather than later.
bmcgonig
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I would imagine that the reduction in cost from the Class A to lower is about the same as the cost of good LTC insurance for an individual. And they just self insure. So realistic reduction might only be 6-7k/yr? If you are paying 250k entrance fee or more, and 3-4k/month, that's a minimal difference.
bmcgonig
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How do you get your equity back out when you leave or pass away? Do you get 100% back or just part? The "gross starting price" they use for getting a villa etc. are quite a markup over normal Charlotte prices I'm assuming?
I understand you get the equity from your unit, including any appreciation, when you leave the campus for any reason, including death. This is a hybrid Type B CCRC. One purchases the unit (and I'm not sure that one can compare "normal" real estate prices to these units) and when you leave the campus, the CCRC then takes your unit and re-sells it; your heirs or legal representatives would get the proceeds from the sale.
There is a 10 percent entrance fee. I have to figure out whether the 10 percent entrance fee, which is calculated on the basis of the sales price of the unit, is included in the sales basis or is a medical expense for tax purposes. Many units, including some we saw during an open house tour of the campus, are customized at great expense to new owners -- I believe the CCRC gives you a set budget for transitional upkeep/move expenses (like painting, new carpeting, new appliances, if dated, etc) but extra expenses like laying new hardwoods, raising ceilings, or knocking down walls are financed by the new owner and of course would add to the re-sale basis.
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Huston55
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We have a similar CCRC in my county. It’s called Villa Marin. While this can be a good arrangement for some, you have to investigate closely about the details of selling your unit. Many such “equity” style CCRCs require the owner to continue to pay monthly expenses (even though deceased) until the unit is sold. And, given that it’s a CCRC, there’s a limited market of buyers for them. So, I’d suggest you check out the range of time units have remained on the market until sale, so you can plan for that.
Good point. However, with a wait list of 4 plus years at this CCRC, resales appear to occur very rapidly. I don't believe you actually "own" the unit but rather have some sort of equity/ beneficial interest in the unit because it would appear that the CCRC must have the legal ownership interest in the unit to market, control, and restrict sales to suitable, qualified new residents.
Nonetheless, I'm more concerned about whether one pays the monthly fee when one goes into the skilled nursing facility, where one is also paying the "discounted" service rate for residential care.
A true Type A (Life Care) will not cost you or your spouse more (beyond the extra meals which is required) if you go into Skill Nursing/Memory Care from Independent living. As you already discovered, no two CCRCs are exactly identical in their offerings. Critical to ask and read in detail the Resident Handbook and all financial and operational disclosures. And then validate how they operate in reality during your conversations with current residents. "Trust but Inspect"!
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Well, as someone else implied earlier, it might be helpful to compare apples to apples. I'm not interested in a Type A program. I'm interested in Type B or C programs, with equity ownership in the unit you reside. In a Type A, you are prepaying for skilled nursing care, whether you actually use that care later in life, as the payment is all rolled into your entrance fee. In a Type B, you still have access to life care treatment in a skilled nursing facility on a pay-as-you go basis, which would dovetail with my LTCi. In the Type B CCRC I'm considering, assisted living or home care in your residence is covered by your entrance fee (of 10% of the purchase price of your unit) and monthly fee, so there isn't any additional cost when care occurs in your unit. But I'll have to see if the CCRC will reduce my monthly rate or whether my LTCi will reimburse me for that care as my LTCi covers assisted living/home care. Preliminarily, the CCRC has told me they will work with LTCi though I'm not quite sure what that means.
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It is clear you have a good grasp of the differences. When we looked at a Type B property which we liked, the sales rep seemed to want to defer providing the actual contractual language (actually never saw but did received the current policy). At this property, the provisions and costs to access higher levels of care seemed to be more administrative procedures rather than contractual language. For example, X days a month in Skill Nursing at X% of then current price) Caveat emptor!
ncbill
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Here there is a substantial property tax break for any facility that uses its own resources to provide for indigent residents rather than put them on Medicaid.
That CCRC is probably taking advantage of the same type of program in your area.
harllee
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
I don't know of any tax break like that here in North Carolina but the CCRC we are interested in as owned by a nonprofit so I don't think they pay property taxes anyway.
Huston55
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Answers to some of the questions above about how to evaluate CCRCs before signing a contract/entry. (This is para. 6 in the CCRC FAQ, and is California focused so, adjust links, etc. for your state.)
6. How do I evaluate CCRCs & select one?
Here are some of the key factors to evaluate & suggestions on how to evaluate them.
A. Quality of Care: check state inspection reports & other industry overview websites which are public and available online. Examples below:
- California Dept of Social Services: https://secure.dss.ca.gov/CareFacilitySearch/Search/
- Lucille's List ( Inspection Reports | Lucille's List ).
- Kiplinger: a good overview of some key topics to consider.
Risks and Rewards of Moving to a CCRC
B. Financial Soundness of the CCRC: ask for copies of audited financial reports. You can also find the CCRC's (or parent organization's) IRS Form 990 on-line, which contains basic financial info (assets, liabilities, cash flow, top executive salaries, etc.). Other key metrics are: occupancy >90% and, having fees which cover ongoing operating expenses (not having to dip into "entry fees" to pay ongoing operating expenses).
C. Cost: here's a great website with average state-by-state and city-by-city costs for various levels of care
https://www.genworth.com/about-us/in...-of-care.html#
D. Rules-Pay careful attention to these items:
- Level of Care transfer rules
- Self Determination rights
- Atmosphere of respect & dignity
- The experience & transparency of management
6. How do I evaluate CCRCs & select one?
Here are some of the key factors to evaluate & suggestions on how to evaluate them.
A. Quality of Care: check state inspection reports & other industry overview websites which are public and available online. Examples below:
- California Dept of Social Services: https://secure.dss.ca.gov/CareFacilitySearch/Search/
- Lucille's List ( Inspection Reports | Lucille's List ).
- Kiplinger: a good overview of some key topics to consider.
Risks and Rewards of Moving to a CCRC
B. Financial Soundness of the CCRC: ask for copies of audited financial reports. You can also find the CCRC's (or parent organization's) IRS Form 990 on-line, which contains basic financial info (assets, liabilities, cash flow, top executive salaries, etc.). Other key metrics are: occupancy >90% and, having fees which cover ongoing operating expenses (not having to dip into "entry fees" to pay ongoing operating expenses).
C. Cost: here's a great website with average state-by-state and city-by-city costs for various levels of care
https://www.genworth.com/about-us/in...-of-care.html#
D. Rules-Pay careful attention to these items:
- Level of Care transfer rules
- Self Determination rights
- Atmosphere of respect & dignity
- The experience & transparency of management
The link above to the genworth site is apparently out of date but I found the data here:
https://www.genworth.com/aging-and-you/finances/cost-of-care.html
Very helpful insight to costs and options
https://www.genworth.com/aging-and-you/finances/cost-of-care.html
Very helpful insight to costs and options
We made a 2019 resolution to begin researching senior living facilities - preferably in our area (San Francisco Bay Area), although being footloose and child-free, we could technically move anywhere.
We first did this back in 2014 for my MIL so it will be interesting to see what changes have happened. There's a couple of brand-new facilities (for profit) that have opened up, for us to visit.
DH and I talked to our financial adviser via conference call to let him know what we were planning. We already know that facility types, social cultures, and contracts vary wildly, since there are no government standards except for OSHA and Health Dept./Medicare rules.
We discussed portfolio allocation and he advised us of how much he'd be able to liquidate quickly if need be. Any amount larger would need repositioning so might take some time.
He congratulated us for "thinking ahead". He's been in business for 30 yrs and has already dealt with clients who've had seniorcare needs and health issues. When we start winnowing down the potential list of facilities, his firm will help review all the contracts.
We may or may not sell our SFH; there are several options open to us so we will take our time to consider what will work out best long-term.
We first did this back in 2014 for my MIL so it will be interesting to see what changes have happened. There's a couple of brand-new facilities (for profit) that have opened up, for us to visit.
DH and I talked to our financial adviser via conference call to let him know what we were planning. We already know that facility types, social cultures, and contracts vary wildly, since there are no government standards except for OSHA and Health Dept./Medicare rules.
We discussed portfolio allocation and he advised us of how much he'd be able to liquidate quickly if need be. Any amount larger would need repositioning so might take some time.
He congratulated us for "thinking ahead". He's been in business for 30 yrs and has already dealt with clients who've had seniorcare needs and health issues. When we start winnowing down the potential list of facilities, his firm will help review all the contracts.
We may or may not sell our SFH; there are several options open to us so we will take our time to consider what will work out best long-term.
I'm curious. Just wondering why you wouldn't be selling your SFH if moving into a CCRC? Are you planning on renting it out or something?
omni
I'm also curious about what may motivate one to keep a primary residence if moving to a CCRC. If the residence is completely paid and you don't need to sell the house to finance the entrance fee at the CCRC, I could see keeping the residence for family needs; perhaps there's a child or relative that wishes to stay in the residence and if the residence is near the CCRC it could be a good gathering place for family events, such as might occurs on holidays. I could also see the wisdom of keeping a vacation home for such events as well despite moving into a CCRC.
bmcgonig
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Please keep us updated with what you're doing and what you find? I and probably the rest of the Bay Area folks would be very interested. Thanks.
Huston55
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KB
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The Forum in the hills outside Cupertino, is very nice. My parents lived there for many years, until their deaths. When my father fell ill this spring, I became much more familiar with the staff and the level of services offered. They have in house realtors also, which helped me sell the apartment very quickly.
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