CCRC refundable entrance fee options

[lemming]

It depends on how lucky you feel I guess
Independent Living Apartments

0% Refundable* 50% Refundable* 90% Refundable* Monthly Fee

1 Bedroom, 1 Bath
$173,597 ..... $241,110 ....... $385,771 .......$2,281
less(173,987) ......... (120,555) ........ (38,577) refundable
-0- 120,555 ................. 348,194

1 Bedroom Deluxe A
$216,841 $301,171 $481,868 $2,681

385,771 -241,110=144,661 divided by monthly fee 63months
385,771- 173597= 212,174 divided by monthly fee 91 months

 

[Brat]

The CCRC that I toured reluctantly showed me their last "phase" of health care. It looked like a scene from the movie "Coma" with a dozen or more folks crammed in a room with tubes sticking out of them - and no staff anywhere in sight . No, thanks. YMMV

Medicare has nursing home ratings. Eye opening.

 

[harllee]

If you are looking at CCRCs you definitely need to ask to see the assisted living apartments, skilled nursing rooms, memory care rooms and rehab rooms. Also confirm that there is an RN on duty 24 hours per day (new Medicare rule). Also look at occupancy and make sure there a plenty of rooms available to handle a growing population. I would also ask how many deaths they had during Covid.

 

[youbet]

Well, they didn't get much, he had the refundable option. My understanding the family got "most" of his deposit back.

The family would have gotten almost 100% refund even if he had chosen the 0% refund option. There is a safeguard with the zero refund option where you loose 2% or 3% (can't remember at the moment) of your buy-in-bux per month until depleted. So, say you died four months after admittance, your family would get 92% back. At least this is the case for the CCRC's we've investigated in northern Illinois.

 

[harllee]

The family would have gotten almost 100% refund even if he had chosen the 0% refund option. There is a safeguard with the zero refund option where you loose 2% or 3% (can't remember at the moment) of your buy-in-bux per month until depleted. So, say you died four months after admittance, your family would get 92% back. At least this is the case for the CCRC's we've investigated in northern Illinois.

That is the way it is here. If you die or move out in the first year you get most of your entrance fee back no matter what option you chose.

 

[youbet]

If you are looking at CCRCs you definitely need to ask to see the assisted living apartments, skilled nursing rooms, memory care rooms and rehab rooms. Also confirm that there is an RN on duty 24 hours per day (new Medicare rule). Also look at occupancy and make sure there a plenty of rooms available to handle a growing population. I would also ask how many deaths they had during Covid.

DW and I have had two experiences looking at skilled nursing facilities.

1. MIL became too feeble to live alone and required full nursing care. DW, I and her brother toured many NH's to find one for her. The variation in quality was very high. A few were really disappointing to say the least.

2. DW and I have been investigating CCRC's for a couple of years and have toured several multiple times. All of those had skilled nursing accommodations that were Medicare five star and, at least from our non-expert view, seemed excellent. Admittedly, all the CCRC's we've toured are located in upscale Chicago suburbs and are pricey, so that might account for the consistency of good grades.

I think it's harder for a CCRC to hide poor quality. Since you move in while you're fully independent and have many opportunities to meet other current independent residents before signing on the dotted line, you get the inside scoop. At least that's been our experience.

 

[Brat]

Every facility must post the name and contact information of the ombudsperson assigned to that facility. Reach out to that person and ask if there are any concerns.

 

[Sunset]

The idea of a refundable deposit can be dangerous, we came within a month of having FIL go in a CCRC and lose over $600K, fortunately for us, they went bankrupt before we signed up:

"Once the largest non-profit continuing care retirement community in Illinois, Friendship Village of Schaumburg charged residents a large entrance fee to move in, with that money meant to be refunded if the resident moved out or passed away.

After Friendship Village was sold in 2023 following their bankruptcy filing, former residents who are owed thousands of dollars have learned they are on track to receive back merely a fraction of what they paid to get in............. 10 cents on the dollar estimated"

Illinois families owed millions of dollars after retirement community files for bankruptcy

Dozens of families who trusted a senior living facility to care for their loved ones are now out hundreds of thousands of dollars after the retirement community filed for bankruptcy and has since failed to pay refunds due to former residents.

www.nbcchicago.com

 

[harllee]

I would look at the financial statements of any CCRC with a close eye to the liabilities for refundable entrance fees. Large refundable entrance fees are the major reason CCRCs get in financial trouble.

 

[SecondCor521]

can anyone share their rationale and calculations for selecting a 50% or 90% refundable entrance fee option versus forfeiting all of their entrance fee?

Thanks.

See below for how we did it.

In the meantime, I suspect if you stuck the difference in an total market fund and reinvested the dividends, your heir would have a much larger stash coming their way without the hassle of negotiating with the CCRC over restoration fees.

When my Mom and Dad moved into their place about 18 years ago, there were two options: (A) no buy in but a larger monthly fee, and (B) a sizeable lump sum buy in with a significantly lower monthly fee.

I did a very simple analysis where I just figured what rate of return my parents would have to get on the lump sum to equal the difference in monthly fee. IIRC it was about 7%. At that time, my parents expected their portfolio to return more than 7% over the long term; it turned out that their expectation was accurate.

A second factor that qualitatively factored in was the facility's lack of clarity regarding any refund of the buy in - they indicated my parents wouldn't get anything back until the facility found a replacement resident, but other than that there was a surprising lack of clarity and specificity in their contract language.

We also recognized the general risk of being a creditor to a small private corporation and wanted to avoid that risk of them going bankrupt or just spending the buy in money on, say, salaries if things got tight for them. So these two things tipped my parents further towards choosing option (A).

I assume you could do a similar differential analysis with all three options (50%, 90%, 100%).

 

[bada bing]

I'm in the process of getting my mom admitted into the SNF at her CCRC. She had a medical setback last week and has been in the hospital. We recently moved her from an independent living unit into an assisted living unit a few months ago. One of the big benefits of a bond contract IMO is the ability to move into different care status without big changes in expenses. This will be the third time my mom has been admitted into the SNF after hospital stays. This time may be permanent. She has 100 days of medicare coverage before she has to relinquish her assisted living unit. The SNF at her CCRC is more than adequate, with single occupancy rooms, 24hr coverage by licensed nurses and a doctor on staff during days. They have enough rooms where it is typically only 75%-80% occupied.

As far as costs, mom moved in 4 years ago with a 75% refundable $425K bond and $6500/month ongoing with meals. Not cheap, but the budget certainty has been worth it and it's a nice place. She chose the highest refundable percentage contract, although they had several other options with lower upfront but higher ongoing and less refunded.

 

[Rianne]

DB recently moved into John Knox Village in Pompano Beach, FL. $350K buy in $4000/month covers everything. He has a beautiful 2bed/2bath overlooking Pompano and can view the ocean even though it's inland. He has severe rheumatoid arthritis but can live on his own. Found a group of like-minded friends. He can move up in care if needed. We're going to visit for Thanksgiving. I'm impressed with the community. Has high ratings.

 

[lemming]

@cb2008 What did you end up choosing?
I need to give a deposit on Monday for a move-in by March. I plan to chose 50% refund instead of 90% since it is 50k less but I don't know if it is the best choice.

 

[nwsteve]

@cb2008 What did you end up choosing?
I need to give a deposit on Monday for a move-in by March. I plan to chose 50% refund instead of 90% since it is 50k less but I don't know if it is the best choice.

Are your monthly fees associated in any way with your deposit amount.
FWIW, we took what was call modified traditional which was about a 50% discount of unit cost but zero refund. There was a 5 year amortization of the entry fee so nothing would come back to us after 5 years.
We completed 5 years last April
Our thinking was that our heirs were not dependent on it, we were not going see it and were not going to get any credit for the future appreciation so better to save the upfront $ and keep them invested.

 

[lemming]

There are two options One with a lower monthly fee that is 1,000 less but the buy-in is 100,000 more to save that- so it doesn't compute for me.
There is a amortization schedule(by law I think) that makes the refund dependent on the length you live there. For 25 months they are allowed to take 2% then it becomes 50%.