CCRC refundable entrance fee options

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
 
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.
 
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.
 
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.
 
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.
 
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.
 
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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.
 
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"

 
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.
 
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%).
 
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.
 
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.
 
@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.
 
@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.
 
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%.
 
I wouldn't usually be suspicious but I've seen where several CCRCs have "reorganized" or gone bankrupt. Inquiring minds... :cool:
I've done a lot of research on CCRCs and visited about a dozen. Have looked at many financial statements and auditors' reports. Of the ones I've examined, the ones in the best financial position are those with a zero refundable option. With a refundable option, this has to be recorded as a liability to the CCRC, since they will have to pay out at some point. Since you are entrusting the CCRC with your care for possibly a long time, you want to be careful and select one in the best possible financial position. One I looked at has is 100% refundable to heirs at death. However, when I looked closely at the financial and auditor's reports, I saw that liabilities exceed assets and this CCRC has a forecasted loss for the foreseeable future. In sum, you want to be very careful with CCRCs that offer a refundable option.
 
From what I've read recently, CCRCs are eliminating/not offering skilled nursing beds.

You get to go outside the campus if you require skilled nursing care.

Sadly, at least around here, CCRCs remain the best places for that level of care.

I got to see plenty of stand-alone SNFs when Mom was sick, and they were not any place I'd want to be.

So I'll be buying LTCi before age 60 for home/supplemental ALF care...yes, it is expensive.
Be very careful with LTCi. In recent times, some companies that offer LTCi have gone under and many that haven't continue to greatly increase rates, making it unaffordable, resulting in people discontinuing their policies.
 
Be very careful with LTCi. In recent times, some companies that offer LTCi have gone under and many that haven't continue to greatly increase rates, making it unaffordable, resulting in people discontinuing their policies.
 
Be very careful with LTCi. In recent times, some companies that offer LTCi have gone under and many that haven't continue to greatly increase rates, making it unaffordable, resulting in people discontinuing their policies.
It's true that LTCi companies didn't do a good j*b of predicting how many people would pay for a long time and then drop out so those who did hang on saw their rates go up.

Keep in mind that that doesn't happen without the approval of State Insurance Boards (or whatever they are called.). Also, if an LTCi provider goes bankrupt, their policies are purchased by other companies so you don't lose your policy.

No apologist for the LTCi industry, but no need to panic about LTCi policies in force though premiums may, indeed rise. YMMV
 
I am a firm believer of LTCI policies. I have one and my husband has a hybrid policy.
 
I am a firm believer of LTCI policies. I have one and my husband has a hybrid policy.
I don't know that I would do an LTCi policy if I could go back, but now that I've paid all these years, I'm keeping mine and DW's policies.
 
I don't know that I would do an LTCi policy if I could go back, but now that I've paid all these years, I'm keeping mine and DW's policies.
We ran an elder care business where 40% of our revenue came from LTCI and have seen the human behavior of having LTCI policy vs. not having one. Some who were uber wealthy but refused to have care because it would cost money and they would rather pass on a "legacy", People who have LTCI are more likely to receive the care when they need. We were of the mindset that we would self insure until we observed the human psychology and did not want us to be trapped in the same way when and if we need care one day.
 
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We ran an elder care business where 40% of our revenue came from LTCI and have seen the human behavior of having LTCI policy vs. not having one. Some who were uber wealthy but refused to have care because it would cost money and they would rather pass on a "legacy", People who have LTCI are more likely to receive the care when they need. We were of the mindset that we would self insure until we observed the human psychology and did not want us to be trapped in the same way when and if we need care one day.
That's a very interesting observation. Perhaps I made the right decision in purchasing LTCi.
 
Provisions vary. I looked at a place near Des Moines last month and they have two buy-in options. The higher one is 90% refundable, NOT contingent on reselling the unit, and applies when you leave the unit- death, move elsewhere, enter LTC. The lower IS amortized over a specified period- 2 years?- with no more due after that. They have LTC and that costs $13K/month. In between, they charge per service for additional things like help with medications, help bathing, or just having an attendant on an hourly basis (which gets expensive fast).

I prefer the larger buy-in because I want maximum flexibility. If things go downhill I want out without too much financial loss. If their LTC facility is full and they want to farm me out to a place 4 hours away (DS and family are in Des Moines) or it's a nightmare, I can go elsewhere.

Checking out another on Monday since I'm here visiting. This one has an indoor saltwater pool. I'm grateful I have options. News feed this morning (knowing my location) just showed an item on cases of neglect in some of the nursing homes in a couple of small towns in Iowa.
 
It's true that LTCi companies didn't do a good j*b of predicting how many people would pay for a long time and then drop out so those who did hang on saw their rates go up.

Keep in mind that that doesn't happen without the approval of State Insurance Boards (or whatever they are called.). Also, if an LTCi provider goes bankrupt, their policies are purchased by other companies so you don't lose your policy.

No apologist for the LTCi industry, but no need to panic about LTCi policies in force though premiums may, indeed rise. YMMV
As a greater number of people live longer and require care, insurance companies that offer LTCi policies will come under increased financial pressure; some will survive, some will not. Those that survive will likely have to dramatically increase rates (is already happening); those people that cannot afford these increases may well discontinue their polices. Some of the distressed companies that issue LTCi policies will be taken over by other companies; some will not. There are state guaranty associations that will protect policyholders up to a certain amount, but this amount will not be sufficient should one require a long period of care. For those thinking of purchasing a LTCi policy, I would go with a company in pristine financial condition; this does not guarantee future viability but does increase the likelihood. Examining Comdex scores is a good starting point. The same financial viability comments could be made about CCRCs. You are entrusting your care in the last part of your life with this organization. It's critical to closely examine its financial condition before making a commitment. If you don't feel you have the expertise to do this, then hire a financial professional. I'm amazed at the number of people who move into a CCRC without examining its finances. I have a neighbor on the waiting list at a CCRC whose financial position is very precarious.
 
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