Cost of Continuing Care Retirement
Continuing care is an expensive option. But if your loved one can afford it, she can generally be confident that once she moves in, her needs will be met for the rest of her life.
Continuing care payment arrangements vary widely from one community to another, and these systems can be complex. In most cases, residents pay a large entrance fee up front, then pay monthly fees for the duration of their residence. In some CCRCs, residents purchase the unit they move into. The up-front deposit might be anywhere from $20,000 to $550,000, and monthly fees might be anywhere from $500 to $4,000 per month. In some communities, there are charges for additional services. Costs vary widely among communities. And at any individual CCRC, you'll pay more—sometimes a lot more—if you select a larger independent-living unit or opt to prepay for more care.
If your loved one purchases a life-care contract, everything including housing, meals, medical care, and skilled nursing care will be covered, and the monthly fee shouldn't go up as she moves from one level of care to the next. She can also choose a modified or fee-for-service contract; this is generally less expensive at first, but additional fees will be charged as more care or services are needed.
Costs will also vary based on the size of the unit your loved one chooses.
Reading and understanding the contract is important in helping an older adult choose any kind of housing option, but when it comes to continuing care, it's a must. In fact, because a CCRC represents both a long-term commitment and a significant financial investment -- and because contracts can be long, detailed, and complex -- it may be worth it to her to have an elder law attorney go over the contract once she has selected a community or communities to consider. To find an elder law attorney in your area, search in the Caring.com Elder Law Directory.
Most CCRC payment is private pay. Your loved one can also use long-term care insurance (LTCI) benefits to help cover CCRC expenses. In the case of an acute illness or injury, there are some cases where Medicare, Medigap, or veterans benefits will help cover some health-related costs. When touring CCRCs, be sure to ask for details about how residents pay for care and what your options might be. In one common design, a declining portion of the entry fee is refunded if a resident leaves or dies within a few years of moving in. For a much higher fee, you may be able to lock in a permanent refund for the resident or heirs of, say, 50% or 90%.Can you afford to consider a CCRC?
Those CCRCs with the highest levels of financial distress are new CCRCs using the pay-as-you-go method (low prices). The best managed new CRCRs offer closed group pricing – maintenance of inflation-indexed monthly fees, group equality, and full funding of the contract-termination reserve fund .Pay-as-you-go CCRCs offer no reserve funds for contract termination and accumulate no equality. Many people cover the entry fee with the proceeds of a home sale. You'll need to compare the monthly charges with what you are paying now for housing and for whatever food and activity costs you might no longer face. Hiring a financial advisor for a one-time consultation might help.
The U.S. Government Accountability Office studied the CCRC industry and found these ranges of fees:
Type A (CCRCs offering Type A or life care contracts guarantee their residents shelter, residential services, and amenities along with personal assistance and nursing care for the rest of their lives in return for an initial entrance fee and a monthly payment schedule. CCRCs usually offer these contracts to seniors who initially occupy their congregate or independent living units.
Entry Fee: $160,000 to $600,000
Monthly Fee: $2,500 to $5,400
Type B (only some health care services are included in the initial monthly fee. Under the modified contract, when residents move to a higher level of care, the CCRC agrees to charge the independent living rate for only some specified time period, after which residents must pay either a full or a discounted per diem rate.
Entry Fee: $80,000 to $750,000
Monthly Fee: $1,500 to $2,500
Type C (residents receive priority or guaranteed admission to the CCRC's higher levels of care, but they are not entitled to any discounted health care or assisted living services. Rather, on entering a CCRC's assisted living facility or nursing home, they pay the regular and usually higher price per diem market rate)
Entry Fee: $100,000 to $500,000
Monthly Fee: $1,300 to $4,300
Type D (generally require no entrance fee, but a monthly fee for basic independent living amenities, with guarantee access to CCRC services and health care. Type D contracts are essentially pay-as-you-go, and residents take on the risk of all expenses and their increases in exchange for little or no entrance fee)
Entry Fee: $1,800 to $30,000
Monthly Fee: $900 to $10,700 depending on level (assisted, nursing, etc.) of initial care
All of these fees will depend on a number of factors such as the type of housing (single family home, condo, apartment); whether they rent or buy; size of the facility; kinds of services; type of contract. Because it costs so much to run CCRCs and consequently, to live in one, it's important to know the financial health of the company. In order to survive, these communities must operate at or near full capacity. If they don't, then some resident services may be cut.
Start by asking for the facility's audited financial statements. Here are some things to look for: Consider the facility's cash-to-debt ratio. This should be about 35%.; What is the facility's cash on hand? CCRCs with "one campus average 306 days of cash on hand; those with multiple sites average 281," according to an AARP article.