Continuing Care Retirement Communities (CCRC) are communities that offer a blend of services to meet the needs of the elderly. The attraction of CCRCs is the “one-stop shopping” they offer for many senior living needs. Most CCRCs offer three components:
1. Independent living arrangements, which offer no support services, although meals are served in common dining areas;
2. Assisted living facilities, with various levels of care and
3. Skilled nursing home care, with various levels of care.
The one-stop shopping draw is attractive to seniors who are seeking lifetime care from one stage (healthy) to another stage (conically ill) in the later part of their lives. CCRCs, in theory, take the worry out of your final years for you and your immediate family. Prospective residents will tour impressive dining facilities, peruse wonderful landscaping, be enticed by the neat living facilities and exposed to abundant recreation facilities. You will, no doubt, walk away being dazzled. But a CCRC is a very expensive proposition, with high entrance fees ($100,000 – $1,000,000), significant monthly maintenance fees and numerous pay for service fees, with costs that often rise over time. What was once affordable may become unaffordable in only a few short years. You have to be very cautious and review the contract carefully, preferably with an attorney who specializes in this type of contract law.
Questions that you need to ask:
1. Is the CCRC accredited by the Continuing Care Accreditation Commission (966-888-1122)?
2. What are the staffing levels?
3. What is the residence turnover?
4. Have there been recent fee increases?
5. How much have the monthly maintenance fees increased on an annual percentage basis over the past five years?
6. How does the CCRC determine when it is time for a resident to move from one level of care to the next level of care?
7. Ask current residents how they feel about the CCRC.
8. Ask current residents what surprises they experienced in the operations of the CCRC.
9. Is the CCRC financially solvent? Make sure you review the financials of a prospective CCRC for the past three years with a CPA.
10. Make sure you secure an attorney who specializes in CCRC contract law.
11. What happens to your entrance fee when you pass away?
12. Is you entrance fee 100% refundable upon death?
13. Does your unit need to be sold before you are refunded your entrance fee?
14. Is there any restriction on the sale of your unit?
15. Is there any minimum sales price on your unit that is required before you receive your entrance fee refund?
16. What percentage of your entrance fee is refundable?
17. What are the restrictions on getting your entrance fee refunded?
18. Is your entrance fee held in an escrow account? if not, be wary as this means your entrance fee may be used to fund operating expenses.
19. What happens to your entrance fee in the event of a CCRC bankruptcy?
20. What does the monthly maintenance fee cover? It should cover meals, transportation and various activities. Find out.
21. Are there different levels of monthly maintenance fees? If so, what are the coverage differences?
22. Are there extra costs for moving you or your spouse to assisted living or nursing care?
23. If care needs increase, are there additional costs?
24. What happens if you cannot afford your monthly maintenance fee? Are you evicted? Is thee a benevolent fund available at the CCRC to help if you run into financial difficulties and cannot meet your monthly fee? If yes, review financials to ensure the funds are adequate given the size of the CCRC.
25. What is the maximum monthly maintenance fee you can afford and is the CCRC monthly fee well below that amount?
26. Make sure the occupancy rate is 90% or more. Occupancy rates below this could affect your future fees.
27. What happens if the CCRC’s occupancy rate drops? How much will your monthly fee increase? Can you afford this increased fee?
28. Are there any plans for expansion or future renovations? Are there adequate funds for this expansion or the renovations?
29. How long has the current management group been operating the facility?
30. Can the CCRC sustain deficits and for how much and for how long? Ask for Financials to see if the CCRC has a strong or weak Balance Sheet. A weak Balance Sheet means the CCRC may not be around to fulfill its obligations to you.
Finding the right CCRC means asking the right questions. Do not go into a CCRC blind. You need competent professionals to help you ask the right questions and evaluate the responses. The risk is simply too great to do otherwise.
Tom Corley is an accountant, financial planner and author of “Rich Kids: How to Raise Our Children to Be Happy and Successful in Life”, “Effort-Less Wealth”, “Change Your Habits Change Your Life”, “Rich Habits Poor Habits” and “Rich Habits: The Daily Success Habits of Wealthy Individuals.”