I frequently have the privilege of talking with prospective residents of continuing care retirement communities (CCRCs, or life plan communities) who are visiting different locations in order to better educate themselves on their options. Some have already definitively determined that they want to move to a CCRC and just need to decide which one best meets their preferences and objectives. Others are still in the midst of their senior living decision process and are weighing their options between staying in their current home or potentially moving to a CCRC or other senior living community.
No matter which of these categories you might fall into, there are several questions that I frequently hear from prospective CCRC residents who are exploring various communities.
Can I use my long-term care insurance?
In most cases, the answer is yes. To begin with, you want to be sure you understand what your policy covers and how/whether it classifies CCRCs. Depending on the type of policy, the classification could impact where you can use your coverage and how much you can use. Also, depending on the type of CCRC residency contract, there may be some restrictions on how much of your coverage can be applied towards your monthly fee at the retirement community each month. Be sure to ask a knowledgeable member of the staff whether any such restrictions apply.
What happens if I run out of money?
Many senior living providers, particularly not-for-profits, tell their prospects they will not “kick residents out” if their funds run out. However, the contract language on this topic might seem ambiguous: “The community may offer financial assistance to a resident…” and “…such assistance will be conditional on the community’s ability to provide funds while operating on a sound financial basis.” Ask the CCRC representative to explain how and why their community can help ensure that residents will not be forced to leave.
Which services and amenities are included in my monthly fee?
The answer to this question can help you budget appropriately if you decide to move to the CCRC you are considering. Depending on which contract type you choose, you may incur extra monthly costs for things like assisted living or healthcare services, as well as for things like a private room (versus semi-private) should you require nursing care, so you want to understand this up front. It’s a good idea to talk with current residents to get a real-world picture of what the monthly costs look like.
If the entry fee is refundable, how and when is it paid?
Most CCRC contracts state that refunds will not be paid until the residential unit is re-sold, or until some maximum length of time (e.g., two years) has passed. The upside of this provision is that it helps the community maintain financial stability because it prevents a sudden and substantial draw on cash reserves in the event that a large number of units are vacated at one time—a benefit to all residents living in the community. The flip side is that a resident, or a resident’s heir, may have to wait longer than expected to receive the refund. Of course, a history of strong demand for the community and short turnover times helps shorten the turnover time. Whatever the provision is, it’s important that you and your heirs understand this up-front to avoid surprises down the road.
How do I know my money is safe with your community?
This is the most frequently asked question I hear prospective residents ask at CCRCs, particularly if some or all of the entry fee is refundable. You should feel confident about a community’s response to this question before you decide to move forward with the process. While no one can make a guarantee about the future, a financially viable community should offer up relevant information and data that illustrates that the community is well-positioned financially–both qualitative information (e.g., experienced management team) and quantitative information (e.g., strong financial ratios).
Will my monthly fees increase over time?
Again, you cannot guarantee the future, but CCRCs should be willing to provide you with information on their financial trends so you can plan your finances accordingly. Look at annual increases over the past five years–this is usually a good gauge of the future, unless there is an extenuating circumstance that would change things more dramatically for the community. Annual increases of 3 to 4 percent are common in the industry. Remember, annual fee increases at CCRCs are also based, in part, on cost increases for healthcare services provided to residents, which tend to increase faster than the inflation rate for consumer goods and services.
How is your contract structure different from other communities?
Admittedly, the nuances between various types of CCRC contracts (i.e., lifecare, modified, fee-for-service, etc.) can be complicated. But each community should be able to illustrate how their contract options compare to others in the marketplace. While there is no “one-size-fits-all” type of contract, it is helpful if you are familiar with the pros and cons of each contract type going into the communities you visit. This is particularly important if you are comparing communities because you want to be sure you are comparing apples to apples. One community may seem more or less expensive than another until you understand the full contract implications and trade-offs.
How can I be assured I’ll receive the best care possible when I need it?
A key reason for choosing a CCRC is gaining access to the full continuum of care, usually all in one location. It’s a substantial financial investment, so you want to be completely confident in the quality of such care. If you feel comfortable with it, I advise people to tour the CCRC’s on-site healthcare center to check it out for yourself. If the community is Medicare-certified, you can ask about their CMS rating. You can also check with the local long-term care ombudsman to see if there have been any complaints.
When two people are living together (double occupancy), how do the monthly fees adjust if one or both residents need to move into the healthcare facility?
It can be very confusing to understand how your monthly fees may adjust under certain situations, such as if one or both partners need to move into assisted living and/or the healthcare facility. Ask the CCRC representative to explain what would happen in each of these scenarios to help clarify the financial ramifications to your monthly costs. For example, most CCRC residency contracts stipulate how the cost can vary depending on whether it is deemed to be a temporary stay in the healthcare center or a permanent stay, and whether it is in a private or semi-private residence.
An informed CCRC decision
The process of choosing a CCRC is about more than just features and benefits; it’s about understanding what your monthly costs will be and feeling confident that you know exactly what will happen down the road should you require care services. That’s why it’s important to get answers to the questions above so you can feel that you have made a fully informed decision about your future.
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