Entry Fee Retirement Communities: Which Community Is Right?

Last week, we delved into what characterizes an equity retirement community, as well as possible pros and cons of this senior living option. Prior to that, we examined the characteristics of a rental retirement community. In this third and final installment in our series on the different types of senior living communities, we take a look at entry fee retirement communities, also referred to as buy-in communities, and what distinguishes them from other types of senior living.

Entry fee retirement communities (sometimes called “buy-in” communities)

In most cases, an entry fee retirement community will be a continuing care retirement community (CCRC), also referred to as a “life plan” community. This type of community provides residents with a full continuum of care services — usually on the same campus — from independent living to assisted living to skilled nursing, and possibly memory care.

Residents must pass a medical eligibility exam and be able to live independently at move-in, thus entry fee communities often attract younger, healthier residents. Residents also must qualify financially to be approved for move-in. In addition to the entry fee, which can be hefty (sometimes hundreds of thousands of dollars), residents also will pay a monthly service fee.

The cost of an entry fee community comes with numerous amenities and services, however, such as:

Home maintenance (exterior and possibly interior)
Housekeeping services
On-site wellness and social activities
Some or all utilities
Transportation
Emergency call monitoring
Security
A meal or multiple meals each day

But the main benefit that residents of an entry fee retirement community reap, as compared to many other types of senior living communities, is peace of mind. Once a senior moves into a CCRC, the community is usually contractually obligated to care for them no matter how their medical condition or financial situation changes.

Depending on the type of CCRC contract the resident has, this care could be included in the cost of their entry fee and monthly service fee, or their monthly cost may go up if and when they require care services (referred to as fee-for-service). Also, depending on the resident’s contract, some or all of their entry fee may be refundable upon move-out or death.

>> Related: A Closer Look at CCRC Entry Fees

The pros of an entry fee retirement community

Peace of mind of priority access to care services, if needed
Depending on contract type, predictable monthly expenses even if care is needed OR discounted care costs
A portion of fees may be tax-deductible as a prepaid medical expense
Numerous amenities like housekeeping, wellness, and transportation services
One or multiple meals per day, depending on which meal plan is chosen
Couples can remain close to one another even if one needs a higher level of care than the other
May provide financial assistance if a resident’s assets are depleted through no fault of their own

The cons of an entry fee retirement community

Entry fees can be expensive — hundreds of thousands of dollars, potentially
Resident does not have equity in their home (though a portion of the entry fee may be refundable to the resident at move-out or to their heirs)
Moving out can result in a substantial financial loss, depending on contract type
If no care services are ever needed, can be an expensive option

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