Archive for March, 2016

CCRC (Continuing Care Retirement Community): A Good Deal For You…Or Not?

March 28, 2016

CCRCs can be found all over the country, including several in Metro-Denver.  The basic concept is you move into an apartment or small house in about your 60s or 70s, while you are still healthy (if not healthy, the CCRC will not allow you to move in).  Then as you age and become less able to live independently, you move into assisted living or a nursing home (often called a “healthcare center”…sounds less intimidating).  Accommodation of the various  independence/care needs stages (independent living, assisted living, nursing home) all happen on the same campus…a good idea.  Here is where the similarity ends.

Some CCRCs require a buy-in payment (around $100,000-$400,000 and up) plus a monthly fee.  This is an equity model…you purchase “equity” in your home.  Others use a rental model (higher monthly fee, but little or no up-front cash payment).

For some, the cost of assisted living or a nursing home is included in the cost.  For others, you pay extra for higher levels of care, sometimes at a discount.  Sometimes not.

Most resident ownership model CCRCs offer a partial refund of your buy-in amount to your heirs when you die.  But the percentage amounts, number of years of living in the CCRC, and requirements for the resale of your unit vary widely.

Some CCRCs have been built on a solid financial foundation.  Others, not so much.

The devil is truly in the details.

Evaluation of a CCRC for a prospective resident is not a do-it-yourself project.  The contracts are very complex and at least in Colorado, not especially transparent.  Here are but a few of the many questions requiring definitive answers: Do assisted living units exist today, or are they planned for sometime in the future?  Same question for nursing home facilities.  What happens if I need additional care, but no beds are available?  Is there an additional cost if I need assisted living or nursing home care?  If so, how large will that cost be?  Is the assisted living/nursing home cost based upon a private or semi-private room?  Are you given a choice?

Who decides when you need additional care and what are the criteria for making that decision?  What exactly is included in your monthly fee?  Utilities?  Laundry?  Are one, two, three or no meals per day included?  Will your unit be furnished or unfurnished?  How long has the CCRC management team been in place?  What are the resident rules and regulations?  Is there anything in them that may be a problem for you?  What has been the history of cost increases for when additional care is needed?  While we are at it, what has been the history of cost increases for residents who have continued to live independently?

Is the location convenient for those who you will want to have visit?  Are services that are essential to you (Examples: hair styling, laundry, banking, religious institutions.) either located in the CCRC or easily accessible?…remember, you will inevitably reach the point where you can no longer drive.  IS THE COST SUSTAINABLE given your future income, assets and liabilities?  Can you picture yourself as being reasonably happy in that particular environment?… in spite of aging and increasing physical/mental limitations?  Note: Questions in this paragraph apply equally to any post-retirement environment.

When you are shown what could become your independent living unit, it will likely be freshly painted.  You will be told of the joys of care-free (and maintenance-free) living.  Please remember that nothing is “free”.  I urge you to consult an attorney who is experienced in reviewing CCRC agreements BEFORE you make a deposit or otherwise sign any documents.  Moving to a CCRC could be the best thing that ever happened to you, or it could become your worst nightmare.

I am not anti-CCRC.  Those who know me, know that I am skeptical of marketing hype in general.  I like to think of it as “healthy skepticism.”  Making a decision regarding moving to a CCRC will have an incredible impact on the rest of your (and that of loved ones) life.  Do extensive research.  Check it out.  Then check it out again.  Speak with existing residents whom you have selected, and without marketing people present.  Most of all, get competent legal advice about the contractual provisions.  If a CCRC is right for you, go for it.  If it is not, then don’t.

As always, I would love to receive your comments, pro or con.  Please email me at ray@LTCinsuranceGuy.com or call me at 303-699-4172.

Ray

 

Disclaimer: This eNewsletter and all links to other sources should not be construed as tax or legal advice because they are neither. Raymond Smith, The Long Term Care Specialist, does not give legal or tax advice.  Consult your attorney or tax advisor  for these matters.

 

© Raymond Smith, The Long Term Care Specialist, 2016