Boomer Money
  • About
  • Fine Print and Privacy
  • Glossary – Definition of Financial Terms

Continuing Care Retirement Communities, Part 1–Seven Essential Things to Know

July 1, 2019 by Linda Vaughn

Vintage black and white photo of two women riding their bikes through a continuing care retirement community.<span data-mce-type=

The takeaway:  Continuing Care Retirement Communities are housing developments that let you age in place, while also providing long-term care if you need it. They are one of the three major types of long-term care insurance you can buy; the other two were discussed in an earlier post.  Unless you have money to burn, be clear on the seven vital–but basic–issues listed below, prior to signing on the dotted line.  These communities have plenty of advantages beyond the long-term care services they offer.

$$$

Ahoy, Boomer! After all our talk about outliving your money, tracking expenses, and retirement health care costs, let’s lighten the mood with a more cheerful topic.

Let’s talk about long-term care insurance.  

WoooHoo! I know your mood’s lighter already. 😉

From the long-term care series, you over-achievers already know that there are three major types of long-term care policies you can buy. Two of these three were discussed here.

The third major type of long-term care insurance is what you can get when you buy into a Continuing Care Retirement Community.

What’s a Continuing Care Retirement Community?

Boomer couple holding hands walking through snow at a continuing care retirement community.

Continuing Care Retirement Communities let you age in place.

Continuing Care Retirement Communities are housing developments that let you age in place, while also providing you long-term care if you eventually need it. They offer:

  • independent living for those who can still easily live on their own;
  • assisted living for those who need help with activities of daily living–like bathing, dressing, eating, etc.; and
  • nursing home care for those who need around-the-clock supervision and medical assistance.

As your needs change, you can move from one level of care to another, without ever leaving the community. Generally, you must be independent and sufficiently healthy when you first move into one of these communities. The minimum move-in age is typically between 55 and 62. 

These communities vary in size. Some are multi-acre campuses containing houses, condos, and apartments. Others can be one large building in the middle of a city. As your health care needs change, you can move from one level of care to another, without ever leaving the community.

What are the seven things you should know before you sign on the dotted line?

Scattered $50 bills with the word "fees" blazoned on top of the image.

Be clear on the fees and their effect on your wallet over time.

#1.  Know the fees! 

There are two types of fees:  entrance fees and monthly fees. 

Entrance fees. Fee size depends on the type of unit you select and where in the country you live. Entrance fees can range from $75,000 to $1 million. Generally, you don’t get your entrance fee back, but check with your individual community.

As of this writing, the entrance fee is partially tax deductible as a long-term care expense. Check with the community and confirm with a tax professional.

Monthly fees. These fees range from $1,800 to over $5,000 a month, depending on the size of your unit, and where in the country you live. You can expect annual increases of 4% to 6% annually.

At these rates, your monthly fees will double every 12 to 18 years. Be prepared! (See the Rule of 72 for calculating how often your fees and investments double.)

Entrance fees range from $75,000 to $1 million. Monthly fees range from $1,800 to over $5,000. Expect monthly fees to increase 3% to 6% annually.”

#2. Understand the three different types of contracts and how they’ll affect your nest-egg.

Vintage black and white photo of a couple at the breakfast table contemplating a move to a continuing care retirement community

Take your time deciding whether you want a place that provides all-in-one service (called Life-Care), or a place that lets you pay as you go (called Fee-for-Service).

Boomer, your total costs, from the time you move in until the time you exit stage left, will depend on the type of contract you sign–and whether you ever need long-term care.

There are three main types of contracts. They represent a continuum of services.

Life-Care contracts offer unlimited independent living, assisted living, and nursing home care for one all-inclusive price.

My father-in-law’s story.  My father-in-law lived independently in a community that required these life-care contracts. Over the 20-year period he lived there, he needed nursing home care off-and-on for only about five months.

White plus sign inside green square, which is in turn inside a black square.The advantage of the all-inclusive price of his life-care contract was that he didn’t have to worry about the unpredictability of long-term care costs. 

This is important because stability and predictability don’t exist for most traditional long-term care insurance you might buy.  He eventually did need long-term care, it was for five months, and the price had all been included in the up-front fees he paid when he moved in.

White minus sign inside a red circle, which is inside a white box.

The disadvantage of this type of contract was that he paid relatively high up-front fees to cover services he barely used during his twenty-year residency. 

He didn’t care.  He’d made his decision based on the experience of his bride of 60 years. 

My mother-in-law’s opposite story.  She could have really benefited from living in a continuing care retirement community that required a life-care contract.  At the end of her life, she needed more and more services to manage the ravages of dementia.

Initially, she needed assisted living care, which was provided in the family home.  At the end, she required 2.5 years of institutional nursing home care. 

By itself, the nursing home care cost $262,500 in today’s dollars–a sizable hit to their retirement nest-egg.  The in-home assisted living care costs added to the devastation.    

For my mother-in-law, the high up-front-fees for a  life-contract community would have been cheaper than what all her care ultimately cost. 

Life-care contracts may save you money if you eventually need long-term care, but you could end up paying for services you never use.“

Modified contracts provide independent living, assisted living, and nursing home care for one all-inclusive price only for a limited time. After that window of time closes, the pricing for fees and services may increase or may revert to a fee-for-service contract, defined below.

Fee-for-Service contracts charge for services on an a la carte basis. With these contracts, the more care you require, the more you pay. If you move from independent living to assisted living, your fees increase. If you move from assisted living to a nursing home, your fees increase even more. 

White plus sign on green and black backgroundThe advantages of these fee-for-service contracts are that you only pay for the services you need.  This kind of contract would have been great for my father-in-law, who barely needed long-term care until the last five months of his life. 

white negative sign embedded in red circle.The disadvantages of these contracts are that this a la carte pricing could result in you paying more than you might have if your experience turns out like my mother-in-law’s. 

She would have benefited from the life-care contract, which provides the one-and-done fee upfront.  Any added care is generally already covered or relatively small.   

And one more thing, Boomer.  If a fee-for-service community hints that their residents pay less for long-term care than what’s charged on the open market, verify that “fact.”  Check out Genworth’s annual cost of care survey. 

Bottom line.  My father-in-law would have done better with the a la carte costs of a fee-for-service community.  My my mother-in-law would have been better off in a community requiring a one-and-done life-care contract.  

It’s wretched out there, Boomer!  Weigh your odds. Then take the long-term care insurance quiz to clarify your thoughts.

In the meantime, check out the real world cost differences between the two types of contract communities below.

black and white photo of dice who's tops say "yes" or "no"

Weigh your odds of needing long-term care by looking here and then here.

#3. Be familiar with real world cost differences between life-care vs. fee-for-service Communities.

Boomer, here are the actual costs of two continuing care retirement communities. One requires a life-care contract; the other a fee-for-service contract. You can see that the life-care contract starts high but doesn’t increase fees for assisted living or nursing home care. In contrast, the fee-for-service facility has lower initial fees, but those prices climb if you need long-term care.

Life-care contracts start a little higher but end a lot cheaper than do fee-for-service contracts.

Table comparing various fees in a Life Care Contract vs. Fee-for-service continuing care retirement community


1Fees effective January 1, 2019.  2Fees effective April 1, 2019. 3Entrance fees are higher for getting into these homes than they are for getting into apartments.
Source: Life-care contract prices are from a facility in Western North Carolina. Fee-for-Service contract prices are from a facility in North Florida. 

These prices are for communities in the southeast–one in North Carolina and the other in North Florida.  If you live in the mid-west, your costs could be lower.  In the northeast, or on the west coast, they could be higher.

Also, if these prices seem high, check out  my column about *maybe* getting Medicaid to potentially pay this cost for you.  You *might* be one of the sixty-two percent of nursing home residents to have their care paid by Medicaid.)[/caption]

Aside from long-term care, continuing care retirement communities provide a wealth of recreational and social amenities.”

hands holding individual letters that spell out the word benefits

Be clear on the benefits of Continuing Care Retirement Communities.

#4. Be clear on what the emotional benefits of Continuing Care Retirement Communities are.

Should you or your spouse need long-term care, Continuing Care Retirement Communities have the advantage of:

  • avoiding the trauma of having to leave your friends and neighborhood, since long-term care facilities are located on site;
  • enabling community friends to easily drop-in and see you, since you remain nearby;
  • providing professional long-term care so that you’re not a burden to your family; and
  • enabling the spouse who doesn’t need long-term care to easily see the one who does with just a short walk or drive across the campus.

#5. Understand the amenities and activities offered by Continuing Care Retirement Communities.

The good folks at After 55.com have outlined the typical amenities and activities available. These include:

Recreation facilities, like

    • putting greens;
    • weight rooms;
    • swimming pools; and
    • tennis courts.
Vintage black and white photo of three women lifting weights in a continuing care retirement community

Be aware of the fitness programs offered by Continuing Care Retirement Communities.

Wellness and fitness programs, like

    • yoga;
    • tai chi;
    • water aerobics; and
    • balance classes.

Selected health care services, like

    • personal trainers;
    • physical therapists; and
    • consultations with a doctor or nurse practitioner for minor health problems.

Meals, which can include

    • meal plans and
    • community dining hall programs for those who don’t want to cook.

Home care and maintenance, like

    • housekeeping;
    • home maintenance; and
    • yard maintenance.
Vintage black and white photo of a woman in fur riding a kiddie car.

Transportation is a common amenity at continuing care retirement communities.

Transportation to such places as:

    • grocery stores;
    • shopping malls; and
    • doctors’ offices.

I recently ran into a neighbor who’d moved into one of these places a few years ago. She said she never dreamed, that at her age, she’d make so many new friends and be involved in so many activities. Then she listed all the things she liked about it, which mirrored the above list.

Be aware of the downside to Continuing Care Retirement Communities.

Still, in the interest of full-disclosure, not everybody loves these places.

#6. Know the downside of Continuing Care Retirement Communities.

The good folks over at Next Avenue report that common complaints about these communities are:

  • a lack of control;
  • a lack of privacy;
  • too much interaction with one’s neighbors; and
  • the feeling that death is just around the corner.

Know what to ask the sales staff before you buy into a Continuing Care Retirement Community.“

Vintage black and white photo of two men in office arguing about continuing care retirement communities

Before you sign up, run sales staff through the Boomer Money and More checklists, found in the next two posts in this series.

#7. Know what to ask before you sign on the dotted line.

Boomer, I’ve got some checklists to help you decide if Continuing Care Retirement Communities are worth the money.  If you determine they are worth the money, then check out these questions to ask sales staff before you sign on the dotted line.  You have a lot of money riding on this thing, Boomer. It pays to be cautious.

Until next time, Boomer, live long and prosper.

$$$

Long-Term Care Series  (Oldest to Newest)

  • Long-Term Care Insurance: Five Warnings Before You Buy
  • Long-Term Care Insurance Quiz:  Will I Need It?  Can I Get It? 
  • 17 Ways to Get Turned Down for Long-Term Care Insurance.  (And What Happened to Me.)   ** Most popular post on blog!
  • Getting Medicaid to (Maybe) Pay for Your Nursing Home Costs:  The (Updated) Epic Guide!
  • Three Types of Long-Term Care Insurance: You Might Not Need Any!
  • Continuing Care Retirement Communities Part 1 —Seven Essential Things to Know
  • Continuing Care Retirement Communities Part 2 — Four Ways to Figure Out if They’re Worth the Money
  • Continuing Care Retirement Communities, Part 3 — What to Ask Before Signing on the Dotted Line.  
  • Staring Down Your Long-Term Care Odds–Much Better News Than You Thought.
  • How to Evaluate a Long-Term Care Policy.  (Hint:  Know These Three Things.)
  • The Three Factors Affecting Your Long-Term Care Insurance Costs
  • My Encounters in the Wild With Long-Term Care Sales Agents.

$$$

Hi there! If this post helped you, could you consider sharing it on Facebook, LinkedIn, or Twitter? It's not easy being a small blog in a sea of a million blogs!! Share on FacebookShare on TwitterShare on Linkedin
Posted in: Long-Term Care Series Tagged: Continuing Care Retirement Communities, Long-Term Care insurance
← Don’t Outlive Your Money Part 4 – Why Health Care Expenses Could be Your Biggest Budget Item in Retirement; Prepare Now!
Continuing Care Retirement Communities, Part 2–Four Ways to Figure Out if They’re Worth the Money →

Categories

  • A Boomer Manifesto (1)
  • Annuity series (6)
  • Asset Allocation Series (8)
  • Book Reviews (12)
  • Boomer Reinvention (11)
  • Don't Outlive Your Money Series (10)
  • Investing Basics (7)
  • Long-Term Care Series (14)
  • Managing Retirement Money and Accounts (5)
  • Money Thoughts (5)
  • Real Estate Series (3)
  • Social Security (1)
  • Uncategorized (4)

Recent Posts

  • Resilience: Your Most Valuable Retirement Skill. Here’s How to Build It. (Book Review.)
  • To Not Outlive Your Money, You’ve Got to Know Where it Goes
  • How to Stop the Sting of Retirement’s Out-of-Pocket Medical Bills. (Or at Least Reduce the Pain.)
  • My Encounters in the Wild with Long-Term Care Sales Agents
  • The Three Factors Affecting Your Long-Term Care Insurance Costs
  • How to Evaluate a Long-Term Care Policy. (Hint! Know These Three Things.)
  • Staring Down Your Long-Term Care Odds—Much Better News Than You Thought.
  • Getting Medicaid to (Maybe) Pay for Your Nursing Home Costs: The (Updated) Guide.
  • That Time a $2,000 Price Tag Cost Me $60K.

Archives

  • March 2023
  • January 2023
  • December 2022
  • November 2022
  • July 2022
  • October 2021
  • August 2021
  • July 2021
  • April 2021
  • March 2021
  • February 2021
  • January 2021
  • December 2020
  • November 2020
  • October 2020
  • September 2020
  • August 2020
  • July 2020
  • June 2020
  • May 2020
  • April 2020
  • March 2020
  • February 2020
  • January 2020
  • December 2019
  • November 2019
  • October 2019
  • September 2019
  • August 2019
  • July 2019
  • June 2019
  • April 2019
  • March 2019
  • February 2019
  • January 2019
  • December 2018
  • October 2018
  • September 2018
  • August 2018
  • July 2018
  • June 2018
  • April 2018
  • March 2018
  • February 2018
  • September 2017
  • May 2017
  • April 2017
  • March 2017
  • February 2017
  • December 2016
  • November 2016
  • October 2016
  • September 2016

Copyright © 2023 Boomer Money... and More.

Lifestyle WordPress Theme by themehit.com