Continuing care retirement communities, often referred to as CCRCs or life care communities, can be a great choice for retirees who live independently today but seek the peace of mind afforded by residing in a community that is equipped to provide long-term care services if needed in the future.
However, CCRCs are not all created alike and the various types of residency contracts are often difficult for some to understand. Once you have identified a particular community that you feel will meet your lifestyle preferences here are a few important questions to ask:
1. How does your residency contract work in terms of monthly pricing?
What this really gets at is seeking to gain an understanding of how your fees adjust if you ever move from an independent living residence into an assisted living or healthcare residence within the community. This is particularly important to understand when there are two residents or spouses and one needs care.
2. Is there an entry fee and how much of the entry fee will be returned if you move out or in the event of death.
Many communities offer a declining balance contract whereby you will receive some portion of the entry fee back if such an event occurs during the early years of residency but not beyond a point, usually 2-3 years. However, some communities offer a refundable contract whereby some portion is refundable no matter how long you live in the community. However, a resident will typically pay a higher entry fee for a refundable contract than for a declining balance contract. Also, be sure you are clear on the exact stipulations for receiving the refund.
3. What assurances can you give me that your community will remain financially solvent for the long-term?
Although no one could ever be expected to guarantee solvency there are a number of things that a provider should be able to tell you that give you a higher level of confidence. A few examples would be: a consistent level of high occupancy (which is evidence of a high level of on-going demand for the community, an experienced management company, a short average turnover rate for occupied units, strong financial ratios compared to industry averages, positive net worth, a strong financial assistance fund and donor base (for non-profits), and a clean audited financial statement.
4. What assurances can you give me that your community will provide high-quality assisted living and health care services?
Ultimately one of the main reasons for choosing a CCRC is the knowledge that healthcare services will be available when needed. Therefore it is important to be sure that these services will be top notch. If a provider shies away from talking about this or does not provide convincing answers it could be a red flag.
By: Brad C. Breeding, CFP ® President & Co-Founder-My LifeSite : firstname.lastname@example.org
Brad is co-founder of My LifeSite (formerly LifeSite Logics), a North Carolina company that develops web-based tools and resources designed to help families make better-informed decisions when considering a continuing care retirement community.