Know what you're paying for when it comes to CCRC fees

Continuing care retirement communities, also known as CCRCs, are an increasingly popular retirement option for seniors. Currently, there are nearly 2,000 CCRCs serving more than 628,000 seniors across the country according to the National Investment Center for the Senior Housing & Care Industry. These age-restricted communities are located on secure, campus-like settings offering a maintenance-free lifestyle with gourmet restaurants, fitness centers, and a variety of social and recreational opportunities for residents.

Another feature that makes CCRCs appealing is the availability of healthcare services within the community. In addition to independent living, most CCRCs offer assisted living, short-term rehabilitation and long-term skilled nursing care which enable residents to continue residing within the CCRC campus despite increasing healthcare needs.

"The healthcare component of a CCRC and its relation to fees is where people really need to do their homework," said Karen Christiansen, Executive Vice President and Chief Financial Officer with ACTS Retirement-Life Communities, one of the nation's largest providers of CCRCs. "The amount a resident is responsible to pay for these services will depend on the contract offered by the community."

How CCRCs Work

Seniors who live in a CCRC typically pay a fully or partially refundable entrance fee and a monthly fee that covers rental of an apartment or freestanding home, maintenance, utilities, meals, activities and amenities. However, the fees for healthcare services in a CCRC vary based upon the contract type. There are three predominant CCRC payment options from which to choose:

Life Care Contract (Type A): This all-inclusive agreement offered by ACTS and other nonprofits includes housing, services, amenities and all healthcare at essentially the same monthly fee aside from normal inflationary increases. Of all CCRC contracts, Type A is most similar to a long-term care insurance plan and the preferred option for those who want predictable monthly payments. Additionally, residents may receive significant tax benefits related to the prepayment of healthcare.

Modified Contract (Type B): This contract offers healthcare services at a discounted rate for a specific time period (typically 30-60 days). After that, residents are responsible for paying for assisted living and nursing care services at market rates. The average cost nationally of assisted living services is currently $3,500 per month and nursing care in a private room averages more than $87,000 annually depending on where you live.

Fee-for-Service Contract (Type C): With this option residents are responsible for the full cost of healthcare services for as long as needed at market rates, which means they pay for care as they need it at increasingly higher rates and in tomorrow's dollars. This contract does not typically receive a tax write-off since no health care services are pre-funded.

Some CCRCs offer a rental option without an entrance fee requirement. Residents who choose this type of contract pay a higher monthly fee and assume the full risk of the cost and coordination of their future care.

"Those considering a CCRC should find out how much fees are subject to increase when it comes to needing higher levels of care. The costs of assisted living and nursing care are not fully covered by all CCRC contracts and they are typically the largest expense seniors face in retirement," said Christiansen.

Source: ACTS Retirement-Life Communities

Headquartered in suburban Philadelphia, ACTS Retirement-Life Communities, Inc., is one of the nation's premier not-for-profit senior living continuing care retirement community (CCRC) organizations.