Active Adult Communities

4/27/2020 | By Seniors Guide Staff

Coffee bars, fitness classes and indoor pools, billiard rooms, arts and craft studios, chef-prepared meals … These might sound like a list of luxuries at an upscale hotel, but they’re not. This is a list of amenities you might see at a CCRC, a continuing care retirement community. In addition to their appealing lists of amenities, CCRCs’ main attraction is their variety of living options. Most feature independent-living condos or apartments and assisted living units on the same property. But can you afford a CCRC? Here’s what to expect from CCRC fees, and what CCRCs look for to determine if you can afford to live there.

How Do CCRCs Work?

When you move into a CCRC, you pay an entry fee, which can be steep. CCRC entry fees range from $100,000 up to $1 million, depending on the area of the country you live in and the facility itself. After moving in, you’ll pay a monthly fee. These fees vary, too, from about $2,000 to more than $7,000 at high-end facilities. 

The benefit of a CCRC is that once you’re in, you’re in. If your medical and housing needs change, and you need more care than what the independent living area of the facility provides, you can simply move to a unit that offers more care. CCRCs provide peace of mind. Instead of scrambling for a bed in an assisted living or skilled nursing facility after a medical issue or illness, you can rest assured that there’s a place for you in the CCRC.

Types of Contracts

Most CCRCs have a few levels of contracts, usually referred to as A, B, and C. In general, the more you pay as an entry fee, and the higher the monthly fee, the more health care costs your fees cover. Type A contracts, sometimes called a lifecare contract, means that you are guaranteed whatever level of care you need – without any extra cost in the future. This type of contract comes with the most expensive monthly fees and possibly a higher entry fee. A Type B contract, or a modified contract, means that you will get the higher levels of care you may need in the future, but you’ll have to pay for it then (usually at a discount, though). Type B contracts will come with a lower monthly fee. A Type C contract, or fee-for-service contract, requires even lower fees, but you’ll pay market price for future levels of health care in the facility. 

Paying for a CCRC

When you apply to a CCRC, the facility will examine your finances to make sure you can afford the entry fee and the monthly fees. According to financial planners, CCRCs expect potential residents’ assets at the time of application to be twice the amount of the entry fee. They also expect their monthly income to be one-and-a-half to two times the monthly fee.

Your first CCRC expense is the entry fee. While these fees vary from facility to facility, the national average is about $329,000. Many seniors pay for the entry fee with money gained from selling their house. If you can’t sell your house immediately, you may be able to use a home-equity line of credit to pay for the entry fee. When you do sell your house, you can pay off the line of credit. If you have to dip into retirement savings or other accounts to pay for the fee, keep in mind that this is considered income, and may trigger a hefty tax bill. However, this tax hit can be partially offset if you write off the CCRC entry fee as a medical deduction.

Monthly Costs to Factor In

Next, consider the monthly fees. The national average for a CCRC’s monthly fee is about $3,300. To estimate whether or not you can afford the facility’s monthly fees, compare those fees against your current housing and other costs. Your CCRC fees will probably cover housing, meals, utilities, maintenance, and security. When you consider your current budget, make sure to include costs like property taxes, yard and home maintenance, and homeowners insurance, because these expenses will most likely be covered in the CCRC monthly fees. Monthly fees do increase with inflation (or sometimes exceed inflation), rising about three or four percent every year, so keep that in mind as you examine your financial situation.

Seniors Guide Staff

Seniors Guide has been addressing traditional topics and upcoming trends in the senior living industry since 1999. We strive to educate seniors and their loved ones in an approachable manner, and aim to provide them with the right information to make the best decisions possible.

Seniors Guide Staff