Retirement Communities

7/6/2021 | By Seniors Guide Staff

Because continuing care retirement communities (CCRCs) have such well-rounded care for residents, there is often a CCRC entrance fee associated with each community. We explore the costs, how these CCRC fees work, and their advantages and disadvantages.

A continuing care retirement community (CCRC) distinguishes itself through its multiple levels of care available in one place. The primary advantage is that it is designed to allow residents to remain on the same campus even with future changes in their health.

For example, a senior could enter a CCRC living independently, move to assisted living at some point, and on to skilled nursing, if needed. Many CCRC’s also provide memory care. This “continuum of care” is a unique feature of CCRCs.

Most continuing care retirement communities have an entrance fee, paid upfront to ensure a place in the community. As with most fees, there are benefits and disadvantages to them. You should be aware of both as you decide whether a CCRC is suitable for you.

How do CCRC entry fees work?

Residents do not purchase a CCRC unit. Instead, they pay an entrance fee followed by monthly payments. Seniors usually face two types of entrance fees: refundable and non-refundable.

CCRC refundable entrance fees are considerably more costly than those without a refund. Some of these are partially refundable, while others may return the total amount if the resident leaves or dies. For example, some CCRCs will return 75 percent of the fee to the estate or to the resident that terminates the contract. Others refund on a declining scale – one percent per month, for instance – so if the resident stayed for a year, that the refund would be 88% (100% minus 12%).

Non-refundable entrance fees are smaller but do not typically allow any money to be returned. For those wanting to ensure there is something left for their heirs, the higher-priced refundable fees make more sense.

How much is a CCRC entrance fee?

Whether refundable or non-refundable, entrance fees are based on apartment size, location, and the CCRC’s specific amenities. Paying more initially lowers your monthly costs if you move on to assisted living, skilled nursing, or memory care.

However, the quality care and security seniors receive come at a price. Entrance fees range from $100,000 to $1 million, with the average cost at about $320,000. While monthly fees average $3,266 nationwide, they can also vary, ranging from $2,000 to over $7,000 at the high-end CCRCs, according to the AARP CCRC entrance fee model.

Various factors can affect these fees, including the resident’s health, the type of housing they choose, the number of residents living in the facility, and the kind of service contract they have. They could also be charged fees for housekeeping, meal service, transportation, and social activities.

How do most seniors pay for a CCRC?

Many older adults pay their entrance and monthly fees through a combination of investment income, savings, pension, retirement plans, and the proceeds from selling their homes. There are no property taxes to pay on their units, and many of them get a significant tax advantage on a part of their entrance and monthly fees in retirement communities that provide health care services.

Related: Can I Afford a CCRC?

What are the pros and cons of paying the CCRC’s hefty fees?

Some of the benefits include:

  • Everything is included: Residents have maintenance-free living and the freedom of living independently.
  • Access to a social network: Residents of a CCRC live around people of the same age with many of the same interests.
  • Health care support system: CCRCs offer residents the security of various levels of health care. And they can move from one level to another without relocating.
  • Flexibility: If a couple moves into a CCRC with different medical needs, the CCRC can meet their needs without requiring them to live apart.
  • Peace of mind for the family: CCRCs provide family members with peace of mind that comes from knowing their elderly loved ones are cared for while living an active and healthy life.

And a few of the potential disadvantages:

  • Getting accustomed to a new lifestyle: For many older adults, leaving their home and neighborhood could be difficult.
  • They will live exclusively with older adults: Some seniors may be more comfortable living among people of different ages rather than just people of their age.
  • The cost may be prohibitive: Older adults on a fixed income might not afford the entrance fee.
  • The financial risk might be substantial: Seniors risk losing their entire investment if a financially unstable community goes bankrupt.

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