Continuing care retirement communities

In recent years, persons approaching retirement age have had more lifestyle options than ever before. One of those options is the Continuing Care Retirement Community (CCRC). These facilities provide a "continuum of care." This means, for example, that a person can start in the CCRD independent living facility, then move on to its assisted living facility and perhaps spend their final years in the skilled nursing facility. What's not to like?

Well, a characteristic of the CCRC is the payment of a high admission fee, sometimes referred to as a "deposit." On the one hand, the high admission fee can be an advantage for those seniors who fear that they may require lengthy and expensive health and residential care in the future. To some extent, the CCRC "locks in" fixed initial rates for care at an affordable level. However, some critics claim that, once the admission fee is paid, there is little incentive for the CCRC to maintain high-quality assisted living and nursing services. Moreover, because the financial stability of the community is based on actuarial expectations, a greater-than-average number of residents needing nursing home care could endanger the assets of all the residents. In some CCRCs, the initial fee for admission is completely unrefundable. For others, the fee is unrefundable over time. That is, the admission contract may provide that the maximum available refund will be reduced by a fixed percentage each month.

In addition to the entry fee, the CCRC will most likely charge a monthly fee. This fee may include health care coverage or it may vary, depending on the level of care required by the resident. At least a portion of the monthly fee may be tax deductible.

Keep in mind that the CCRC entrance fee will be considered a "countable resource" for purposes of qualifying for Medicaid if the resident has the right to use the fee for care costs, the resident is entitled to a refund upon death or departure, and the fee did not purchase an ownership interest in the CCRC.

If considering a CCRC contract, the following are some of the factors to examine carefully:

1. Current and future fees, and how they are calculated.

2. Which facilities are included, and under what circumstances may the resident choose to change locations.

3. Which health and nursing services are included

4. Does the contract provide that the resident will be cared for even if his or her financial resources are exhausted?

5. Is there a provision for a self-governing council or advisory group made up of residents?

6. Is the CCRC financially stable? Has it made provisions for potential future increased expenses?

7. Check whether the facility has been credited by the Continuing Care Accreditation Commission (CCAC).

James Bendell practices law at the Grupp Law Firm in Coeur d'Alene, and is a member of the National Academy of Elder Law Attorneys.