Continuing care facilities are designed to offer seniors stability and supportive services no matter what level of care they need. Communities are designed to give residents the typical services and independent lifestyles offered by most retirement homes with the added comfort of knowing that advanced medical care is also available when needed. Continuing care facilities promote aging in place, which suggests seniors can and should remain in their chosen communities regardless of medical need.
According to a new report out by the Senate Special Committee on Aging, however, “these arrangements are not without risks.” Continuing care retirement communities (CCRCs) typically require fairly large entrance fees (some are even as high as five or six figures) in addition to regular monthly payments. These fees are used to cover the costs of housing in these well-groomed communities, medical care including skilled nursing and assisted living as needed, meal plans, as well as a variety of on-site amenities available to residents free of charge.
When the cost of healthcare skyrockets and the value of real estate plummets, as has been the case in recent years, CCRCs tend to experience heightened financial pressure, since upfront fees paid years earlier may no longer cover the costs of care. Although few of these communities have closed or filed for bankruptcy, concerns have been rising about their financial stability.
The Government Accountability Office (GAO) in June released a report warning senior citizens about the risks of CCRCs. It said recent economic conditions have placed financial stress on some CCRCs, and that states should be vigilant about ensuring adequate consumer protections for residents. “CCRC financial difficulties can lead to unexpected increases in residents’ monthly fees,” warns the GAO. The report goes on to say that “should a CCRC failure occur, it could cause residents to lose all or part of their entrance fee.”
One of the most attractive selling points of CCRCs is the stability they offer during the later years of life, which can often pitch seniors back and forth between times of illness and periods of good health. The continuity that such facilities offer could be undermined, however, if economic factors cause financial instability.
Over half of all CCRCs require no entrance fee, but those that do average about $250,000. Before committing your life savings to any facility, review its financial credentials, credit rating, and reputation. You can also have an attorney review any escrow agreements and other legal documents.
