CCRCs combine independent living with assisted living and nursing home care
A “CCRC” is a Continuing Care Retirement Community, the most comprehensive retirement living option available to seniors in America today.
A CCRC combines the services of an independent living retirement community with an assisted-living facility and a nursing home at a single location.
In exchange for an entrance fee and ongoing monthly service fees, the resident receives the immediate benefit of all of the independent living services, together with the assurance of high quality assisted-living or nursing home services if the need should arise, for the rest of the resident’s life.
Most CCRCs are not-for-profit
In contrast with most free-standing assisted living facilities and nursing homes in the United States, most CCRCs are operated by charitable or religious organizations on a not-for-profit basis.
Financial surpluses generated in these CCRCs are reinvested in the community for the benefit of its residents, rather than distributed to investors as dividends. This reinvestment enables most CCRCs to continue to care for their residents who outlive their assets.
Virtually all for-profit long-term care facilities require such residents to move out and/or receive government assistance.
Living in comfort and style
Seniors unfamiliar with the CCRC concept may think the words “continuing care” define the character of a CCRC. Actually, it is the independent living services that are usually the primary focus of a CCRC. The vast majority of CCRC residents are in independent living. Most of a CCRC’s capital investment is made in its independent living facilities and amenities.
Newer CCRCs typically have spacious, well-appointed independent living units, usually apartments, but often free-standing villas or cottages. The finest contemporary residential finishes including granite counter tops in full kitchens, with two or three bedrooms and multiple bathrooms, which include whirlpool tubs and walk-in showers, and crown molding throughout.
Shared amenities include full sized swimming pools, spas, fitness centers, and a wide array of activities generally organized by the residents themselves with the support of a recreation management professional. Dining options are expanding rapidly with both formal fine dining and informal venues.
High quality health care services
High quality healthcare services are the heart and soul of a CCRC. The health centers in recently developed CCRCs are usually much more “residential” than medical.
In Georgia’s CCRCs, staff size at the highest levels of care is often twice that of the statutory state minimum. Newer CCRCs provide their residents private rooms in all levels of care instead of the two and three bed “semi-private” rooms common in many nursing homes.
Because financial surpluses are reinvested in the community, the quality of healthcare services is not compromised by the need to make a profit.
What are the costs?
CCRC entrance fees and monthly fees vary with the age, the lifestyle and the type of contract offered by the community. While it is true that newer communities designed to appeal to the wealthy will probably have fees to match, far more are designed to appeal to the middle class, and many of those communities have been established for years.
Apart from the basic future healthcare agreement between resident and CCRC, fees vary according to the type of contract and scope of services. There are two types of CCRC contracts:
- Type A or “Lifecare” communites may have higher initial fees, but the monthly fees typically do not increase as a resident moves through the continuum of care. Therefore, monthly fees will be more predictable over a resident’s life.
- Type B or “modified contract” communities may offer lower entrance and monthly fees, but the monthly fees may rise dramatically as a resident moves to the higher levels of care.
Since roughly half of a CCRC’s residents will move permanently into a higher level of care, it is difficult to say one option is financially better than another. Some CCRCs offer both types.
Entrance fees for CCRCs in the Atlanta area range from $105,000 to well over $1 million, reflecting individual differences in the communities. Entrance fee refund options are increasingly common, with some CCRCs returning as much as 90% to a resident’s beneficiaries upon the resident’s demise and the reoccupancy of the unit. Monthly independent living fees range from as low as $1,400 to more than $4,000, depending on the service plan.
The CCRC tax benefit
Perhaps the best kept financial secret about CCRCs is that a portion of both the non-refundable entrance fee and the monthly fees is usually deductible in the year paid as prepaid medical expenses.
The percentage which my be claimed as an itemized deduction typically ranges between 25% and 30%; this can reduce income taxes for CCRC residents by thousands of dollars a year!
A CCRC resident profile
Each CCRC develops its own unique culture. One may attract the wealthy few, and another the broader middle class. Religious affiliation may be a common bond. Some universities are developing CCRCs to attract retiring alumni.
But while there is no common resident profile, there is one characteristic which is shared by virtually all CCRC residents: they are planners. They know their future health status is uncertain, and they want to make sure high quality healthcare services will be there if needed. Equally important, they want to spare their children the burden of caring for them in the event their health fails.
By Tom Olsen
St. George Village