Continuing Care Retirement Communities Explained

Watch as McKee Smith, SRES® and REALTOR®, explains the basics of CCRCs as an option for some seniors!

I am McKee Smith. I am a Senior Real Estate Specialist® and REALTOR® with Competitive Edge Realty. I work primarily in the area around Coppell, Texas, and all the zip codes immediately around it. I also work all over the DFW area. I have sold and shown houses all the way from Burleson to well Rockwall, so I cover a big area.

If you have any questions, go ahead and post them in the comments. If you’re hanging around to the end, I can take some questions then, but I’ll try to answer questions as they pop up in the comments.

So today we are going to be talking about continuing care retirement communities. I did a presentation at the Coppell Senior Center about two weeks ago and I was surprised by the amount of interest that the people at the senior center had in CCRCs. So, I decided to do an entire Facebook Live on the subject.

Let’s start at the beginning. What is a continuing care retirement community? Well, CCRCs are facilities that allow seniors increasing levels of care as their needs change. They can progress from independent living to assisted living, to memory care, to skilled nursing, and even all the way to hospice care generally all in one facility. Certainly all managed by one overall program. It’s something that a lot of seniors like because, well, it’s all in one. Everything is combined into one program.

Now, CCRCs, and that’s what I’m going to be referring to them as because continuing care retirement community is really long to say. Generally, CCRCs fall into two primary categories. First are for-profit facilities and second, are, you guessed it, nonprofit facilities. They both operate the same. There are some differences obviously, but the biggest one is the for-profit facilities often, but not always have more up to date, newer facilities, newer equipment, buildings and that sort of thing. Nonprofits almost always have larger staffs because staff is the largest ongoing expense. So that’s a quick way to tell the difference.

Not all CCRCs have everything under one roof. It’s managed by one facility, but they don’t always have everything under one roof. As I will say repeatedly, while you are doing research on any CCRC of which you’re interested, read the contracts, find out the fine print details because they’re all going to be slightly different.

How do these facilities work? Well, generally you sign a contract and there are four primary types of contract. The first is life care. Life care includes housing, residential services, amenities, and unlimited use of healthcare services with no, or at least minimal increases in fees. A substantial entry fee is usually required, but the monthly payments generally do not increase. In other words, you might be putting down a very large amount to get into a CCRC initially, but once you’re there, there is an ongoing monthly fee, but it is set and you don’t have to worry about it. Sometimes they have some allowances, but under what is called the full life care, generally, the fees are all set.

Okay, let’s move on to modified life care, which as you might guess by the title is similar but slightly different. Same with housing and residential services and amenity as life care, but the healthcare services are more limited, such as you might only get 60 days of skilled nursing care. The fees also increase as the resident’s care needs increase and sometimes it’s possible with the modified life care to have your needs increase beyond the capabilities of what that particular facility has.

The Modified life cares have significantly lower buy fees. Their monthly fees actually tend to be about the same. Again, these are all generalizations, research each facility on your own, but that’s the biggest difference. With full life care, everything’s covered, everything is generally included and prices stay the same with modified life care. The buy-ins lower, but you might have to have to pay a little bit more later on.

Type three is called fee force service, and again, it’s the same housing and residential services and amenities as the first two types. But healthcare expenses are paid by the resident on an as needed basis. So they will have a facility and you are in that facility, but as you need increasing amounts of healthcare, you are going to be the one responsible for paying for it.

The resident is the one responsible for paying for it. As you might guess, both the monthly fees and the buy-in for this third type are significantly lower than type one. However, remember your medical expenses will be going up and for a lot of people having the medical expenses already covered and known is a big reason people like CCRCs.

And the fourth type is called rental. Rental is a pay as you go option and is generally the least expensive. There almost never is an entry fee required for the rentals and the residents pay all the expenses, but access to the CCRCs healthcare benefits is guaranteed. Now, one important thing about CRC contracts, is that’s important to understand, especially for type one and generally for the type two contracts.

When you leave a CCRC for whatever reason, it might be that the person has passed on or it, you might just decide it’s time to move out. You or your family members get a significant portion of the buy-in fee back. That’s right. You get a large chunk of it back. The exact percentage is going to vary based on the facility and the rules of that facility. But I know of at least one facility has told me that they return 90%. Another facility says that they have returned 85%, but with the 85% facility, they said if you choose to leave just in a year or two, you will get 90% of it back. So if you choose to leave or something happens and and you you are no longer with us and leave, your heirs will get up to 90% back. So that is something to keep in mind.

Again, these fees can be substantial. Many of them are over $500,000 buy-ins. I know I have read of one facility that had an $800,000 buy-in, but remember if you’re getting it back, it’s not as crucial.

It’s just make certain that you have the money and also you want to make sure that the facility has the financial strength will go into that a little bit more to be able to return, return you when it is necessary. Okay. Let’s come along here. What are the advantages of having a continuing care retirement community? Well, there’s several of them and it depends based on what your specific situation is. For example, if you’re comparing a CCRC to living in your own home, well the biggest thing is that you’re going to have someone else cleaning, washing, doing the maintenance, all those things. It’s not your home anymore. You aren’t the one responsible for the insurance and the taxes and all of those things. You have handed those over to the other people. A big part of that is peace of mind. This is especially true if you have the type one full life care because if you have a health issue, you already know it’s covered.

You already know where you’re going to be and you know that you will be taken care of. That is the biggest one when compared to living in your own home. But what about independent living thing? Well, if you compare a C CRC to an independent living facility, and a lot of times CCRCs have independent living facilities as part of their facility. Again, it’s peace of mind. If you are in an independent living apartment or independent living community where you have bought your house or your condo, again, all the healthcare is still on you. You have to manage all of that. If you’re in a CCRC, they manage it. You do not have to worry about it, and that is the biggest thing. The other thing is you know that generally what your costs are going to be as time goes on.

Alright, let’s talk about if you’re, if you’ve already moved on to assisted living, what’s the difference between a standalone assisted living facility and a CCRC assisted living facility?

Again, if you need more care, you are covered and you know what it’s going to be. The other plus is generally if you have in an assisted living facility and your condition improves, it’s difficult to go back to the independent living facility. However, if you’re in a CRC and something happens and you don’t really need the assisted living anymore, you can go back to independent living. Likewise, if something happens and you need more care, you need skilled nursing care or you need memory care, you can move into those facilities with fairly seamlessly. You can move into them without having to manage that or have your family manage that.

Now, one other big thing for couples, if you’re in a CCRC, the peace of mind factor doubles here. Let’s face it, not everybody ages or needs care at the same pace. If a couple is in a facility, then if one of member of the couple needs to go from independent living to assisted living or more importantly to memory care or skilled nursing care, the other member can stay where they are and since it’s in the same facility, it makes it very to go and visit the person.

Peace of mind. That is the biggest benefit of a continuing care retirement community.

Alright. What are the disadvantages? Because there are advantages and disadvantages to everything. Well, the biggest disadvantage to a CRC is they’re expensive. The cost, the buy-in cost can be very substantial. Like I said, I have heard prices up to $750,000, although that’s rare earth, but $500,000 is certainly not uncommon. The other possible disadvantage of a C CRC is if the facility you have chosen gets into financial trouble, then you might have an issue with them being able to honor all of their promises. Most especially the promise to return the entry or buy-in fee after the resident departs, be it back to the resident or to the resident’s heirs. Locally in Dallas we had a facility called Edgemere that was a CCRC that did get in trouble and they were having problems returning the B fees on a timely manner.

My understanding is they have settled this issue now, but I must emphasize anybody considering a CRC or treat it, just like any major investment you make, read the details, read the fine print. My father always say the said, my father who was an attorney, practiced for 54 years. The large print giveth and the small print taketh away. Read the fine print, make certain the facility you’re looking at has the financial ability to stay there.

All right, so you’re interested in a CCRC. What are the next steps? Well, research. That’s the primary one. As I said before, read, read, read. You need to research. You need to find out what the facilities have to offer, what the facilities, you know, compare the amenities, compare everything. You cannot research too much on it If you want to sell your home to help pay that large buy in fee and have cash to continue.

Well, that’s where I come in. I am a real estate agent and I am a senior real estate specialist, so I am trained by the National Association of Realtors in working with people who are, let’s say, a little more seasoned.

Well, that pretty much wraps up everything. I don’t see any questions yet, but if you have a question, you can one, post it in the comments. I come back and look the comments on all of my Facebook Lives and then try to get back to the people I, if it’s, if you’re posting on Facebook, I will spawn that way. You can also email me. That is an easy thing to do. I am realtor McKee, and you can follow a link that is in the Facebook message system that will set you up for a no obligation consultation.

I just love talking about real estate with people. So that’s it for now. Again, if you have any questions, please just give me a shout and I will be happy to answer or find the answer for you. That’s it for now. Remember, McKee has the keys to selling your home.

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