Understanding Continuing Care Retirement Community (CCRC) Costs

Most seniors hear the phrase “aging in place” and immediately think about making home modifications and changes so they can grow old in their own homes. However, continuing care retirement communities (CCRCs) offer another way for aging adults to enjoy aging in place and provide different senior housing options and levels of care on a single campus. Several years ago USA Today reported that more than 600,000 seniors were choosing to live in CCRCs, and those numbers have been growing since most seniors love the idea of being able to stay within the community, even if their health and care needs change.

CCRCs offer an appealing option for independent seniors who want to enjoy an active, community lifestyle while preparing for the future. However, the costs of a CCRC can be a bit complex. These different fees can make it difficult to understand whether you can afford to live in a CCRC. What fees do you have to pay to live in a CCRC? What do the fees cover? What happens to your money if you pass away or you have to leave the community? Here’s a closer look at CCRC costs, information on the available contracts, and a look at some tips on how to pay for life in a CCRC.

CCRC Entrance Fees

One of the biggest CCRC costs is the upfront entrance fee. This is a one-time fee that may or may not be partially or fully refundable, depending on your contract. Entrance fees vary greatly and can run between $100,000 and $1 million. The amount you’re paying up front for entrance fees depends on the location and size of the unit you’ve chosen and may include a certain amount of money towards your care in the future.

According to LongTermCare.gov, your one-time entrance fee may not be refundable. However, some communities are willing to offer full or partial refunds in certain circumstances. For example, Forbes reported that if you decide to move or pass away within a certain period after you move in, your entrance fee may be partially or wholly refundable, although that fee could be held until your spot has been filled.

Monthly CCRC Fees

Along with the up-front entrance fee, you’ll also need to pay monthly fees while you’re living in a CCRC. Fees can vary greatly but usually range between $2,000 and $4,000 per month. Monthly fees are affected by the type of housing you’ve chosen, the contract you’ve signed, and the amenities that are available.

It’s important to note that monthly fees often go up over time, increasing with inflation. According to Kiplinger, monthly fees generally increase between 4-6% annually while you’re still in the independent living unit of a CCRC, and it’s possible to see even higher increases in monthly fees if you’ve moved to skilled nursing or an assisted living nearby within your community.

The Potential for Additional Fees

Even though you’ve already paid an entrance fee and you pay a monthly fee, there are still fees you may be asked to pay for services that aren’t included in your CCRC contract. When you’re considering a CCRC, it’s a good idea to ask about things that won’t be included in your contract and what they will cost you. These may include things like transportation, meal plans, health care, housekeeping, assistance with daily living activities, beautician services, and more. Identify the services that may have additional fees before you sign a contract and consider how much they’ll cost. Some of the potential miscellaneous continuing care costs you may need to plan for include:

• Pet deposits (if pets are permitted)
• Wellness programs
• Maintenance fees
• Late charges
• Waiting list fees (if there is one)
• Internet and television
• Utilities and phone
• Parking fees
• Storage

Different Types of CCRC Contracts

When it comes to the cost of living in a continuing care retirement community, the most significant factor affecting your costs is the type of contract you sign. There are three basic types of CCRC contracts and they come with different risks and benefits. These contract options include:

• Fee-for-Service Contracts: The upfront enrollment fee is the lowest with this choice of contract, but there's a trade-off down the line. Should you need the assisted living or skilled nursing services available in your CCRC, you'll have to pay for them at market rates. With this type of contract, you're essentially making a bet on your health. Fee-for-service contracts start out as relatively inexpensive initially, but they have the possibility of becoming extremely expensive, should you need extensive amounts of health care. According to the AARP, while these contracts come with the lowest enrollment fees, they have the highest risk because skilled nursing and assisted living costs in the future will be paid for at market rates.
   
• Extensive Contracts: These contracts are the most expensive, but also provide the greatest peace of mind for you and for your family. Under a Life Care contract, your monthly maintenance fee remains stable no matter what kind of care you need in the future. If you need an in-home caregiver, it's covered. If it comes time to move into assisted living near you or a skilled nursing facility, it's all covered. You have unlimited access to all the health care the CCRC can provide, all for the same fee you paid when you first moved in. A Life Care contract, not surprisingly, requires the largest buy-in upfront, sometimes rising into the high six figures. If you can afford it, it's a good choice for couples, who may end up developing different medical needs at different times. In addition, it protects your family from rising costs in the future.The U.S. Department of Health & Human Services estimates that approximately 43% of CCRCs offer this type of contract option.
   
• Modified Contracts: Under this type of contract, you receive specified services, mostly medical services, for a given amount of time. Once you hit that time limit, you still have unlimited access to the services, but now you have to pay a higher monthly fee. Typically, the fee you pay is still quite a bit lower than what you'd paid for the same services outside the CCRC. Sometimes a modified contract covers a certain number of days per month of health care — say, 15 days a month of skilled nursing care or assistance with the activities of daily living (grooming, bathing, dressing, etc.). After that, you have to pay the fees yourself. Before committing to this type of contract, it's a good idea to look over your health insurance policy to see how what it covers dovetails with the services you'd be paying for.
   

Can You Afford to Live at a CCRC?

While the idea of a large entrance fee along with additional monthly fees may seem overwhelming, there are multiple ways to afford life at a CCRC if it’s an option that fits your needs. You can pay for a CCRC in several ways, such as selling your home or using your long-term care insurance if you eventually need to make the move to the assisted living level of care. In some cases, Medicare may pay for certain services needed while living in a CCRC. To determine whether it’s an affordable option for you, it’s a good idea to ask CCRCs you’re considering for audited financial statements and work with your financial advisor to evaluate the costs versus your assets.