Continuing Care Retirement Communities

Continuing Care Retirement Communities

Continuing care retirement communities (CCRCs), once referred to as life-care communities, offer a full continuum of housing and services within the same community. Thus, they cater to seniors ranging from those who are relatively active to those who suffer from serious physical and mental disabilities and chronic health problems. Over the course of their CCRC stay, older residents could conceivably occupy a rental apartment in a congregate housing facility, a room or apartment in an assisted living facility, and a bed in a skilled nursing home. As a senior housing expert put it, "Visitors who tour the different levels of shelter and care found in a well-run, full-service CCRC often feel as if they are watching the aging process unfold before them" (Golant, 1992, p. 26).

These various levels of shelter and care are housed on different floors or wings of a single high0rise building or in a physically adjacent buildings (garden apartments, cottages, duplexes, mid and low-rise buildings) or spread out in a campus setting. Some CCRCs are especially luxurious and resemble upscale ski resorts.

The average CCRC contains just over 330 units, made up of 231 independent or congregate living units, 34 assisted living beds, and 70 skilled nursing home beds. On average, an older resident will live in the congregate living facility for just over three years, the assisted living facility for one year, and the skilled nursing facility for nine months (ASHA, 2002).

CCRC Services

Seniors are attracted to the CCRC option because of its promise that for the rest of their lives they will receive appropriate personal assistance and nursing care in attractive residential settings, regardless of the current seriousness of their impairments or chronic health problems. Thus, they (or their family members) will not have to conduct a frantic search for an assisted living facility or a nursing home to cope with unexpected declines in their health or functioning. Indeed, CCRC residents often indicate that not being a burden on their children or friends was an important reason for their residency (Hunt, 2003; Krout, Moen, Holmes, Oggins, & Bowen, 2002).

A recent treng among CCRCs is to offer more apartment services to reduce housing moves within the community and better meet the desires of residents. Many CCRCs are downsizing their skilled nursing staff and increasing home-delivered services.

Three types of CCRC contracts

Residents typically sign contracts that specify the shelter arrangements, residential services, personal and health care, and nursing care that they are guaranteed during their stay in the CCRC. These agreements also specify the present costs to the residents of living in its community and using in resources, the conditions under costs may be increased, and the conditions under which residents must transfer among its levels of care. These contracts are designed to protect the rights of the older residents, but they also give the owners of CCRCs considerable influence as to what long-term care benefits older residents receive.

The American Seniors Housing Association (ASHA) distinguished three principal contract types: life care (also known as extensive or all-inclusive); modified; and fee-for-service (ASHA, 2002).

These contracts reflect the differences in the way CCRCs charge for personal assistance and nursing care and the extent to which they guarantee the availability of this care without additional costs to residents. In practice, CCRCs will often offer residents contract arrangements that represent a blend of these three contract types. A very small percentage of CCRCs also offer their residents the opportunity to own their units. This is an attempt to capture that market of seniors who consider real estate ownership a critical prerequisite for occupying a CCRC.

Life Care and Modified Contracts

CCRCs offering either life care or modified contracts guarantee their residents shelter, residential services, and amenities along with personal assistance and nursing care for the rest of their lives in return for an initial entrance fee and a monthly payment schedule. CCRCs usually offer these contracts to seniors who initially occupy their congregate or independent living units. Entrance fees vary greatly from a low of $50,000 to well over $500,000. The entry fees may be nonrefundable or partially refundable depending on the length of the residents stay.

Life care and modified contracts differ financially in an important way:

  • Under the life care contract, residents who move to the assisted living or nursing home accommodations of the CCRC continue to pay a monthly fee similar to what they had for their independent living accommodations. CCRCs agree to increase these feeds only to compensate for normal operating cost increases.
  • Under the modified contract, when residents move to a higher level of care, the CCRC agrees to charge the independent living rate for only some specified time period, after which residents must pay either a full or a discounted per diem rate.

You should be aware that, while some seniors are currently living under life care contracts, new issuances of life care contracts are disappearing because it is a difficult business model to manage effectively.

Fee-for-Service Contracts

Fee-for-service contracts often do not require an entrance fee. Under this plan, residents receive priority or guaranteed admission to the CCRC's higher level of care, but they are not entitle to any discounted health care or assisted living services. Rather, on entering the CCRC's assisted living facility or nursing home, they pay the regular and usually higher per diem market rate. Older residents admitted directly into a CCRC's assisted living facility or nursing home would typically sign fee-for-service contracts.

The payment of an entry fee usually does not give the older resident any ownership rights to a living unit. Rather, it is more akin to a long-term care insurance premium that guarantees the resident the right to receive the benefits associated with the facility's assisted living and nursing care accommodations when he or she needs them at some specified price. CCRCs typically rely on teh entrance feeds to pay for their debt financing and operating expenses and to build up financial reserves to cover their future costs of providing services and care.

Differences Among CCRCs: Types of Assistance and Care

The types of assistance and care residents are entitled to in return for their monthly fee may not be obvious or simply related to the contract type. How much is charged will depend on the operator's cost of running the facility, the luxuriousness of the accommodations, the size of the occupied unit or room, and whether one or two persons occupy a unit. It will also depend on what residential, assisted, and nursing care services the CCRC includes in its base plan. Some CCRCs, for example, will charge residents extra to receive more hands-on or skilled care to address more serious impairments or health problems. CCRCs will also differ as to whether their entrance fee or their monthly fees include medical coverage distinct from long-term care services such as personal assistance and nursing services. Medical reimbursements, for example, may be limited to routine checkups and minor medical treatments.

Most CCRCs require seniors who initially enter their independent or congregate living facilities to undergo a medical examination to assess their physical and mental status. They may also require prospective residents to have Medicare Part A and B coverage and sometimes Medigap coverage. Selected pre-existing AADL impairments or health conditions may cause a CCRC to reject some seniors as residents in their independent facilities. Residents will also be required to prove they have sufficient assets and income to cover the entry and monthly fees. Some CCRCs will prefer residents with certain ethnic, religious, or fraternal order affiliations.

Different state and federal laws may regulate the assisted living facilities and nursing homes of CCRCs are accredited by teh Continuing Care Accreditation Commission; this accreditation guarantees the facilities have met certain minimum shelter, care, and financial standards. The absence of such accreditation, however, does not necessarily imply that they have not met these standards.

CCRC Issues for Seniors

The unique financial and lifetime commitments that seniors must make to the CCRC ownership and management require them to be especially vigilant. Specifically, seniors should consider the following questions (Golant, 1998):

  • Would seniors be comfortable living with residents like themselves, and would the everyday rhythym of activities in the CCRC be to their liking?
  • Are seniors familiar with the record of accomplishment of the organizations (which may be multiple, separate entities) that own and manage the facility?
  • Do seniors have confidence in the financial solvency of the CCRC and its ability to keep its shelter and care promises (insurance benefits) without inordinately raising its fees because it has failed to estimate accurately its future long-term care obligations?
  • Are seniors fully cognizant of how the CCRC makes its shelter and care resident transfer decisions? They must be clear under what circumstances such a move might be only temporary. For example, when might a stay in a nursing home be shortened and the residents allowed to return to independent living units if they have recovered from an earlier health problem? This is important because of the growing trend among seniors to delay as long as possible their permanent relocation from their independent living quarters to assisted living or nursing home accommodations.
  • Are seniors knowledgeable about the circumstances under which it will be possible for CCRC management to deliver personal care and home health services into their congregate facility apartments, so that they can exercise their preferences for agign with choice?
  • Will seniors have effective means of communicating dissatisfaction or concerns to the management?
  • What about a worst-case scenario? What if, at some future point, seniors have difficulty paying their monthly fees? How will the CCRC likely respond? Does it, for example, have any contingency funding to deal with this situation?

The bottom line: Before signing a CCRC contract, seniors should receive counsel from their accountant and lawyer.

The information above is reprinted from Working with Seniors: Health, Financial and Social Issues with permission from Society of Certified Senior Advisors® . Copyright © 2009. All rights reserved.