Continuing Care Retirement Communities (CCRCs), sometimes called Life Plan Communities, are preferred by many seniors because they offer a continuum of care and allow for aging in place.
These communities provide residents with various levels of care according to their needs without leaving the community’s campus. Usually, Independent Living with a variety of housing choices, Assisted Living, and Skilled Nursing Care are offered by CCRCs.
Communities such as these often require an initial payment called a buy-in, up front, or entrance fee. While having to pay a large sum of money prior to moving into a community may seem daunting, entrance fee communities actually offer many advantages.
Entrance-fee communities tend to reward those who plan ahead and make their move to a senior living community early, offering stability and a sense of control. New residents of a CCRC can move into an Independent Living home or apartment, for example, knowing that Assisted Living and Skilled Nursing care services are available should they need them. Often Rehabilitation care is also offered should a resident need extra help following an illness, injury, or surgery.
Entrance-fee communities can also offer financial benefits. According to the nonprofit National Investment Center for Seniors Housing & Care (NIC), there are nearly 2,000 CCRCs across the county offering a variety of housing and care level options. Entry fees range from about $40,000 to well over $2 million dollars, with the average being roughly $400,000. Entrance fees generally fall into two contractual categories:
- Refundable Entrance Fees: higher dollar amount; usually offer a refund percentage from 50% to 90%
- Non-Refundable Entrance Fees: lower dollar amount; usually do not allow for return of any monies; usually result in lower monthly fees
Another benefit to entrance-fee communities is the potential for tax advantages. The IRS may consider a portion of a non-refundable entrance fee and monthly fees to be pre-paid medical expenses and therefore deductible from taxes. Speaking with a tax professional will help you understand the specific tax implications of a contract with a community you are considering.
CCRCs offer the greatest benefit for those who plan ahead and enter a community at a younger age because of the extended length of time these seniors will enjoy the benefits of living in the community.
Entering a community earlier also means the community has additional time to invest an entrance fee payment. Additionally, these seniors will have “locked in” their lump-sum entrance fee payment and monthly payments while younger. Also, some entrance-fee communities require seniors to initially live independently, which is more likely at a younger age.
The lump-sum payment to enter a CCRC is usually affordable for anyone who has owned a home. Most communities are excellent managers of entrance fee monies, according to the nonprofit HumanGood, and use these funds to keep monthly fees down, invest in improvements and upkeep for the community, and add amenities to enhance life on campus.
Finally, an entrance-fee community can offer the security that comes from knowing everything needed for wellness is on the community’s campus.
