Understanding CCRC Finances
Breaking Down the Costs of Long Term Care Retirement Communities
Whether you're starting to think about retirement planning, or you have actively begun to research different CCRCs, the first thing most people ask is “how much will it cost?” We get it! You just want to know “What will I pay?”, “What can I afford?” and “What will I get in return?”.
This article will give you a clear understanding of the various costs inherent in moving to a CCRC – also called Life Plan communities - what a CCRC does not pay for, and what financial benefits you can receive as well.
The Entrance Fee
In a Life Plan Community residents will typically be required to pay an entrance fee and a monthly fee. The entrance fee locks in your choice of residence and ensures your access to the full continuum of health care services.
Depending on your specific contract, the entrance fee may be mostly or fully refundable, meaning that it will be returned to you or your successors when you leave or pass on. The entrance fee can also serve to reduce the amount of your monthly fee.
Entrance fees for senior living communities vary greatly and, in North Carolina, for example, can run between $70,000 and $1 million. The amount of your entrance fee depends on the location and size of the residence you’ve chosen, and may also provide a certain amount of coverage towards your future health care.
Many seniors fund the entrance fee to a CCRC with proceeds from the sale of their current home or homes.
The Monthly Fee
The monthly fee in a CCRC covers the cost of utilities and all the services and amenities offered to residents, from housekeeping and groundskeeping, to meal plans and fitness centers. Fees can vary but usually range between $2,000 and $4,000 per month in North Carolina. Monthly fees are affected by the type of residence you’ve chosen, the contract you’ve signed, and the amenities that are available. The monthly fee also covers your access to the “continuum of healthcare”, which, simply put, is the several levels of care offered on one campus.
In most cases, the monthly fee in a CCRC compares favorably to the monthly expenses of living in one's present home—especially when you factor in homeowners’ insurance, utility bills, property taxes, home and lawn maintenance—in short, all the headaches of homeownership. CCRC Sales Counselors will carefully walk you through a side-by-side comparison of monthly expenses, to help you make an informed decision.
It’s important to note that monthly fees often increase, along with inflation. According to Kiplinger, monthly fees generally increase between 4-6% annually within independent living residences in a CCRC. By comparison, they report, it’s possible to see even higher increases in monthly fees if you’ve moved to a free-standing skilled nursing or an assisted living community.
What CCRCs Do NOT Cover
CCRC Sales Counselors are well-trained to help you understand what your existing health insurance plan and any supplemental insurances cover.
Supplemental insurances may include Medicare, Veteran's Benefits, and Long Term Care Insurance. These may help cover the following list of health care items that are generally not covered by CCRCs:
Mental health services
Tax Advantages of CCRCs
While tax laws are constantly evolving and are always subject to interpretation, current IRS guidelines allow residents of Life Plan Communities to deduct the portion of their fees that pertains to health care. We encourage you to consult with your tax advisor for additional information.
The Value of Choosing the Right CCRC
When considering a move to a CCRC, it's important to understand not just affordability, but also value. It's interesting to note that Dictionary.com defines price as “the amount of money or its equivalent for which anything is bought, sold, or offered for sale”. Cost is defined not only as “the price paid to acquire something”, but it is also defined as “sacrifice, loss, or penalty”. And value is defined as what you believe a product or service is worth.
The price of moving to a CCRC can seem reasonable when compared to the cost of not having a retirement plan at all. For the price of the refundable deposit, and monthly fee, the costs potentially alleviated are:
Isolation and loneliness
Lack of daily emotional and physical support
Feelings of being a burden to families and friends
Being separated from a spouse if one’s physical or emotional state changes
Being tied to daily chores that are no longer manageable
Being at risk for falls at home
Inability to take medications on time and eat well and regularly
Many residents of CCRCs find that the true value of choosing the right CCRC includes:
Knowing they have a secure plan in place for their future
Being loved, cared for, and respected among like-minded friends and acquaintances
Living a healthier lifestyle
Giving family and friends peace of mind
Staying close to their spouse if physical or emotional changes occur
Feeling and being safe
Having unlimited choices of social, spiritual, intellectual and physical pursuits
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