Introduction
Continuing Care Retirement Communities generally combine at least three levels of care — independent living, assisted living and nursing care in a single setting. An increasing number are also offering Alzheimer’s and dementia care. Traditionally, such communities have required a sizeable entry fee, plus monthly maintenance fees, in exchange for a living unit, meals, and health care coverage, up to the nursing home level. In recent years some communities have begun to offer their services on a month to month rental basis with health care coverage being paid for at the time of need rather than on the basis of the coverage afforded by the traditional entry fee or “life care” endowment.
A variation on the typical CCRC community is the “life care” community. It provides guaranteed health care coverage for life — no exceptions. It also guarantees that if the resident’s resources become exhausted they would not lose their residence or their benefits. In these cases they have to be subsidized by the retirement community. The retirement community has to have a nursing facility within the community itself.
Generally you can only get into a CCRC while you’re still able to live on your own. That means you’ll have to pass a health check, just as if you were buying insurance. You also have to pass a financial screen to make sure you won’t run out of money paying the monthly fee.
How to Select a Continuing Care Retirement Community
There are several different options in the CCRC industry. Consider the community size when making your decision. Do you prefer a large community with many options and services, or a place smaller and more individualized? Would you prefer a more “formal” environment or are you a casual person at heart? There are CCRCs of all types and sizes and you should find the one where you feel most at home.
If you have decided that a CCRC is the best option for yourself or a family member, it is best to visit several locations. Here are examples of some things to keep in mind and questions to ask as you decide which CCRC is best for you.
- Find out the kinds of services the CCRC offers and which ones are included at no extra cost. Sometimes extra services are available for additional fees.
- Inquire as to the kinds of contracts available to you. The CCRC contract is a legal document between you (the consumer) and a CCRC. This agreement generally secures living accommodations and services, including healthcare services, over the long term. The most common types of CCRC agreements are described below.
Types of Contracts
Type A (Extensive Agreement) – With this type of agreement, consumers assume the least amount of risk, but pay top dollar. A Type A contract provides housing, services and amenities, and unlimited access to long-term nursing care at little to no additional cost, apart from periodic inflationary increases. The higher initial fee is based on the assumption that these residents may require — and utilize — higher levels of care as their needs increase over time. This can add up to substantial savings over a resident’s lifetime, considering that Medicare does not cover custodial nursing care, which currently runs $250-plus daily, for a private room in a nursing home. In addition, the prepayment of future health care costs qualifies these residents for significant tax benefits (the IRS medical deduction). Typically, residents must maintain a minimum level of Medicare coinsurance.
Who Benefits? People who want to ensure that all of their health care needs will be covered for the remainder of their lifetime.
Type B (Modified Agreement) – A Type B contract also provides housing, services and amenities, but access to long-term health care and nursing services is restricted to a specified number of days. After that, the resident is responsible for any additional care costs incurred. Some contracts allow residents to pay for the additional care at a discounted rate once they have utilized the care included in their contract. Just as with a Type A contract, residents are eligible for the IRS medical deduction.
Who Benefits? People who are able to pay for the costs of care not covered through their contract, and those who do not expect their health care needs to increase significantly over time.
Type C (Fee-for-Service) Agreement – With a Type C contract, access to health care is guaranteed, but residents must pay the full cost of the services they use. Under this type of agreement, residents receive housing, services and amenities as defined in the contract. Some communities do not charge an entrance fee for Type C contracts, instead charging only a monthly fee. However, other communities do charge an entrance fee, with the funds subsidizing a resident’s assisted living or skilled nursing care. If the cost of care exceeds the funds obtained from the entrance fee, then the resident would be charged for the full cost of any services utilized. This can happen if a resident requires extended skilled nursing care. For those who require higher levels of healthcare later on, the cost can be extremely high. At a daily rate of $250 or more, nursing home care costs escalate rapidly, creating a major financial burden for residents without long-term care insurance or considerable financial resources. Residents do not qualify for the IRS medical deduction under a Type C contract.
Who Benefits? People who are willing to assume to the full risk of health care costs.
Other Contract Options
Rental Agreement – Allows residents the opportunity to rent their housing and provides, but does not guarantee, access to health care services paid on a fee-for-service basis.
Assisted Living Agreement – The resident enters into an assisted living agreement and pays per diem (an agreed upon daily rate) or market rate for assisted living services.
Skilled Nursing Agreement – The resident enters into an assisted living agreement and pays per diem (an agreed upon daily rate) or market rate for skilled nursing services.
Equity Agreement – This type of agreement involves the actual purchase of real estate or membership, including condominiums and cooperatives.
Questions to Ask
- Determine which fee structure and contract option that best suits your personal circumstances.
- Find out if the CCRC is subject to licensure. Ask to see the most recent inspection reports. You can view reports on the nursing home component of the community by going to the Nursing Home Compare section of Medicare.gov.
- Find out what the payment schedule is. Also find out if the residents own or rent their living space.
- Find out if the CCRC is accredited by CARF (See below: Why Does Accreditation Matter?)
- Before signing a contract, have it reviewed by your accountant or lawyer.
- Monthly fees charged by CCRCs typically cover the following:
- Meals: number per month may vary
- Scheduled transportation
- Housekeeping services
- Unit maintenance
- Linen and personal laundry
- Health monitoring services
- Some utilities
- Coordinated social activities
- Emergency call monitoring
- Round the clock security
- Additional services, depending on the community
Why Does Accreditation Matter?
Consumers face a variety of options when deciding what services to use and who should provide them. Accreditation is a sign of quality services and is an important consideration in your decision making process. People turn to CARF accreditation for confidence in their choice of a retirement community. The value of accreditation goes beyond a competitive distinction for service providers and provides a framework for continuous quality improvement.
How is Accreditation Achieved?
Achieving accreditation requires a community to commit to quality improvement and place its focus on the unique needs of each of the persons the provider serves. A service provider begins the accreditation process with an internal examination of its program and business practices. Then the provider requests an on-site survey that will be conducted by a team of expert practitioners selected by CARF. During the survey, the provider must demonstrate that it conforms to a series of rigorous CARF standards. The survey results in a written report of the service provider’s strengths and areas for improvement. If a provider has sufficiently demonstrated its conformance to the standards, it earns CARF accreditation.
After receiving the report, the provider must submit a quality improvement plan to CARF to show how it is addressing any areas needing improvement. Then, each year during the term of accreditation, the provider must submit a report to CARF documenting additional improvements it has made.
While accreditation is like a seal of approval, not all communities feel the need to participate in the process. There are many fine, well-run communities that are not accredited.
Resources for Further Research
Today’s Continuing Care Retirement Community
Published by the American Association of Homes and Services for the Aging
Continuing Care Retirements Communities: Risks to Seniors
Summary of U.S. Senate Special Committee on Aging – 7/21/2010
Older Americans: Continuing Care Retirement Communities Can Provide Benefits, But Not Without Some Risk
U.S. Government Accountability Office –Testimony before the U.S. Senate Special Committee on Aging – 7/21/2010
Continuing Care Retirement Communities
Published by the Family Caregiver Support Network in Southeastern Wisconsin