Paying for a CCRC
Paying for residence in a Continuing Care Retirement Community (CCRC) is not the most straightforward thing, but it certainly doesn’t have to be complicated. One thing you should know is that paying for a CCRC isn’t the same everywhere you go.
Here are the most common types of fees that you can expect to pay, along with a brief look at the average ranges for these costs, and how to pay for them.
An entrance fee is a one-time cost that you pay up front when you become a resident of that community. The entrance fee is one of the most expensive costs associated with paying for a CCRC, because it prepays the cost of your healthcare services. In some communities, it also includes the purchase of real estate.
Entrance fees may be fully or partially refundable. If they are, they are usually refunded to a resident’s estate once he or she has passed. In addition, the CCRCmay require that the resident’s unit be re-sold (or re-occupied) before it is paid out.
- Expect to Pay: $20,000 to $500,000 and up, depending on whether the cost involves the purchase of your unit.
The buy-in fee at a CCRC is simply the cost of buying your unit. This isn’t even an option at some communities, but it is required at others, especially many of the newer CCRC models, which operate similarly to condominiums, where you buy your unit.
In most cases where paying for a CCRCinvolves a buy-in fee, that means you would own your living accommodations, but would be required to pay for services and healthcare separately.
- Expect to Pay: The cost of the buy-in fee at any given community will vary, depending on a number of factors, such as location and type (e.g., budget, luxury) of community as well as size of the residential unit, but expect the cost of the unit to be similar to comparable non-senior living accommodations in the area.
Regardless of whether you plan to purchase your unit, monthly fees are part of paying for a CCRC. Monthly fees cover your healthcare and sometimes other services as well. Most seniors enter CCRCs with the intention of residing there for life, and their payment structures reflect that intention with lower monthly fees.
However, some communities will allow you to pay as you go, which is essentially a monthly rental option. If you enter into a month-to-month contract with a CCRC, know that your monthly costs will be higher to begin with, and could potentially skyrocket if you experience a health event and have to pay out of pocket for health coverage.
- Expect to Pay: $500 to $3,500 and up. Annual increases of 3-5% are the norm.
Depending on how your contract and fees are structured, healthcare, personal assistance, meal plans, transportation, housekeeping and beauty services may not be included. The best way to identify these additional costs is to ask which services are, and are not, included in your agreement. If they are not included, ask how much they cost.
- Expect to Pay: Varies, depending upon your fee structure and agreement.
CCRCs aren’t the only type of senior housing that are known for hidden costs, but because their fee structures vary from place to place, it can get tricky when you’re comparing costs. Other miscellaneous fees associated with paying for a CCRCmay include: a wait-list fee (as applicable), an application fee, and living expenses such as a pet deposit, phone, utilities, parking and storage.
- Expect to Pay: An application fee may run up to $250, while a typical wait-list fee is $100 to $150. Living expenses should be comparable to what’s typical for the area.
A Few Tips on Paying for a CCRC
During the application process, you must show that you are able to afford the costs, both now and in the future. Paying for a CCRC always involves some amount of out-of-pocket funds. In addition, many communities require residents to have Medicare Part A and Part B coverage as well as long-term care insurance and/or Medigap coverage. Medicaid pays for some care at certified facilities.
If you itemize deductions on your income taxes, you may be eligible to deduct certain medical, dental and eye care expenses. The allowable amount (usually between 25 and 30 percent) is computed by each community on an annual basis, so ask for the current information. As a CCRC resident, you may be able to itemize a portion of your entrance fee, if it is nonrefundable. Ongoing monthly fees (not month-to-month expenses) may also be deductible as prepaid medical expenses.
Paying for a CCRC is a little different for everyone. For more information on applicable tax deductions and tax credits, visit www.irs.gov.
Written by senior housing writer Nikki Jong.