Continuing Care Retirement CommunitiesThe United States Government Accountability Office (GAO) issued a report to the U.S. Senate's Special Committee on Aging in relation to continuing care retirement communities (CCRCs). The study was conducted because recent economical stress has caused financial hardship for some CCRCs, and the Senate was interested in knowing whether this added financial concern posed risks to seniors who choose to invest their funds in a community with the promise of being cared for through all stages of aging.

CCRCs operate by ensuring residents that they will be able to age in place, without having to relocate to facilities that can provide a higher level of medical care as their needs increase. Residents have to pay a significant upfront cost, or "buy-in" when they move into a CCRC. When financial turmoil strikes, if a CCRC has to close its doors, residents could risk losing their money. The GAO investigated these risks, along with state regulations that may help to prevent such financial catastrophes.

Bankruptcies and foreclosures have been rare, and in such cases, residents are typically not forced to move out. However, sudden increases in monthly fees or changes to regulations can leave residents dissatisfied. If a total failure were to occur, residents could be at risk of losing all or part of their entrance fees.

While these risks do exist in rare cases, the GAO found that most states have regulations that protect the interest of CCRC residents, including requiring the escrow of entrance fees, eliminating the risk of a resident losing their investment. However, in some states, there is no requirement for changes in policy affecting resident care, services, or other benefits to be disclosed prior to changes taking effect.

The recent investigation into these concerns will likely lead to an increase in state and possibly federal regulations, in light of recent economic conditions that can make such changes, fee increases, and risks more likely.

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