There are two primary types of independent senior living communities: those that are strictly rental and those known as “Continuing Care Retirement Communities” (CCRCs) or “buy-in communities.” When evaluating these alternatives, we believe the following topics merit your careful consideration:
In a CCRC, the resident typically pays a substantial entry fee – frequently a six figure amount – and for that fee gets some sort of “ownership interest” in the community and the assurance that there will be a continuum of care when needed, to include assisted living and/or skilled nursing services. In addition to the entry fee, a monthly service fee (in essence, rent) is still paid by the resident for services rendered by the community.
Before paying these substantial entry fees, prospective CCRC residents should thoughtfully evaluate the following concerns:
- Will I (or my estate) get any refund of my entry fee if I move out?
- Often no refund is issued until the specific unit the resident is occupying is sold to a new entrant. This could be a very long time in a slow housing market or when the stock market is depressed.
- Rarely does a resident enjoy any appreciation on these entry fees, and often does not even receive a return of 100% of the cash entry fee (typically, 90% or less of the entry fee is refundable). Had these funds been invested in CDs or Treasury bills they would remain secure, liquid and income generating.
- What happens if planned health care facilities and other amenities associated with the CCRC are never built or are fully occupied when I need to access the additional health care services?
- The resident often has little recourse if the project is not completed as originally represented or if the beds are fully occupied.
- What happens if the project gets into financial difficulty?
- A recent senior living industry newsletter said, “in the event of a bankruptcy, the residents of a CCRC with a refundable entrance fee become unsecured creditors and often lose their right to the entrance fee … if all contracts are canceled in bankruptcy court.” This is a very real concern in these turbulent times.
In light of the above, consider the following benefits of choosing an Arbor Company community:
- Residents pay only a very nominal community fee. No substantial equity investment is required. Nest eggs can remain secure and liquid.
- Residents have the option to leave, should they desire, with only a 30 day notice without penalty.
- Because our communities are completed, there is no risk that additional phases of the project will not be delivered as promised.
- We have excellent referral relations with high-quality local assisted living communities and nursing homes. Unlike a CCRC, residents are not locked in to using the care services provided on-site – they can choose what’s best for them at the time a need arises.
Don’t take a chance when it comes to your health and well-being.
Contact a community today for a more detailed and personal consultation.
