CCRC – An Option for Long-Term Care
The median annual cost for a private room in a nursing center is about $100k in Florida. A private room for an assisted living facility will cost you about $48k a year. Multiple years of those costs can put retirees in a tumultuous position. It’s no wonder when we talk to our clients about their retirement concerns, a consistent worry is regarding the cost of long-term care.
The traditional way of protecting against these expenses is through long-term health insurance. However, after a few years of skyrocketing premiums, some find it too expensive to maintain a policy.
So how do you protect yourself if you choose not to use long-term health insurance but are still worried about covering the costs of your long-term healthcare needs? A continuing care retirement community (CRCC) might be a solution.
What is a continuing care retirement community?
CCRC's, also known as life plan communities, can be an option for retirees who want to age in place. Residents start out living independently in an apartment and get to enjoy the amenities and a socially active community of retirees. These amenities often include various planned social events, dining services, gyms, swimming pools, and even golf courses. As healthcare needs progress, residents can transition to different levels of care, either assisted living or nursing care. It allows residents to remain within a familiar environment and feel secure in their future care.
What's the cost?
Continuing care retirement communities can be expensive and, from what we've seen, generally consists of two fees. First, most campuses will have an up-front cost to enter. Those fees can range from $100,000 to $1 million depending on the facility and the residency contract you choose, but the average admission is generally around $300k. You typically have the option for lower upfront costs but higher ongoing costs, depending on the facility and contract type you choose.
You will also have monthly bills, almost like a rent payment, that can include add-on services for items like meals and housekeeping. Those monthly costs will generally be between $1 and $4k, but again it depends on the elections you make.
It's certainly not cheap, and CCRCs will likely verify you have enough assets to become a resident before you can move in. That said, if you are a homeowner, you would probably be selling your home when you move. After the recent home price run-up, proceeds from the sale of your home could cover some or all of the upfront costs. Combine that with the monthly social security payments, and it may be more affordable than at first glance, especially considering all the services that come with it.
What are the downsides?
Aside from the ongoing costs, there can be some other downsides to a CCRC. For example, if you pay a hefty up-front fee and pass away shortly after entering the CCRC, you likely didn't get good value for your money. However, depending on the contract you enter, there may be partial refunds of the up-front money in that situation.
Residents also need to pay attention to the discharge policies of a CCRC if the resident runs out of money. For example, do they have resident funds to help cover those costs, or will the CCRC try to discharge the resident to different centers or different rooms?
When you select a CCRC, you are making a significant financial commitment to that facility. Before that happens, you should research as much as possible, including talking to residents, tasting food, touring facilities, checking the CCRC's financial condition, and checking agencies for complaints. You want to identify red flags before moving in.
The Bottom Line
Long-term care can be a significant expense for retirees, and with insurance costs skyrocketing, funding options may seem limited. However, continuing care retirement communities can be an excellent option for some (but not all) people to fill their needs. In addition to long-term care, they can potentially provide a low-stress, socially active way to enjoy the later years.
We are fortunate to have many CCRC options in Jacksonville and the surrounding areas. If you are worried about long-term care, we encourage you to visit some of the communities to see if they might be a fit for you.
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