Elder Law- January 2011

Continuing Care Retirement Communities (CCRC's) offer Rewards, Risks

Housing options for seniors have expanded dramatically since the days when elders only had a choice between their own home or the nursing home.  In particular, Continuing Care Retirement Communities (often called CCRCs) have grown in popularity over the last twenty years and for good reason.  CCRCs appeal to seniors and their families because they afford residents the opportunity to “age in place” by offering multiple levels of care in one campus-like location.  But the decision to live in a CCRC is not to be made lightly – in most cases, once you choose to live in a CCRC, you have committed to making the CCRC your home for the rest of your life.  Even though many CCRCs are run by non-profit organizations, and despite the fact that nearly all of the communities provide an exceptional level of care, they are a very expensive investment that should be weighed carefully with the assistance of family members, a financial planner and an attorney.  Here are some helpful facts about CCRCs and some reasons why you should call Brown & Brown, PC before signing any agreement with a CCRC.

CCRCs Provide A Range of Housing Choices and Other Services

 CCRCs are popular because they offer a wide range of services that fit seniors’ needs.  A typical CCRC has three levels of living arrangements which are usually utilized in order.  The first level is completely independent living in an apartment, townhouse or cottage setting.  These units do not differ from any other type of rental housing that anyone could access in his or her community (except that they usually have special features to make getting around easier and they are typically in much better condition).  The second level is assisted living, which usually takes the form of a private apartment in a building with shared services and access to caregivers.  The third level is a skilled, long-term nursing care unit, which looks and feels a lot like a nursing home, albeit a more luxurious one.  When seniors enter the CCRC, they will typically move into an independent living unit where they may live for the rest of their lives.  If a resident requires additional care due to accident or illness, the assisted living and long-term care facilities are available and the resident is entitled to move into those units if and when the need arises.  Since CCRCs are designed with this progression in mind, they are typically interested in having seniors move in when they are younger and healthier, which benefits the active senior and the community as a whole. 

Payment Often Includes an Entrance Fee and Monthly Payments

 Tiered living is one feature that sets CCRCs apart from other types of senior living – the other main difference between CCRCs and other types of housing is the way that seniors pay for services in the community.  Most CCRCs require their new residents to pay a one-time fee, called an entrance fee, when they first move into the community.  This fee can range from tens of thousands of dollars up to close to a million dollars, depending on the type of facility and the quality of care provided.  The entrance fee is almost never completely refundable – in Massachusetts, a typical CCRC will refund 90% of a senior’s entrance fee if he or she moves out of the community or if he or she passes away.  (However, under Massachusetts law, the facility can reduce the amount of the refund by 1% per month of residence, so if a senior moves into a CCRC in January 2011 and he moves out in January 2013, the facility, by law, could choose to only refund 76% of his entrance fee – 100% minus 24%, one percent for each month.  It is unclear if any Massachusetts CCRCs actually reduce their deposits in this manner.)

On top of the entrance fee, seniors must also pay a monthly fee to the CCRC, which usually comes to at least several thousand dollars a month.  Depending on the contract, this fee could remain the same no matter what type of unit the senior lives in and no matter what kind of services he receives (this is usually the most expensive option), or the monthly fee could change dramatically if the senior requires more intensive services in an assisted living or skilled-nursing unit.  In some cases, the monthly fee only covers the senior’s physical housing – all other services are charged based on use.

Take Care Before Making The Move to a CCRC

CCRCs provide seniors with attractive options – tiered housing, services tailored to their needs, and the comfort of knowing that they will live in the same community for the rest of their lives.  Most Massachusetts CCRCs are vibrant, dynamic communities with great staffs, interesting programming, and waiting lists to get in.  However, the extensive and confusing (even for some attorneys) CCRC residence contracts contain some very important drawbacks.  For instance, some communities reserve the right to tell the senior when it is time for him or her to move into a new level of care.  Other communities can force seniors to move out of the community entirely if their behavior does not meet “community standards” (this often happens with people suffering from dementia).     

The fees for services in CCRCs are frequently hard to understand, especially when expressed in contractual language.  Seniors often believe that their monthly fee will not increase, no matter what services they need, when in fact the opposite is sometimes true.  (These misunderstandings do not come about because of any improper action by the CCRC’s staff, but usually because all of the parties involved do not take enough time to thoroughly review the contract).  Others think that they will be able to obtain personal care assistance from CCRC employees in their independent living units without incurring additional fees, when in most cases their monthly fee only covers personal care service in the assisted living unit.  Then there is the issue of what happens when a senior runs out of money when living in the CCRC – potential applicants need to ask if the facility will accept Medicaid for skilled nursing care and they also need to know if the entrance fee is available to be applied towards the cost of care if a they run out of savings.  Forward-thinking residents should also understand the effect of their entrance fee on a potential Medicaid application.

The CCRC contract addresses all of these issues, but the actual contract document is often incredibly long and complex.  Yet despite the complexity, in many cases, potential residents don’t speak with their attorney before signing up to live in a CCRC and paying a hefty entrance fee.  As with any other transaction where hundreds of thousands of dollars are changing hands and your rights can be severely curtailed, it is imperative to carefully review a CCRC contract, and the CCRC’s financial statements, with a qualified attorney before making the decision to move into a CCRC.  The attorneys at Brown & Brown, PC can help you to understand the CCRC contract and will make suggestions for changes that will protect you.  If you are thinking about living in a CCRC, if you are getting ready to sign a CCRC residence contract, or if you are worried about qualifying for Medicaid long-term care coverage, give us a call to discuss your rights and options today. 

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