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H. Amos Goodall, Jr., CELA, Fellow
Steinbacher, Goodall & Yurchak
(814) 237-4100

Aging in America

Continuing Care Retirement Communities

By H. Amos Goodall Jr., CELA, Fellow

It is helpful to think of a CCRC as a place where elders go to live with support rather than an institution they enter to die.

An overlooked component of the elder law attorney’s toolbox is a continuing care retirement community (CCRC). In my town, most elders’ children have left home, and it is hard for them to interact with their parents daily from far away. Their concerns include whether their parents’ shelter is safe and well kept, whether physicians understand their parents’ situations and communicate effectively, and whether their parents are foregoing needed services due to a false sense of economy. Often something as simple as the kind of food in the refrigerator can be a harbinger of more significant problems.

Offering Care and Peace of Mind
CCRCs are generally expensive, but I explain to clients that while they are possibly reducing their children’s inheritance, they are giving them peace of mind today. Nearly every child involved in planning lobbies for a CCRC. So, what does a CCRC involve?

It is helpful to think of a CCRC as a place where elders go to live with support rather than an institution they enter to die.

A continuing care retirement community offers a continuum of care, generally on the same campus. Typically, the facility has independent living residences (sometimes cottages, townhouses, or apartments), an assisted living facility, and a skilled nursing facility.1

Often activities are integrated, so that residents may take their meals in the general dining room, a separate dining room, or in their own rooms. There are usually medical and social services available to all residents, as well as commercial services (post office, beauty parlor/barber, bank), cleaning and upkeep of the unit, and recreation services and activities are arranged. Although typically CCRCs do not offer bill-paying or other financial services, their staffs are attuned to red flags indicating a need for help.

According to the American Association of Homes and Services for the Aging,2 a CCRC is an organization that offers a full range of housing, residential services, and health care in order to serve its older residents as their needs change over time.”3 The hallmark of a CCRC is a lifecare contract. With some exceptions, the facility signs a contract with every resident obligating itself to provide housing, health services, and other specified items to a resident for life. Depending on the type of contact, there is usually a down payment as well as monthly charges. Generally, after a trial period, the down payment is not refundable even if the resident cancels the contract, although some contracts provide some refund after the resident’s death, usually payable after a replacement is secured. There are health and financial criteria for entrance, but if a resident outlives his or her assets, many nonprofit CCRCs have a scholarship program or other methods of providing relief. Some nonprofit CCRCs have entrance fee assistance for qualified applicants.

According to Ziegler Investment Banking’s Life Plan Community Database, there are just under 2,000 CCRCs in the United States, with Pennsylvania at just under 200, the leading state. Roughly 80 percent of CCRCs are sponsored by a nonprofit organization, with the balance privately owned. Eighty percent of privately-owned CCRCs are part of multistate organizations.4

Five Types of CCRCs
There are at least five types5 of contracts for CCRCs:

Extensive Agreement (Type A) In return for an entry payment and monthly fee, these offer housing, residential services and amenities, and basically unlimited long-term care. There are no or small increases in periodic payments based on the level of service (except for normal operating cost and inflation adjustments). Substantial portions of the down payment and monthly payments are allocated to prepaid medical expenses for tax purposes. There is usually a house medical staff, and the CCRC must pay all the costs of the services residents need not covered by third-party reimbursement (e.g., Medicare). The CCRC is at full financial risk for the cost of long-term care services, although there may be a cap on the CCRC’s exposure. Approximately 43 percent of CCRCs offer Type A contracts.

Modified Agreement (Type B) Modified agreements also involve entry and monthly charges and cover housing, residential services and amenities, and limited nursing care without any substantial increases in periodic payments. Care is paid for a specified amount of days each year. After all these days are used up, the resident then pays a daily charge. This charge may be discounted from what non-residents pay. A modified agreement places a partial risk on the CCRC because it is at partial financial risk for the cost of the long-term care services beyond those reimbursed by third parties such as Medicare. However, once the resident pays for care beyond the specified period, he or she assumes full financial risk above third-party reimbursement. Twenty-nine percent of CCRCs offer modified contracts.

Fee-For-Services Agreement (Type C) Fee-for-service agreements include housing, residential services, and amenities. Residents are guaranteed access to health care services by paying prevailing rates. Essentially, residents only pay for health care services used. Under this type of agreement, there are usually lower entry and maintenance fees. However, the resident also accepts the risk of paying for care that may eventually become too expensive. The CCRC, on the other hand, assumes no financial risk. Thirty-eight percent of CCRCs offer fee-for-service contracts.

Rental Agreements (Type D) Rent is paid, often month-to-month, and any other services are billed at market rate as they are rendered. In that sense, these typically do not require any entrance fees.

Equity/Co-Op (Type E) Under this arrangement, the resident purchases a residence on the campus, paying monthly homeowner fees.

According to the Ziegler database, 64 percent of nonprofit CCRCs offer some kind of entry fee contract, while 64 percent of private sector CCRCs offer their services on a rental basis.6

A CCRC can be an important option. For example, State College, Pennsylvania, has two CCRCs. One of them is Foxdale Village, a Quaker-related facility with 360 residents. At Foxdale, the entry fee for a couple that wants a typical two-bedroom unit is $259,300, and the monthly fee is $4,815. In the skilled nursing unit, the monthly fee is $4,227. This is less than half the average cost of skilled nursing home care in Pennsylvania. And while Foxdale’s nursing unit is licensed for double-room occupancy, all are used as singles. There are 240 staff members at Foxdale (including 130 full time). CCRCs tend to develop into communities, and in this 30-year-old facility, there are 60 special interest groups, including — since 1990 — the first computer lab in Centre County.

1 Since residents who are suffering from dementia may have very different needs than other skilled nursing residents, some facilities have separate dementia units.

2 Now called Leading Age.

3 Jacquelyn Sanders, U.S. Department of Health and Human Services, Continuing Care Retirement Communities: A Background and Summary of Current Issues
(Feb. 1, 1997)

4 Ziegler Investment Banking, “A Profile of Today’s Life Plan Communities” (May 21, 2018).

5 Although a facility may characterize itself as a particular type, read the contract carefully to determine whether this is accurate and whether the institution you’re studying for a client has altered any of the elements. While health services are subject to Medicare regulations, often the facilities themselves are minimally regulated. For example, in some states, lifecare agreements must be filed with the insurance department, and there are capital requirements for new institutions. CCRCs are free to modify their contracts into what might be considered a “hybrid” agreement.

6 Ziegler Investment Banking, op. cit.

About the Author
H. Amos Goodall Jr., CELA, has an elder law practice in State College, Pennsylvania. He is a NAELA Fellow.

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