Continuing Care Retirement Communities (“CCRCs”) are considered “a viable choice for relatively healthy seniors with upper-middle-class or upper-class incomes.” Begley, T. and Barrett, C., Representing the Elderly or Disabled Client, ¶9.03 at 9-10 (Thomson Reuters 2013).

As described in a GAO report entitled “Older Americans: Continuing Care Retirement Communities Can Provide Benefits, but Not Without Some Risk”, U.S. Government Accountability Office Report to the Chairman, Special Committee on Aging, U.S. Senate, June 2010 delivered to the Senate Special Committee on Aging,

CCRCs are generally residential facilities established in a campus-like setting that provide access for older Americans to three levels of housing and care: independent homes or apartments where residents live much as they did in their own homes; assisted living, which provides help with the daily tasks of living; and skilled nursing care for those with greater physical needs. Most residents must be able to live independently when they enter in to a contract with a CCRC, with the intent of moving through the three levels of care as their needs change.

GAO Report, p. 3.

CCRCs offer a variety of plans, which can be divided into the following three types:

1. All-inclusive: shelter, services, amenities, and long-term care are provided as needed at no additional cost;

2. Modified: covering only a specified portion of health care, usually for a specified time in the long-term nursing care;

3. Fee-for-service: shelter, services, amenities, and sometimes emergency health care is provided; access to long-term care is guaranteed, long-term care is at an additional cost. Continuing Care Retirement Communities, A Guide Book for the New Jersey Consumer, at 6 (Department of Community Affairs, rev. June 2011).

A CCRC may or may not be Medicare/Medicaid certified.

Some CCRC contracts may prohibit the resident from transferring assets after signing the contracts. Pursuant to the Deficit Reduction Act of 2005 (“DRA”), the CCRC contract “may require residents to spend on their care resources declared by the resident for the purpose of admission to the CCRC prior to applying for Medicaid.” CMS Enclosure, Section 6015, Rules Pertaining to the Treatment of CCRC Entrance Fees Under the Deficit Reduction Act of 2005, July 27, 2006.

Entrance fee:

Most CCRCs require a substantial entry fee which, depending upon the contract, may or may not be refundable. Typically, the lower entrance fee provides minimal or no refund plan. Begley, supra, at ¶9.03. However, the refund policy might be conditioned on certain events occurring, such as the resident’s living unit becoming re-occupied.

For purposes of Medicaid/long-term care planning, it is important to keep in mind that CCRC entrance fees may be considered countable assets. Pursuant to the DRA,

an individual’s entrance fee in a continuing care retirement community or life care community shall be considered a resource available to the individual to the extent that–

(A) the individual has the ability to use the entrance fee, or the contract provides that the entrance fee may be used, to pay for care should other resources or income of the individual be insufficient to pay for such care;

(B) the individual is eligible for a refund of any remaining entrance fee when the individual dies or terminates the continuing care retirement community or life care community contract and leaves the community; and

(C) the entrance fee does not confer an ownership interest in the continuing care retirement community or life care community.

42 U.S.C. §1396p(g)(2). The Centers for Medicare & Medicaid Services has stated that, in order for paragraph A to be met, it is not necessary for the CCRC to provide a full, lump-sum refund of the entrance fee; if portions of the fee can be refunded or applied to pay for care, paragraph A is met. As to paragraph B, it is not necessary that the resident actually receive a refund; the paragraph is met “as long as the resident could receive a refund were the contract to be terminated, or if the resident dies.” CMS Enclosure, Section 6015, Rules Pertaining to the Treatment of CCRC Entrance Fees Under the Deficit Reduction Act of 2005, July 27, 2006.

In sum, because of the conditions that may be imposed on the refund of the entrance fees, and because any entrance fee refund will have to be spent down in order to qualify for Medicaid, caution should be taken before choosing the more expensive, refundable-entrance-fee options.

Monthly maintenance fee:

The resident is also required to pay monthly maintenance-type fees for such items as housing, miscellaneous services and healthcare, and these fees may increase as a result of the facility’s operating expenses. It is important to keep in mind that these monthly maintenance fees may be subject to increase. The CCRC Disclosure Statement is required to include an explanation of the method by which monthly service fees are adjusted. Continuing Care Retirement Communities Guide Book, at 11 (Department of Community Affairs, rev. June 2011). However, you should also ask the facility for historical data regarding their levels of increase in previous years.

Regulation and Accreditation:

Notably, CCRCs are not regulated by federal law, except to the extent that the facility has a Medicare/Medicaid-certified nursing unit. Begley at 9.03.

In New Jersey, the Department of Community Affairs (“DCA”) issues a Certificate of Authority to CCRCs that comply with applicable state law.

Not-for-profit CCRCs may be nationally accredited by the American Association of Homes and Services for the Aging (“AAHSA”). CCRCs may also receive certification from the Continuing Care Accreditation Commission (“CCAC”).

Financial Stability of the CCRC:

The financial stability of a CCRC is critical. CCRC bankruptcies or closures are considered to be “relatively rare.” June 2010 U.S. Government Accountability Office Report to the Chairman, Special Committee on Aging, supra. However, given the substantial financial investment made by the resident, the bankruptcy of a CCRC would be devastating. In addition, financial difficulties of a CCRC could lead to unexpected increases in a resident’s monthly maintenance fee, or in less than satisfactory operations. June 2010 U.S. Government Accountability Office Report to the Chairman, Special Committee on Aging, supra.

For these reasons, it is prudent to have an accountant review the facility’s financial stability.

Transfer from levels of care:

An item of concern is the manner in which decisions are made to transfer a resident from the various levels of care, generally as the resident’s care needs increase. For example, what input is the resident or the resident’s family given in the transfer decisions? If a couple resides in a single living unit, what happens when one is transferred permanently to another level of care, or when one resident dies? If a single resident is transferred to a higher level of care, how long is that resident’s living unit held? What rights does the resident have to object to these transfers?

Resident’s Ability to Pay:

It is important to explore a CCRC’s policy in circumstances in which the resident becomes unable to pay the monthly maintenance fee.

Other Issues:

A sample “Consumer Checklist,” provided through the Department of Community Affairs, can be found on page 16 of the attached Guide Book: Continuing Care Retirement Communities – A Guide Book for the New Jersey Consumer. The Checklist helps the consumer review the various services and amenities being offered by the CCRC, whether included in the fee, available for a fee, or unavailable.

Other items to explore with the CCRC include:

  • historical occupancy/turnover rate
  • historical mortality rate
  • average age of residents

You should also consider visiting with residents of the CCRC, and asking them about their satisfaction with the facility, particularly with respect to issues that concern you.