By Darlynn Morgan, Orange County Probate Attorney
As an Orange County Probate Attorney, I often help my clients plan ahead for the type of living assistance they may want (and may ultimately need) when they reach the golden years. However, when it comes to such options, most people only think of three things: living at home, nursing homes or assisted living centers.
But, happily, there is another fast growing option available to American seniors – the Continuing Care Retirement Community or “CCRC”.
A CCRC combines the services of an independent living retirement community with an assisted living facility and nursing home, all on site.
Residents of CCRC’s pay an entrance fee and an ongoing monthly fee for services. In return, they receive all the benefits of independent living (their own private living quarters, the ability to continue driving, etc.), along with the security of knowing they have excellent assisted living or nursing home care available to them on site and within reach for the rest of their lives.
A Not For Profit Option
Unlike most assisted living or nursing home facilities in the United States, most CCRC’s are not for profit. Many are operated by charitable or religious organizations.
If the CCRC takes in more money than it requires for operation, the money is reinvested in the retirement community itself and benefits the residents – not some unknown group of investors. This is a real benefit to the residents because it allows them to remain in the CCRC if they outlive their own assets.
That is not the case with most for profit long term care facilities. If their residents outlive their own assets, they must either move out or apply for assistance from the government and hope they qualify.
A Higher Standard of Living
While many people think that the chief component in the CCRC is the continuing care, in reality most of the investment in CCRC’s is made in the independent living facilities and on-site amenities. In most cases the residents have spacious apartments or cottages with modern appliances and their own furnishings. And many facilities have pools, spas, fitness centers and organized activities for the residents.
And since financial surpluses are invested back into the community, profit is not a consideration in the health care services provided to the residents. Staffing is often twice that of for profit facilities and many CCRC’s offer private rooms for all levels of care rather than the semi-private rooms in most nursing homes.
So How Much Does a CCRC cost?
While some of the newer CCRC’s are designed to appeal to the well-to-do and have fees to match, most are designed for, and are well within reach of, middle class seniors. Many of these communities have been around for years, but the public is just now catching on to the benefit of this type of living arrangement.
CCRC fees will vary according to the type of services and amenities offered. There are basically two types of contracts:
- “Lifecare” communities will have higher initial fees but the monthly fees usually do not increase as the resident requires additional care. That makes the monthly expenditure more predictable and easier to budget for.
- “Modified contract” communities offer a lower entrance fee and monthly fees but the monthly fee increases as the resident requires additional care. These increased fees can be substantial so it’s a good idea to discuss this at length before you sign a contract.
Initial entrance fees for a CCRC can range anywhere from $105,000 to over $1 million depending upon where they are located and, of course, the amenities available. However, many communities will refund a portion of the entrance fee upon the death of the resident. Be sure to ask about this possibility when interviewing a CCRC facility.
The monthly fees can range anywhere from as low as $1,400 to as high as $4,000, again depending on the level of care needed and the amenities, much the same as the entrance fee.
Another Benefit – The Tax Write Off
One of the little known benefits of a CCRC is that a portion of both the entrance fee and the monthly fee is usually tax deductible in the year that they are paid as prepaid medical expenses.
The percentage you can deduct usually ranges from 25% to 30%, and that can make a serious difference in the amount of income you pay taxes on for that year.
CCRC’s are an attractive option for American seniors and one that is well worth planning for. Most of us want to remain independent in our later years. While none of us knows what our health situation will be as we age, we do know that we want the best care available with as little burden on our loved ones as possible. The CCRC allows us to cover all the bases.
If you or someone close to you is thinking about options for continued care and want to know more about what is available beyond the traditional nursing home, call us to schedule your Family Wealth Planning Session today. We can identify what needs to be done to ensure that you have considered all options, choose the right one for you, and plan accordingly. Our Family Wealth Planning Session is normally $750, but this month I’ve made space for the next two people who mention this article to have a complete planning session with me at no charge. Call (949) 260-1400 today and mention this article.