Will Assisted Living Expenses Eat Up My Estate?


Will assisted living expenses eat up my estate? That question is often on the minds of retired couples doing their estate planning. Continuing Care Retirement Communities (CCRCs) are one way to make future costs of assisted living and even skilled nursing care more predictable.

World War II nurses holding hands

Ashlea Ebeling, in Forbes.com, provides a good overview of CCRCs, including a list of questions to ask:

Those who move into CCRCs are “thinking ahead,” says Robert Kramer, president of the National Investment Center for the Seniors Housing & Care Industry. “They want to choose a community ahead of time rather than having limited choices when a health crisis hits,” he adds. There are other marketing draws too. For example, more than 50 of these complexes have been built close to or in conjunction with colleges or universities, including Stanford, Penn State and Dartmouth and offer lectures or classes or access to a university hospital. Others offer pools and posh recreational facilities.

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Here are eight questions to ask if you’re considering a continuing care retirement community.

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2. Is the entrance fee refundable?

Typically if you die (or just decide to move out) within a certain period after moving in, your entrance fee is wholly or partially refundable. But watch out; in some cases, communities can hold your entrance fee until they refill your spot. Krooks recently helped a couple who signed a commitment and had a change of heart get half of their entrance fee back. (They thought people would be playing tennis and golf but it ended up they were playing bingo.) The couple could have waited until the CCRC was sold out to get it all back but at best they would have had to wait several years and might never have gotten the money back. Do your due diligence on the community and any refund provisions before you hand over your check, Krooks says.

3. What’s included and what costs extra?

Almost all CCRCs offer guaranteed access to health and personal care services, but not all include it in their basic monthly fee. The broadest coverage, where the cost of care is really included, is a Type A Life Care contract. You’re basically buying into an insurance pool so all the residents’ fees go toward care for the other residents. Modified (Type B) contracts limit the number of days a resident may stay in assisted living or skilled nursing before getting dinged with an add-on fee. With fee-for-service (Type C) contracts, you pay the full cost of any time spent in the health center. Finally, a small number of CCRCs offer rental (Type D) contracts where there is no entrance fee and everything is a la carte. In these, a nursing home bed isn’t even guaranteed.

4. Are there just old folks?

Look for ties with the local community and schools. Pennswood sits between a Friends day school and The George School, a prep school, and is a satellite campus for Bucks County Community College. Residents volunteer at the schools and take classes alongside 20somethings on the history of jazz and Moby Dick. More than 50 CCRCs are tied to universities, says Andrew Carle, director of the Senior Housing Administration program at George Mason University. To weed out the best ones, he says, look for those that are close to campus, have at least 10% of residents as former faculty or alums and have a written agreement for two-way programming.

The rest of the article, including all 8 questions, is available at Forbes.

Two additional questions I would ask are:

9. How do the advantages and disadvantages of this CCRC compare to obtaining long term care insurance?

10. How do I know that this CCRC will continue to be economically viable?

A list of CCRCs in California is available at the California Department of Social Services website here.

Creative Commons License photo credit: gbaku

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