“When moving into a retirement community, seniors now dig into the facility’s ins and outs, instead of settling into the nicest campus.”
–Kevin Keller, Denver Post, Researchers Learn about Senior Citizens by Staying at Boulder Retirement Home, June 3, 2016
Prospective residents of retirement communities are more diligent than ever before. This is especially true for continuing care retirement communities (CCRCs), also called life plan communities, which typically require an entry fee plus ongoing monthly charges in exchange for priority access to assisted living and skilled nursing when needed. Many CCRCs market themselves as upscale communities with resort-style services and amenities, but the sizable financial and lifestyle commitment makes prospective residents rightfully cautious. They want a clear understanding of the contract terms and the community’s financial health before making a decision.
Examining the details of a CCRC contract
To illustrate what to look for when evaluating a CCRC, I created an online profile on www.mylifesite.net for a not-for-profit East Coast community I will call Salty Winds Retirement Community. Salty Winds has roughly 250 independent living residences, 50 assisted living units, and 55 skilled nursing beds. Below are important contract and policy details prospective residents should review and understand.
Contract type
The profile indicates Salty Winds offers a lifecare contract. That generally means residents pay an entry fee and monthly fees that are intended to remain relatively stable over their lifetime, with the community covering many future care costs. However, lifecare contracts vary, so it’s vital to read the specific language to see how and when fees might change.
>> Learn more about types of CCRC residency contracts
Salty Winds’ entry fee is 90 percent refundable. That means 90 percent of the entry fee will be returned when a resident moves out or upon death, but the refund terms matter. For example, Salty Winds requires that the unit be reoccupied by a new resident and that the new entry fee be received before paying the refund; once those conditions are met, refunds are paid within 30 days. Depending on demand, this process can take time.
Other important questions include: Must the resident or heirs continue paying monthly fees until the unit is reoccupied? Could the refundable amount be affected if entry fees for new residents change? Does the community maintain a reserve fund to help pay refunds if re-occupancy is delayed? These are the kinds of details that belong in any thorough contract review.
Pricing
According to the profile, Salty Winds’ entry fees start around $270,000 and monthly fees begin near $3,500. Couples pay a second-person entry fee and second-person monthly fee, which are typically lower than the base rates. The report also notes monthly fees rose roughly 4 percent per year over the past five years, a useful figure for long-term budgeting.
An important pricing consideration is how monthly fees change if a resident moves from independent living to assisted living or skilled nursing. Salty Winds’ contract describes this scenario as follows:
A single resident in need of temporary care will continue to pay the same monthly fee as charged for the independent living unit plus additional costs for extra meals not included in the monthly service fee. Upon transfer to permanent care, the resident will surrender the living unit and pay the current monthly fee for a one-bedroom deluxe apartment for assisted care, or the current monthly service fee for a two-bedroom traditional apartment for skilled care, plus charges for two additional meals per day.
This language shows monthly costs may change depending on the size and pricing of the independent living unit the resident previously occupied. A resident’s eventual monthly fee for care could be higher or lower than their previous independent living fee. The contract also contains provisions related to double occupancy and situations where one spouse remains independent while the other needs care.
In-home care & healthcare
Salty Winds is Medicare-certified but not Medicaid-certified. Residents should understand the distinction between Medicare and Medicaid and how certification—or lack of it—can affect access to services and potential out-of-pocket expenses.
The contract language also addresses in-home care provided by the community. At Salty Winds, residents are eligible for up to one hour of staff-provided care per day at no extra charge for up to 90 days; after 90 days, this drops to 30 minutes per day. The contract does not explicitly discuss hiring private-duty caregivers, so prospective residents should ask the community for its policy on outside care providers.
Financial viability
Because Salty Winds operates as a not-for-profit, it does not need to show a profit each year, but it must generate enough revenue to cover operating costs and maintain its facilities over time. Short-term operating losses can be acceptable if the community has adequate cash reserves and debt coverage, but persistent negative performance raises concerns. Prospective residents should ask about the community’s financial history, current reserves, debt levels, and long-term outlook to assess stability.
>> Watch this video to learn what else to look for when evaluating a CCRC’s financial condition.
The CCRC contract fine print
When choosing a CCRC, location, amenities, and quality all matter, but understanding the contract’s fine print is equally critical. Many people sign agreements without fully reading the details, and that can lead to unexpected costs or limitations later. Before signing, read the entire contract carefully and clarify anything that is unclear—refund timing, fee escalation, care definitions, in-home care policies, and financial health are all key items to review. A clear understanding of these provisions will help ensure the community you choose meets your needs and expectations.