Last week we explored what defines an equity retirement community and reviewed the potential advantages and drawbacks of that senior living option. Before that, we covered the characteristics of rental retirement communities. In this third and final installment of our series on types of senior living, we examine entry fee retirement communities, often called buy-in communities, and highlight what sets them apart from other senior living choices.
Entry fee retirement communities (sometimes called “buy-in” communities)
Entry fee retirement communities are commonly structured as continuing care retirement communities (CCRCs), also known as life plan communities. These communities typically offer a full continuum of care—on the same campus—from independent living to assisted living, and on to skilled nursing and sometimes memory care.
Prospective residents must usually pass a medical eligibility exam and demonstrate the ability to live independently at move-in, so entry fee communities often appeal to younger, healthier seniors. Financial qualification is also required for move-in. In addition to a potentially substantial entry fee—sometimes in the hundreds of thousands of dollars—residents pay a monthly service fee.
The higher upfront cost often covers a wide range of amenities and services, such as:
- Home maintenance (exterior and sometimes interior)
- Housekeeping services
- On-site wellness programs and social activities
- Some or all utilities
- Transportation services
- Emergency call monitoring
- Security
- One or more meals each day
A primary benefit of entry fee retirement communities compared with many other senior living options is long-term peace of mind. After move-in, the community is typically contractually obligated to provide care as a resident’s medical needs or financial circumstances change.
How that care is paid for depends on the type of CCRC contract the resident signs. Some contracts include care as part of the entry fee and monthly service fee, while others use a fee-for-service model where monthly costs increase when additional care is needed. Depending on the contract, some or all of the entry fee may be refundable to the resident at move-out or to their heirs after death.
>> Related: A Closer Look at CCRC Entry Fees
The pros of an entry fee retirement community
- Priority access to higher levels of care if needed, providing peace of mind
- Depending on the contract, stable monthly costs even if care is required, or discounted care rates
- Some fees may be tax-deductible as prepaid medical expenses
- Comprehensive amenities like housekeeping, wellness programs, and transportation
- Meal plans that include one or more daily meals, depending on the option chosen
- Couples can remain nearby if one spouse requires a higher level of care
- Some communities offer financial assistance if a resident’s assets are exhausted through no fault of their own
The cons of an entry fee retirement community
- Entry fees can be substantial—potentially hundreds of thousands of dollars
- Residents typically do not hold equity in a home; a portion of the entry fee may be refundable, depending on the contract
- Moving out may result in a significant financial loss based on contract terms
- If no higher level of care is ever needed, the entry fee model can be more expensive than other options
>> Related: The Great Debate: Rental or Entry Fee Retirement Community?