You’ve decided to move to a continuing care retirement community (CCRC), also known as a life plan community. You’ve reviewed your budget and can afford the monthly service fee, which the 2019 NIC Guide (sixth edition) reported as averaging $3,353, though actual fees vary widely by services, amenities, residence size, and location. Beyond the monthly fee, many CCRCs also require an entry fee.
Unlike rental-based independent living communities that typically have no entry fee, most CCRCs ask for a one-time entry payment. Entry-fee contracts come in different forms: some are non-refundable, while others offer partial refunds. According to myLifeSite data, roughly three-quarters of CCRCs require an entry fee, and about 80 percent of those offer refundable options—common refund levels are 50 percent and 90 percent. Some communities offer both refundable and traditional declining-balance (non-refundable) contracts.
So what does the entry fee cover, how much should you expect to pay, and how do residents usually fund this cost? Below is a clear look at each question.
What do you get in exchange for a CCRC entry fee?
The primary advantage of a CCRC is the on-site continuum of care. That continuity—access to increasing levels of care without needing to relocate to a different facility—is the main feature that distinguishes CCRCs from other senior living options.
Residents in CCRCs typically have priority or exclusive access to higher levels of care as their needs change, such as assisted living, memory care, and 24-hour skilled nursing services. Ideally, a life plan community lets a resident remain in the same community as health needs evolve, with moves limited to the on-site healthcare center when required.
Contract provisions differ by community. Generally, monthly service fees in entry-fee communities are lower than comparable rental communities. In many cases the entry fee also offsets future care costs in a way similar to long-term care coverage. Nonprofit CCRCs frequently provide financial assistance to contract-holding residents who, through no fault of their own, can no longer afford monthly fees.
Depending on the contract you choose, part of the entry fee may be refundable to you if you move out or payable to your estate after your death. Exact refund terms vary, so it’s essential to review contract language closely.
How much is a CCRC entry fee?
Average entry fees commonly fall in the $300,000–$350,000 range, but amounts vary widely based on location, community offerings, apartment size, and contract type. In many CCRCs a portion of the entry fee can be tax-deductible in the year paid as a pre-paid medical expense, subject to IRS rules and your personal situation, so consult a tax professional.
Refundable contracts often specify refund percentages such as 50, 75, or 90 percent. Refunds are typically payable to the resident if they leave the community or to the resident’s estate at death, regardless of the number of years the resident lived there. Specific refund conditions differ among communities, so examine contract terms carefully.
How do people pay for their CCRC entry fee?
Residents use several strategies to fund entry fees. Common approaches include:
- Savings: Using personal savings or retirement assets to pay the fee outright.
- Proceeds from selling a home: Many people use equity or net proceeds from the sale of a long-time residence to cover all or part of the entry fee.
- Bridge loans: When timing is a concern—for example, if a home hasn’t yet sold—bridge loans can provide short-term funds to secure a CCRC residence while awaiting closing on a home sale. Specialized lenders provide these solutions.
- Sale-leaseback or other options: Programs that buy your home at fair market value and allow you to rent it back temporarily can free up equity to fund an entry fee.
Each funding route has trade-offs. Discuss options with financial professionals to determine which approach best fits your cash flow, tax situation, and long-term plans.
A different way of looking at entry fees
The headline entry-fee dollar may seem large, but many people view it as an investment in long-term peace of mind. Paying an entry fee can secure access to a continuum of care, reduce uncertainty for both residents and their families, and lock in predictable living arrangements as health needs change.
Before signing any CCRC contract, consult an experienced financial advisor and a tax professional. They can review contract terms, evaluate tax implications, and help you choose the entry-fee structure and payment method that best align with your financial goals and personal circumstances.