Sorting Through Fees and Finances As You Choose a Retirement Community

Members | August 26, 2013

Before moving to a retirement community, whether it's a continuing care retirement community (CCRC) or otherwise, it's important to assess your financial situation as well as understand the financing options that may be available at the residences you're considering.

Before moving to a retirement community, whether it's a continuing care retirement community (CCRC) or otherwise, it's important to assess your financial situation as well as understand the financing options that may be available at the residences you're considering.

CCRC's are a popular option for many because they offer a continuum of care within a single campus. LeadingAge has released a helpful brochure for prospective and current CCRC residents that contains detailed information on what to ask when comparing CCRC's. 

One of the first things is ask about is fees. Information disclosed about CCRC fees might include:

  • Entrance fee amounts (sometimes referred to as EF's) and other details, including refunds and refund payment provisions.
  • Monthly fee amounts (or MSF's) and the services covered by those monthly fees.
  • Fees applicable to other service levels at the CCRC.
  • The manner in which fees increase at the CCRC, along with fee increase trends.
  • The CCRC’s use of the entrance fees and monthly fees.

Royal Oaks

Vicki Ullery is the marketing and community relations manager at Royal Oaks Retirement Community in Sun City, Arizona. Royal Oaks offers a Type A Lifecare model, which Ullery feels differentiates the community from others in the area. 

According to Ullery, a Type A Lifecare community provides peace of mind financially since the Monthly Service Fee (MSF) remains level and doesn’t jump up to nursing care rates if residents need a higher level of care. 

A Type A Lifecare model means that residents do not need to worry about running out of money due to out-of-control nursing care costs.

"In a good way, many of our clients are surprised that their MSF does not increase when they move to a higher level of care. Many of our competitors are not a Type A Lifecare and they charge more for higher care levels. Many people who visit us have already toured a competitor who charges more as they move through the continuum but the prospect didn’t know that. We always suggest they ask for a contract and ask those specific questions about an increase in MSF," Ullery says.

Reading through CCRC contracts is a task that requires attentiveness. Other contract details to look out for include:

  • What the refund is, if any, upon death or move out.
  • What the MSF covers and what may be increased costs if they move from independent living to assisted living or skilled care.
  • What happens in the case of death of a spouse, or remarriage of a single resident.
  • What are the transfer fees and other costs should they want to move to a different size independent living unit.

Also important is the viability of the CCRC itself. When visiting, the CCRC should offer up front a copy of their financials/annual report. CCRCs with nothing to hide are very forthcoming about this information because they are proud of their financial solvency. Additionally, those looking at CCRC's should ask to see a schedule of MSF increases over the past dozen years. Ullery feels strongly that "Prospects should feel comfortable asking to speak to the CFO about specifics if the financials don’t satisfy them."

Crest View

At Crest View Senior Communities, the situation is slightly different. Specific amenities and packages are offered on a fee-for-service basis, meaning that "the resident pays for what they are receiving- not what other people are receiving" explains Shirley Barnes, CEO. 

If financing is an issue, check to see if you meet the criteria for "low-income" wherever you are applying. Barnes notes that definitions and assistance programs vary widely from state to state, but in Minnesota, under the Group Residential Housing Act, many communities accept waivers.

At Crest View, the conversation over financing usually begins with the director of sales and marketing. It's this person's role to provide a rate sheet that clearly states the rates and fees. Be sure to ask "Do you accept assistance programs?" and find out what's included within that and what is additional.

As an adult child, having the conversation with mom or dad about moving out of their home is typically thought of as daunting or scary. But Barnes would like to dispel that myth. "With the right staff, it can be such a relief to the adult child and person looking...whether they can pay or whether they need public assistance, it's a huge relief to have this conversation, quite the opposite of being scary," says Barnes. 

In her experience with potential residents, "all of those fears go away when you tour, when you ask the right questions and see the other residents enjoying that are offered, activities that will be available to you. It's much better than living alone."