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DENVER - The prospect of having to move to a nursing home at some point is not an appealing thought for many older Americans. Yet independent living is not always possible. One increasingly popular alternative is the continuing-care retirement community. Michael Snowdon, CFP, CMFC, and the CFP Program Manager at the College for Financial Planning, provides answers to some commonly asked questions about this relatively new housing plan for older Americans.

What’s the difference between a continuing-care facility and a nursing home?

Continuing-care retirement communities provide a continuum of care, generally guaranteed for a lifetime. You may start out living independently at the community in your own unit, with only light housekeeping services. Later you may require some medical or living assistance, such as with taking medication or dressing. And later still you may need to move into the facility’s nursing home for full-time care, either temporarily or permanently. A good continuing-care community can make these transitions seamless.

Not all of the continuing-care retirement communities (CCRCs), sometimes called life-care communities, provide the same level of services. Some facilities offer a full spectrum of services, from transportation and laundry service to extensive recreational facilities such as for golf and swimming. Others are more modest, though most offer some recreational and social activities, meals, and transportation to local events and shopping.

How expensive are CCRCs?

These facilities tend to be more expensive than traditional housing options because they guarantee lifetime care. Fees vary widely, but typically average from $60,000 to $120,000 for one-time entry fees, with monthly fees from $1,000 to $1,600 or more. Be sure to ask what is included in the monthly fee and what you must pay extra for. A majority of CCRCs participate in Medicare, Medicaid, or both programs.

What determines the size of the fees?

It largely depends on the type of services you buy, refundability of entrance fees, and living arrangements. Following are three basic types of services:

• Complete care. This guarantees housing, services, and unlimited nursing care. Generally, it’s the most expensive, but there usually are no substantial increases in monthly fees except for inflation adjustments.

• Limited care. You pay for housing, services, and limited nursing care or other medical services, with additional daily rates for any medical care beyond the specified limit.

• Fee for service. The entrance and monthly fees generally will be lowest for this type of contract. They cover only basic shelter and services. Access to nursing care is guaranteed, but you pay market rates if you use the service.

Is the entrance fee refundable if I decide to leave after a few months or if I die unexpectedly?

That depends on the contract. Newer CCRCs usually will refund a portion of the entrance fees, from 50% to 90%, if the person moves. In the event of death, a portion may be refunded to the heirs.

Who makes the decision of what level of care I need?

This should be spelled out in the contract. Often it is a joint decision made by you, family members, medical advisors, and the CCRC’s manager. Some state laws provide guidelines as well.

How do I know a CCRC is right for me?

CCRCs are most appealing to single people who have no family or who don’t want to burden a family with their care and to married couples, who want to remain close to each other even if one moves into the facility’s nursing home. CCRCs also are appealing to people who want to live independently yet have guaranteed access to medical care.

Money is clearly another factor, since one needs the financial resources to pay the hefty entrance and monthly fees. Also, although the number of CCRCs is growing, they are not nearly as widespread as nursing homes. Their greatest concentrations are in California, Florida, and Pennsylvania. Therefore, if you must move to another state to live in a CCRC, check to see how that state’s laws might affect your will, taxes, and other estate and financial planning issues.

How do I choose a CCRC?

Because of the entrance fee, you should treat a CCRC as you would any investment. It’s particularly important to investigate the financial stability and management experience of the facility. Some communities have gone bankrupt, though CCRCs are more regulated than they once were. Because many of them are run by nonprofit organizations, they do not have deep pockets to pay back residents if the CCRC should fail. Have an attorney and financial advisor carefully review the contract. People should look into CCRCs well before they may need or want one–the waiting lists for good facillities can be years long.

Source: http://www.insweb.com/

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