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Protecting Our Seniors: CCRCs - Buyer Beware
Continuing Care Retirement Communities (“CCRCs”) are gaining in popularity as an option for senior retirement living. Many CCRCs offer gorgeous surroundings akin to a 5-star hotel. Often they tout ties to prestigious universities in the hopes of attracting alumni and faculty. However, for all the attractions of CCRC living, there are serious legal consequences to be considered before a senior should make the move to a CCRC.
CCRCs are different than other types of elder care (such as assisted living) because they promise a continuum of care as the senior’s health changes over time. More specifically CCRCs offer a “long term continuing care contract” that provides for independent living units, residential care/assisted living services, and skilled nursing care. Most often all of these levels of care are found on a single campus. Usually the care contract provides that care will be provided for the resident’s lifetime. Often the contracts have a “benevolent care” clause promising that if the elder’s funds run out the CCRC may still provide care to them (more on this below).
CCRCs almost always require a substantial entrance fee (e.g., from a low of $200,000 to over $5 million) to be paid by the applicant upon admission along with significant monthly fees (roughly the same as what the senior would pay for a mortgage in the community, possibly higher).
CCRCs sell themselves as an attractive option to affluent seniors – often making representations about financial security and peace of mind. As part of the intake process seniors have to turn over robust medical and financial disclosures. The reason for these disclosures is that CCRCs want to hedge their bets and offer admission only to those seniors who the CCRC deems healthy enough and financially secure enough to pay the hefty fees that will be charged over the elder’s lifetime, without undue cost to the CCRC.
So why “buyer beware?” First, an elder entering a CCRC is making what is likely the single largest financial decision that they will make over the remainder of their lifetime. Second, entering a CCRC will tie up the elder’s resources in a potentially permanent fashion. Not only is the financial commitment often on the order of several million dollars, but once the elder enters the CCRC if their health declines they may find it hard to move to another facility. Although many CCRCs offer “refundable” entrance fee options whereby all or a large portion of the entrance fee is “refundable” – there are likely strings attached, for instance the CCRC may only refund the entrance fee after the senior’s apartment is resold, or only refund the entrance fee after a set number of years.
Common issues that CCRC residents face include:
* Financial mismanagement;
* Lack of financial transparency within the CCRC organization;
* Unwillingness by the management to give adequate consideration to the preferences of residents;
* Rapidly increasing monthly fees;
* Unilateral decisions by management as to when residents must move to a different level of care;
* Unavailability of beds in care centers when they are needed;
* Failure to abide by “benevolent care” promises (some seniors have found that CCRCs claim lack of resources when seniors run out of funds, in other situations the CCRC will place blame on the senior for running out of funds);
Even if considering a purportedly “non-profit” CCRC seniors must carefully examine the financials of the CCRC. They should investigate whether the CCRC is really run like a true non-profit. If the CCRC has a claimed religious affiliation that is important to the senior the senior should investigate whether the affiliation is in more than name only.
Unfortunately some CCRCs use pressure tactics to sell to prospective residents. They may pressure prospective residents to make hasty decisions claiming they have long waiting lists or by instilling fear that if a senior citizen does not sign up quickly their health may deteriorate and they will lose the window of opportunity to join the CCRC.
Fortunately there are resources available to seniors who are interested in CCRC living. This author recommends the following:
* California Advocates for Nursing Home Reform (CANHR): is a leading non-profit devoted to protecting the interests of senior citizens. CANHR has a webpage devoted to CCRC related information;
* California Continuing Care Residents Association (CALCRA): CALCRA provides an independent voice to California’s 20,000 CCRC residents;