You’ve made the decision that you want to move to a continuing care retirement community (CCRC, also called a life plan community) in or around Covington, Louisiana. You’ve crunched the numbers and can afford the monthly service fee, which, according to 2019 NIC guide (sixth edition), averages $3,353 (though of course some are much higher and others much lower, depending on breadth of services, amenities, size of the residence, and location). But then there’s the matter of paying the entry fee.
It is typical for CCRCs like Christwood Retirement Community to require an entry fee, in addition to a monthly service fee, whereas many other independent living retirement communities are traditional rental retirement communities, which do not have an entry fee. And then to make matters even more complex, there are different types of CCRC entry fee contracts — with some having entry fees that are partially refundable.
About three-quarters of all CCRCs do require an entry fee, and about 80 percent of these communities offer a refundable entry fee option. In some cases, a community will offer a refundable entry fee contract option in addition to a traditional, declining balance (non-refundable) entry fee contract.
But what do you actually get for that CCRC entry fee, how much can you expect to pay for an entry fee, and how do people cover that expense? Let’s take a closer look at each of these questions.
What do you get in exchange for a CCRC entry fee?
One of the big benefits of choosing a CCRC like Christwood is the availability of a continuum of care services offered on-site to CCRC residents. In fact, this is the main distinguishing feature of CCRCs that sets them apart from other senior living communities.
In addition to independent living residences, Christwood residents are given priority access to on-site assisted living, specialized memory care accommodations, and 24-hour skilled nursing care, as needed, at significantly discounted fees. Ideally, a resident of a life plan community will never have to move again as their healthcare needs increase, except perhaps to the on-site healthcare center.
Contract terms vary from community to community, but generally speaking, when you move into a CCRC with an entry fee, you are in essence paying up front for some portion of any future care needs. Again, depending on which contract type you choose, you may get back some portion of that entry fee if you ever move out of the CCRC or as a payment to your heirs.
How much is a CCRC entry fee?
In exchange for the housing, services, and contractual priority access to long-term care services, most CCRCs do require an entry fee in addition to their monthly service fees. The entry fee for CCRCs can vary dramatically based on similar criteria as the monthly service fee. The cost also depends somewhat on the type of CCRC residency contract you select. These are all things the experienced team at Christwood can explain in detail to ensure all your questions get answered.
Again, not all CCRCs are entry fee communities, but typically they are. All other things being equal, the monthly service fee will almost always be higher at a rental CCRC (one that does not require an entry fee) than at a comparable entry fee community.
Entry fee refunds (for refundable entry fees) are typically payable to the resident if they ever move out, or to the resident’s estate in the event of death, no matter how many years the resident has lived in the community. The stipulations for receiving a refund can vary from one community to another, so it is important to carefully read your contract details.
How do people pay for their CCRC entry fee?
There are a number of different ways that people fund their CCRC entry fee. A few of the most common tactics include:
- Savings: Depending on how much wealth you have accumulated over the years, you may be able to cover the entry fee cost with a portion of your retirement savings.
- Proceeds from selling the home: Many seniors who have lived in their current home for a number of years have either built up substantial equity or paid off the house in full. The proceeds of the sale are commonly used to cover some or all of the CCRC entry fee.
- Bridge loan: There are situations where the timing between when a would-be CCRC resident’s home sells and closes, and when that person is ready to move into a CCRC. In these cases, a bridge loan can in essence give the person an advance on the home sale proceeds so that they can go forward with their CCRC move even before their prior home sale is completed.
A different way of looking at entry fees
If you are looking at a CCRC that requires an entry fee, such as Christwood, the dollar figure might appear financially daunting at first glance. Upon closer examination, however, a CCRC entry fee is more or less an investment in your peace of mind. You are in essence paying in advance to have easy access to whatever level of care services you may eventually require as you grow older. That investment — a portion of which may be refundable depending upon your contract type — can alleviate stress for both you and your loved ones.
No matter which entry fee financing approach you are considering, it is wise to talk with an experienced financial advisor and accountant before making a decision and signing a CCRC contract. These professionals can give you tailored guidance based on your unique financial situation so ensure you are making the best choice.
The Christwood team is ready to answer all of your questions and ensure you understand exactly what to expect about the fees, benefits, peace-of-mind, and lifestyle here at our senior living community. Reach out to us by filling out the Contact form below or give us a call any time.
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