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CCRC Part 3-Contracts
Jan L. Warner & Jan Collins

Continuing Care Retirement Communities, Part 3 – Understanding the Contract (continued from the last two weeks. If you missed either of the last two NextSteps columns, go to

So Mom and Dad paid a hefty up-front price and escalating monthly fees to live in a community where they can “age in place” – that is, receive stepped-up care as increased health needs come calling? And, if they run out of money, the community will provide “perpetual care” at a nursing facility that does not accept Medicaid? And it’s not in writing? Afraid not. Continuing Care Retirement Communities (CCRCs) can provide seniors with many quality-of-life benefits and health care so long as you can pay the ticket. We know of no communities that will agree, in writing, to provide health care for the rest of your lives – even if you run out of money.
Because the money you are about to spend may be the largest expenditure you will ever make, you and your family should review the CCRC contract very carefully – before a move is made. What do you look for? First, a knowledgeable lawyer who can help you understand what you will be paying for.

In evaluating a CCRC contract, you should consider the following factors, among many others, no matter whether the community is affiliated with a religious or fraternal organization or is touted as being “non-profit.” In the final analysis, everyone has to pay overhead and increasing expenses.

Find out what financial information is available so that you, and those who advise you, can determine if the community is sufficiently capitalized and funded to withstand future vacancies. These folks are asking you for a lot of money and a financial statement to make sure you can afford to live there, so don’t be embarrassed to ask for the same things: assets, liabilities, and financial reserves, plus the length of time the facility has been in business.

Make sure that appropriate licenses are in place, see if the contract addresses the staff-to-resident ratio, and find out about staff turnover. These issues are important since most CCRCs include independent living, assisted living, and intermediate and skilled nursing care.
Read the contract carefully – no matter what you are told -- to determine which services are available, which services will be extra, how much you will pay each month, and on what basis your monthly expenses will increase. If it’s not in the contract, don’t count on it. If it’s in the contract, make sure you receive it. Does the contract address what social activities are provided, how your transportation needs are met if you want to shop, go to the doctor, or go to a movie? And since many seniors have pets, can your pet bird, cat, dog, or hamster enter with you?

If there is an entrance fee, what is the community’s policy on refunds if you don’t like it there and want to move? Although you will provide financial information when you enter, what happens if you have financial reversals, run out of money, and are unable to pay? Since it’s unlikely you will be able to sell or gift your rights under these contracts, it’s important to understand what happens if the unthinkable occurs.
Find out if any part of your entrance fee can be placed in escrow to help pay for your future care. If you divorce or remarry, will there be additional fees for your new partner or spouse to join the community?

Finally, because some communities can arbitrarily require you to move from independent living to assisted living, make sure to understand your rights – and whether you have any appeal rights.

So don’t be an impulsive shopper. Take your time and make wise, informed decisions.

Need more advice or help with this topic? Click here to get information about taking the "Next Step".
     Related Resources

  • Continuing Care Neighborhoods Need Careful Examination

  • CCRC Contractual Pitfalls

  • CCRC Contracts Part 2

  • Create your personal health plan now and make your wishes known ® using My Final Decisions

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