Benefits of Paying a Continuing Care Retirement Community Entrance Fee

Blog Category: Finance Health

If you are unfamiliar with Continuing Care Retirement Communities (CCRC), the entrance fee may come as a bit of a shock. Some people think this is a steep price to pay without fully understanding what you are getting from it. Well, that’s why we’re here. We want you to understand what the entrance fee gets you so you can make an informed decision about paying an entrance fee vs. renting.

What the Entrance Fee Does

Not for profit

Concord Reserve is a not-for-profit Senior Living Community.  The residents do not own the property and therefore do not need to maintain it, pay taxes or carry insurance on the property.  The entrance fee program is designed to assure lifetime residency in our community.  By financially prequalifying all of our residents and requiring the payment of an entrance fee, we are able to assure them that they can live here for the rest of their lives through all levels of care.  The entrance fees are partially refundable.  The remaining entrance fee is refundable to the resident or their estate after they leave the community.  Monthly fees are paid throughout residency and typically increase in the range of 2-3% per year. 

A Full Continuum of Care

The entrance fee ensures your access to the complete continuum of care. As opposed to many communities that offer monthly rental charges, at a CCRC you can move through the continuum to ensure you age on your terms regardless of the turns your health may take. By paying the entrance fee what is purchased is a contract for services detailed in the community’s Residency Agreement.  Briefly, it’s access to the continuum of care:

  • Independent living
  • Assisted living
  • Memory Support
  • Nursing care
  • Inpatient and/or outpatient therapy

Why Pay an Entrance Fee Instead of Renting

It comes as no surprise that when you consider the costs of a rental community compared to an entrance fee community, which will likely cost hundreds of thousands of dollars, your knee-jerk reaction is to assume the rental community will be the less expensive option. And though this may prove to be the case, in reality, some cases may prove to be less expensive than a rental community.

The main reason the difference in cost may not be as drastic as it might first appear is that you are not just calculating your costs today but rather for a lifetime. For example, let’s say you are currently comparing communities. One a rental, one a CCRC. Right out the gate, the rental community might pull ahead due to the $300,000 entrance fee.

However, in most cases, the entrance fee is 90% refundable upon moving out or expiration. This means you can still leave it to your heirs. Also, let’s say that the rental community is charging a higher monthly fee than the CCRC. Over time, that cost will add up.

Lastly, and most importantly, let’s say you get sick. Most people want to live long lives. An average of 92 years, to be precise. Yet, according to one study, people are 5 times more likely to be afraid of being a burden to their families than dying itself. On average, women need 3.7 years of long-term care and men will need roughly 2.2. This alone can make a CCRC worth it because you can move through the continuum of care even if you should exhaust your resources. The average cost of nursing care can range from $54,000 to $95,000 per year.

With all the senior living options today, researching each of them can be exhausting. To help, we have created your FREE Continuing Care Retirement Community Guide to get you started.

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