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Continuing Care Retirement Communities

By Dan Haut, CFP® CIMA®
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Starting in 2011, the first wave of “baby-boomers” – Americans born between 1946 and 1964 – reached retirement age. The term tsunami may be more apropos than wave, however. According to Health and Human Services (HHS), more than 10,000 Americans will turn age 65 every day for the next decade1.

While turning age 65 does not mark retirement for every senior – 29% of baby boomers have actually continued to work beyond this age – the majority of the 77 million boomers are either retired or focusing on issues that will impact the next phase of their lives2. For the demographic that encompasses 23% of the U.S. population, this “next phase” will include more than planning to travel to luxurious vacation hot spots like Bali. The next phase will undoubtedly include the more tedious tasks like downsizing real-estate, applying for Medicare and social security, and planning for required minimum distributions from 401(k)s and IRAs.

However, an issue that is less ubiquitous but just as complicated, is navigating senior housing options when one’s health begins to fade. Per the National Alliance for Caregiving and AARP, while about a third of senior care recipients in the U.S. are fortunate to live with a family care-giver, this leaves two-thirds who are left to figure it out themselves3.

Traditionally, senior housing options have been segmented into four categories: Active Adult Communities, Independent Living Facilities (ILF), Assisted Living Facilities (ALF), and Skilled Nursing Facilities (SNF)4. While all four housing options serve their specific purposes well, they each lack a continuum that starts with active retirement and ends with long-term skilled nursing care. It is exactly this continuum – not to mention a suite of other services – where Continuing Care Retirement Communities (CCRCs) fill a need.


While CCRCs have been around since the turn of the 20th century, they experienced their first growth phase during the 1960s and 1970s. While the 1980s saw a slight drop in construction due to economic recession, from 1990 to 2010 the growth was massive. In 2010 there were around 745,000 seniors living in approximately 1,900 CCRCs in the US4.


A CCRC is a retirement community that offers a continuum of aging care needs, from independent living to assisted living, to skilled nursing and memory care. Unlike the more traditional senior housing options, CCRCs offer this spectrum of services all within the same resident community. The benefit of the CCRC model is that residents don’t have to go through the stress and hassle of moving if and when their health and wellness changes. As their needs change, seniors can take comfort in knowing that they will live in the same community with their spouse, friends, and peers throughout the aging process. CCRCs also provide more than just brick and mortar housing. They offer a myriad of features which include 24-hour security, social and recreational activities, upscale dining options, housekeeping, transportation, and fitness programs.

As far as housing structure, a CCRC can be comprised of apartments, condos, cottages, and lodges, all within a campus style like setting. The most typical CCRC has fewer than 300 units on campus, but they exist in all geographical locations from the city to the rural outskirts. Contrary to popular belief, less than 20% of CCRCs are constructed by for-profit developers. In fact, over 80% are developed for not-for-profit owners and half of all CCRCs are associated with faith-based organizations5.


Within the CCRC model, the average age of residents is 81 and more than twice as many CCRC residents have a college degree as opposed to the general population over the age of 65. Most CCRC residents are in the middle to upper-income brackets with half having a net-worth of over $300,000. That said, there has been a recent surge in popularity of CCRCs (like the Fountain Grove in Sonoma County) that target specific groups that have traditionally faced housing discrimination, like the LGBTQ community6.


Per the American Seniors Housing Association (ASHA), there are three types of financial contracts that a resident must consider when choosing a specific CCRC.

Type A or Life Care Contracts guarantee residents a continuum of care and amenities, which ranges from shelter and amenities, to personal care and nursing assistance for the rest of their lives. The costs entail a one-time “entrance fee” and monthly payment schedule. The “entrance fee” varies greatly based on geography. For instance, The Meadows of Napa Valley charges an entry fee in the low $700,000 range for a two bedroom 1,500 square foot apartment, which is 90% refundable. However, the average entrance fee on a national level is around $250,000. Further, if one buys into a Type A or Life Care Contract outside of California, the entrance fee can be as little as $100,000. Like “entrance fees,” the CCRC monthly payment schedule also varies significantly by geography and by life stage.  For example, the Sequoias of San Francisco charges up to $7,400 per month for one person and up to $9,800 per month for two people. This fee covers a two bedroom Life Care A Contract for independent and assisted living. Skilled nursing care may increase the costs. However, the national monthly average is much less, and is roughly $3,000 according to the CCRC database “myLifeSite.”

Furthermore, some Type A or Life Care CCRCs have an “equity model,” which will refund the resident’s estate up to 70% of the initial entry fee. For instance, the Vi in Palo Alto, California, allows a resident’s estate to recoup 70% of the initial entry fee for a slightly higher monthly fee. In the equity model, residents without access to long-term care insurance are able use up to 70% of their initial entry fee which is akin to a long-term care line of credit without the interest.

Type B or Modified Contracts are similar to Type A Contracts in that they offer residential services and amenities and charge an entry and monthly fee. However, the monthly fees are less costly than Type A contracts. As a consequence to the lower monthly fee, when residents move from independent to assisted living and eventually to nursing care, residents will have to pay the market or per-diem daily rate as determined by the CCRC.  A Type B contract is akin to a high deductible insurance policy where the monthly costs are less but carry potentially more risk if and when skilled nursing care is needed.

Type C or Fee for Service Contracts generally require no entry fee unlike Type A or Type B contracts. Additionally, residents pay the market’s per-diem or going rate for skilled nursing care. While residents are guaranteed the services offered under the CCRC umbrella, they risk paying completely out of pocket for skilled nursing care.


CCRCs are currently only regulated at the state level. Roughly 38 states not only license CCRC providers, but also monitor and update their financial conditions. While states do provide some regulation, the degree of regulatory oversight can vary considerably. For instance, while some states regulate CCRCs through their Department of Insurance (North Carolina), some regulate through their Department of Social Services (California). Some states like Ohio don’t provide much regulatory oversight at all.

The only non-government agency (NGA) that analyzes and accredits CCRCs is the non-profit-accreditation commission, Commission on Accreditation of Rehabilitation Facilities (CARF). This NGA is an excellent resource to rank CCRCs by state.

Entering a CCRC does not come without risks which can include CCRC bankruptcy. While CCRCs meticulously evaluate the financial ability of the resident to make monthly payments – a prerequisite of joining is to provide deposit, net-worth statement, budget, and brokerage statements – it is important that residents evaluate the financial strength of the CCRC they are joining as well.

Outside of researching the financial health of the CCRC through CARF, future residents can take other prudent measures. One can review financial statements or form 990s (CCRC non-profit tax filings) directly from the organization. Also, most CCRCs have resident board members that can answer questions in regards to financial and credit strength.

At Osborne Partners, your Portfolio Counselor team is always available to help you evaluate the prospect of considering a CCRC in the context of your (or a loved one’s) overall financial plan.


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Dan Haut, CFP® CIMA®

Dan Haut, CFP® CIMA®

Daniel is a Portfolio Counselor for OPCM with nearly 15 years of experience in the financial services industry. Dan earned his Bachelor of Arts degree in Political Science from the University of California, Davis. He is a CERTIFIED FINANCIAL PLANNER practitioner and a CIMA® designee.
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