Avoiding Trouble at Continuing Care Retirement Communities

Entering a life care community requires some legal advice

By Judy Malmon, J.D. | Last updated on January 26, 2023

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Inevitabilities associated with aging present the need to make important life planning decisions. While your health is good is the time to consider what you might want if you or your spouse should need care down the road. An option that has emerged in recent years with the “aging in place” trend is a continuing care retirement community (CCRC), also known as a life care community. CCRCs offer a continuum of care in a single location, from independent living to assisted living to nursing home care. Each community has its own flavor, and some offer specialized options, such as specific care focused on patients diagnosed with Alzheimer’s. They may provide services like meals or housekeeping, or onsite gym facilities. The advantages of this type of living choice can be many, including the opportunity to remain with a consistent community of friends and caregivers throughout the transitions from independence to nursing home. Additionally, where one spouse needs additional care but the other does not, the well spouse can remain where they are while having easy, close access to their spouse in a nursing home. There are also social benefits to having community events and people to monitor potential diminishing capacity over time. One downside is that these communities are, unsurprisingly, quite costly, and they can be difficult to get out of should you decide it’s not right for you.

Be Wary of Contracts and Agreements

Because CCRCs require a hefty outlay of investment, as well as a significant commitment, it’s important to have legal counsel assisting you with the contracts and financial arrangements prior to signing an agreement. “We do a fair amount of helping people when they’re looking at moving into a continuing care community,” says Bridgewater elder law attorney Lawrence Friedman. “I help people on the contracts because it’s a really complicated arrangement. Most people don’t understand what they’re buying. The marketing makes it sound great, and there’s nothing wrong with it; you just need to understand financially what you’re getting into, if it’s right for you or not.” Typically, a CCRC contract will require an initial deposit of several hundred thousand dollars, as well as a monthly maintenance fee. At the end of the contract, whether upon death or the decision to leave, the deposit is partially refundable, up to a stated percentage (this can range from 50 percent to 90 percent), less the cost of services used, such as nursing home care.


For many people, the challenge comes in the requirement that a deposit may only be refundable upon re-letting of the space. “There are little zingers like that you need to understand and decide if it’s right for you,” Friedman says. Some places are easier to re-let than others. Where a development is still being built, “no one’s going to let your used apartment when they can get a brand new one for the same price,” he adds. “A CRCC can be right for people with significant assets beyond the entrance fee. It’s not right for someone with very little on top of the deposit, because the maintenance fee is going to put them in a difficult situation each month. Plus, if they don’t like it and want to leave, they can’t, because all their money is tied up in the deposit. On the other hand, somebody who has more than twice the initial entrance fee, yeah, you don’t want to have $300,000 tied up for three years, but if it is, it’s not the end of the world. You can afford the monthly fee, or leave anytime you want.” There are popular and well-managed CCRCs, with waiting lists for vacated space, and there are others that have problems. It’s important to do your homework before you commit. Talk to people who live in the places you’re considering, as well as people familiar with the industry who can give you more details than a marketing or sales representative will be inclined to do. In many states, CCRCs are not well-regulated, and there is no federal agency oversight of the industry. Another thing to keep in mind when considering a CCRC is that even if you can’t get your deposit back when you need it, this amount of money will be counted towards your eligibility for Medicaid, which allows you to have only $2,000 in assets (plus certain other property) in order to qualify. It’s crucial to have knowledgeable legal advice regarding how your choices will affect all your care options. For more information on senior care facilities (assisted living facilities), medical care and health care services, and senior living (nursing care), see our overview of elder law and nursing home laws.

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