As seniors consider both healthcare and housing decisions in retirement, their options typically extend to polar opposites. They think of either “staying at home” or “moving to a community.” In response to seniors’ growing desire to remain in their homes, Life Plan Communities (also referred to as Continuing Care Retirement Communities) are promoting a relatively new concept. It’s called CCRC without Walls (also known as the “Continuing Care at Home” model).
Before you start envisioning a CCRC without Walls as a collapsed roof on top of a group of seniors (which, of course, it’s not!), it’s important to understand how this concept is similar to the traditional Life Plan Community model. It’s also key to see how the new option differs from traditional home care. This choice actually may be an optimal hybrid for seniors who want to plan ahead for the extra help they may need in the future, while also fulfilling their desire to stay in their own homes.
What is a ‘CCRC Without Walls’?
Over the past couple of decades, senior communities have realized that many of their prospective residents are reluctant, for either personal or financial reasons, to move from their homes. This may be due to the fact that a home sale could trigger a high taxable gain. It could also be that the cost of downsizing and selling their home may seem overwhelming to seniors compared to the payoff. Additionally, seniors may have emotional reasons to stay in the homes where they raised families, or a desire to remain near friends in their neighborhoods.
Instead of disregarding this large population of reluctant-to-move seniors, communities came up with a new program. The idea is similar to what’s offered in a traditional Life Plan Community contract: Bringing home health aides, assisted living services and even 24/7 skilled nursing care into the resident’s home.
Participants would still need to qualify financially and be healthy and independent to start out. Typically, their homes would also be inspected to make sure that caregivers can safely and efficiently offer services in the home at some point in the future.
Comparable to long-term care insurance
This evolving senior-living model is also taking aim at traditional long-term care insurance providers. How so? Individuals pay now and into the future to insure themselves against the risk of extensive long-term care costs. After paying an initial lump-sum fee, seniors would pay ongoing monthly fees (similar to an insurance premium) to live independently in their own homes and be eligible for future services.
If a resident later needs extra care, the contracted company (which is typically an affiliated Life Plan Community in their area) would provide services in the resident’s own home. For instance, a senior might start with a home health aide for a couple hours a day. Later, however, he/she may need a 24-hour skilled nurse. Regardless, the resident’s monthly care costs would remain the same.
Unlike long-term care insurance, which doesn’t charge premiums during the time you utilize insurance services, a resident typically would continue paying their monthly CCRC Without Walls care fee even while they receive services. This is how it works under a traditional Life Plan Community contract, too.
Costs and benefits
Just as entry and monthly fees differ dramatically from community to community, CCRC without Walls programs may range widely in terms of costs. However, CCRC Without Walls programs are much less expensive than traditional Life Plan community contracts.
For instance, if a senior wanted to move into a Life Plan Community, he/she could pay a non-refundable entry fee of $350,000 and an ongoing monthly fee of $2,800. For a home-care contract, on the other hand, that same senior might pay an entry fee of $50,000 and a monthly fee of just $500. The reason for the huge cost difference: The community is not providing housing.
The CCRC without Walls program may also include additional amenities. For instance, it may allow home-based clients access to the affiliated community’s social activities, dining areas and fitness centers. This may be the ideal way for seniors to benefit from the social aspects of a senior community, while maintaining their homes.
Risks and expenses
Creating a CCRCs without Walls programs may be a smart way for Life Plan Communities to expand their business. However, it can also create unintended consequences. There is currently no real limit as to how many home-based seniors a program can accept. They could simply hire new home care aides as necessary. In a traditional Life Plan Community, residency has always been limited to the number of available residence units.
If CCRC without Walls programs unintentionally grow too large, and also underprice their services, they may run into the same liability risks as the long-term care insurance industry. (Too many subscribers at too low a price.) Ultimately, if too many “at-home” residents end up needing higher levels of skilled care, the operating costs could undermine the program’s financial solvency.
Senior participants also have cost-related risks to consider. Yes, the cost of an at-home program seems lower than moving into a Life Plan Community. However, that’s not necessarily the case. Why? At-home residents are still responsible for their home. They’ve not yet accessed principal from the sale of their home. In addition, they have ongoing costs such as property taxes, insurance and maintenance.
Should I stay or Should I go?
As I always say, the decision to sign up for senior care in a community or at home is a very personal one. It’s not all about cost. The CCRC without Walls programs have certainly evolved to meet the needs of seniors who prefer to stay at home, and that’s a good thing.
However, just as Life Plan Community contracts often are confusing and inconsistent, so are at-home program contracts. Before you sign on the dotted line, be sure to review the contract costs, coupled with the ongoing costs of maintaining your home, with an experienced Wealth Advisor.
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