Families Discover the Hidden Costs Behind '90% Refundable' Entrance Fees at Continuing Care Retirement Communities
Many families who pay a $400,000 entrance fee to continuing care retirement communities (CCRCs) with the promise of a “90% refundable” amount are learning that the refund is not guaranteed and may take years—sometimes decades—to be paid. The refund typically only becomes due when the unit is re-occupied by another resident who has also paid an entrance fee, which can delay recovery for estates significantly. The refund clause in CCRC contracts often includes hidden terms such as inflation erosion of value over time and front-loaded amortization that may result in residents losing more than 10% if they leave early. Additionally, the unsecured nature of these refunds means families are at risk if a community goes bankrupt, placing them behind secured lenders and bondholders. CCRCs offer different contract types—Type A (life care), Type B (modified), and Type C (fee-for-service)—each with varying levels of financial commitment. While the entrance fee may appear affordable upfront in some models, long-term costs can be substantial if residents require extended medical or memory care.
Topics: CCRCs Medicaid asset scrutiny refundable entrance fees retirement communities