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Health Care & Insurance

A Community to Age With You

Continuing care retirement communities offer stepped-up levels of care to meet all needs.

When lawyer Harry Weil retired in January 2000, he and his wife, Nancy, decided to settle in the suburbs of Washington, D.C., to be near her sister. Before selling their Pittsburgh home, they visited empty farm fields in Maryland to look at the site of a future retirement community. Based on the developer's plans, they reserved an apartment at what was to become Riderwood Village. In September of that year, they moved in.

But Riderwood is not a typical retirement community, even though it has all of the amenities you'd usually find at one, such as a fitness center, a pool and a variety of activities. Instead, this high-end campus with nearly 2,000 housing units is a continuing care retirement community, or CCRC. In addition to independent-living units, Riderwood, like most CCRCs, provides its residents with ready access to on-site assisted living and nursing care, should the time ever come when they need it.

Harry, now 73, and Nancy, 70, paid a large upfront entry fee, with the promise that the money would be returned after they died. "I liked the idea of making a significant deposit that I would get back and pass on to my children," Harry says.

Riderwood is part of a growing trend in retirement housing. Also known as life-care communities, CCRCs are rising in popularity, especially in wealthier parts of the U.S. According to the Census Bureau, the number of such developments has increased to 4,200 in 2004, up from 2,200 in 1998.

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Choosing a CCRC is not simple, however. There are financial, legal and medical issues to consider. "In theory, CCRCs are a great solution," says Nancy Fiedelman, president of the Aynsley Group, a McLean, Va., geriatric-care consulting firm. But, she adds, "People must take the time and energy to really understand what the community is."

At most CCRCs, you pay an entrance fee, which is partially or fully refundable to you or your estate when you move or die. In addition, you'll pay a monthly fee for independent living. Some communities offer a life-care contract, where your basic fees are higher but you won't be charged more if you move into an assisted-living or nursing unit. Most, however, add big charges for that extra care.

At Riderwood, for example, the entrance deposit for a deluxe corner, two-bedroom unit with a sunroom is $446,000, with a monthly fee of $1,897 (plus another $594 a month for an extra person). Housekeeping services cost $27 an hour. If you need nursing-home care, you'll pay $247 a day.

Nursing and assisted-living fees charged by a CCRC are usually comparable to prices you'd pay at a free-standing facility. So what do you get for the entrance fee? A support system and the peace of mind that you'll get care as you become more frail. Many developments conduct routine social service or medical assessments as you age. Some have physicians on staff. You are also able to stay close to a spouse who needs nursing care.

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Many CCRCs are operated by churches or other nonprofits, while some are run by for-profit companies. Riderwood, in Silver Spring, Md., was developed by Baltimore-based Erickson Retirement Communities, a company that runs 18 CCRCs in ten states. Nearby in Gaithersburg, Md., Asbury Methodist Village was founded by members of the United Methodist Church. While both are upscale developments on more than 100 acres in leafy suburbs, the mood and feel of each are quite different.

United Methodist minister Warren Ebinger, 77, and his wife Mary, 75, a family counselor, were drawn to Asbury because of its ties to their church. Although Asbury welcomes all comers, Warren says he was attracted by its "spirit of community." The Ebingers, who lived in Silver Spring, moved to Asbury in 2002. He says: "Some think that having Methodist in the name is a disadvantage. I don't. It means high values, and it brings some identity to what we've known. But it is not exclusive."

In contrast, the Weils find Riderwood's diversity appealing. "It's one of the things we love about it," Harry says. "There are so many people here with different backgrounds."

If you like the CCRC concept, you'll need to plan well in advance. Waiting lists of three to five years are not unusual, so use that time to research your options. Once you settle on a location or two, you can find CCRCs by checking with the local Area Agency on Aging. A nonprofit organization called the Continuing Care Accreditation Commission (www.carf.org) certifies a few hundred communities, but accreditation is voluntary. Many nonprofit CCRCs are members of the American Association of Homes and Services for the Aging (www.aahsa.org).

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With all this complexity, prospective residents should consider the following issues.

Investigate fees. Find out how much of your entry fee is refundable if you move or die. In some cases, you or your heirs may not get the money back until the management company re-rents the unit. If the CCRC operates on a fee-for-service basis, inquire about the charges for each level of care.

To get an idea of the expected yearly increase, find out how much fees have gone up in recent years. Many CCRCs include at least one meal a day in their dining rooms, but you should check. Have your lawyer or financial adviser review the documents before you sign anything.

If you have long-term-care insurance, you may be able to use those benefits to pay for home care, assisted living or a nursing-home stay. Check with the CCRC and your insurer to see what the policy will pay for.

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Understand the disadvantages. Because you're not buying your unit, you can't benefit from any real estate appreciation. In addition, you get no deduction for real estate taxes or mortgage-interest payments, although you might be able to deduct part of your fees as a medical expense. Also, you will earn no interest while the company holds your money. "I would not encourage people to look at it as an investment," says L. Andrew Morgan, director of sales and marketing at Asbury. "It is a way to maintain a lifestyle as you age."

Check out the management company. Obtain its financial history, and ask how long it's been around. To find out if a publicly traded company is stable, look over its financial statements, which you can usually find on a company's Web site. If it's a nonprofit, review its annual report.

Except for a few states, such as California, the government doesn't regulate CCRCs. But their nursing units, like all nursing homes, are regulated. In many states, so are their assisted-living facilities. You can check up on nursing homes through Nursing Home Compare (www.medicare.gov, click "Compare Nursing Homes in Your Area").

Visit facilities. The continuing-care features are what set CCRCs apart from other retirement communities. But marketers often downplay these services because they prefer to sell to younger, healthier people. And consumers often avoid the subject. "We didn't think about it that much," Warren Ebinger says.

But access to this higher level of care is a big reason you're paying those hefty fees. Take a look at the nursing and assisted-living units. Are the residents up and dressed, or languishing in bed? Ask about staff turnover, and the number of aides per patient. Also, see if the facilities are equipped to care for patients with Alzheimer's disease.

Ask the CCRC what happens if there is no available assisted-living or nursing-home bed when you need one. Will it find a bed with an outside provider? If you need home care, will the CCRC make arrangements with an outside agency? At Riderwood, there's an in-house home-care service.

Make sure the dining room can handle any dietary restrictions. And while you may be able to drive now, what happens when you can't? Will the CCRC help you get to doctor appointments, or arrange to take you shopping or even to the movies? Are these services included in your basic fees or priced separately?

Perhaps most important, be sure you are comfortable with the environment and lifestyle. Before you sign on, ask to eat some meals in the dining room, use the health club, or attend some lectures or classes. And spend some time with the residents. After all, they'll be your neighbors for many years to come.

EDITOR'S NOTE: This article was originally published in the December 2006 issue of Kiplinger's Retirement Report. To order a subscription, click here.