A Continuing Care Facility (CCF), often known as a Continuing Care Retirement Community (CCRC), is a residential option that offers multiple levels of care on a single campus, allowing residents to age in place by transitioning seamlessly from independent living to assisted living or skilled nursing care as their needs change. While the promise of lifetime care and security is appealing, prospective residents must understand the significant and complex drawbacks associated with this model. The most considerable challenges involve the financial commitment, the quality of care delivery, and the facility’s own economic stability.
Understanding the High Cost and Contract Complexity
The single most common barrier to entry and a major drawback of many CCRCs is the substantial financial burden, beginning with a large upfront entry fee. This fee, which can range from hundreds of thousands of dollars to over a million, is essentially a pre-payment for future healthcare services and a means for the facility to fund its operations. While many residents view this fee as an asset, its “refundable” status is often conditional, sometimes dependent on the community reselling the unit after the resident leaves or passes away.
This financial structure is further complicated by the three primary contract types offered, making comparison shopping difficult for consumers. The Type A, or Life-Care, contract requires the highest entry and monthly fees but offers unlimited assisted living and skilled nursing care with little to no increase in the monthly rate. This type is essentially an embedded insurance product that pre-pays for future care.
The Type B, or Modified, contract features a lower entry fee but offers only a limited number of discounted days of higher-level care, after which the resident pays a higher rate. Conversely, the Type C, or Fee-for-Service, contract requires the lowest initial fees but mandates that the resident pay the prevailing market rate for all assisted living or skilled nursing services. These complex contracts lock a resident into a single provider, making it difficult to move if they become dissatisfied with the community or services.
The risk of losing the entry fee is considerable, particularly if a resident must move out early due to dissatisfaction or unexpected health changes the facility cannot accommodate. Even if a percentage of the fee is technically refundable, the contract may stipulate that repayment is not due until the unit is occupied by a new resident. This condition can leave former residents or their estates waiting years for the return of a significant portion of their life savings, turning the “refundable” fee into an illiquid asset.
Potential Gaps in Future Care Delivery
The promise of “continuing care” can be undermined by operational realities, particularly concerning staffing and service continuity. High staff turnover is a pervasive issue across the senior living industry, and CCRCs are not immune, particularly in the skilled nursing and assisted living components. For direct care roles like Certified Nursing Assistants (CNAs), turnover rates can reach 50% in some areas, severely disrupting the consistency of resident support.
The frequent rotation of caregivers means that new staff members may lack familiarity with a resident’s specific medical history, preferences, and long-term care plan. This lack of continuity can lead to lower patient satisfaction and is statistically associated with poorer health outcomes. Residents may have to repeatedly build trust with new personnel, which is especially taxing for those with cognitive impairments.
Furthermore, the transition between levels of care, the core benefit of a CCRC, is not always seamless or guaranteed. A facility may experience a lack of capacity in its skilled nursing wing, leading to unexpected wait times for a resident needing to move from independent living. In some situations, the community may determine that a resident’s complex medical needs exceed their internal capacity, requiring the resident to relocate to an outside facility despite the original contract’s promise.
The Risk of Facility Financial Instability
Another significant drawback is the financial instability risk inherent in the CCRC business model, which can jeopardize a resident’s promised lifetime care. Unlike traditional insurance products, the embedded long-term care “insurance” component of CCRC contracts is often inadequately underwritten and is not federally regulated. This lack of robust oversight means many operators may be under-reserved for their future obligations to residents.
This systemic vulnerability has led to instances of financial distress, with a number of CCRCs filing for bankruptcy in recent years. When a facility enters bankruptcy, the resident’s position is highly precarious, as they are generally not prioritized as secured creditors. Former residents or their estates waiting for a refundable entry fee are often relegated to the status of unsecured creditors, meaning there is no guarantee they will recover the money owed to them.
The facility’s financial health is often dependent on maintaining high occupancy and a steady influx of new entry fees to service its debt obligations. Residents are advised to review a CCRC’s annual financial statements and occupancy rates carefully, as low numbers can signal an increased risk of financial difficulties. Ultimately, the potential for a facility to default on its debt leaves residents vulnerable to losing their home, their substantial entry fee, and their guaranteed future care.