Most Continuing Care Retirement Communities (CCRCs) not only offer life-care contracts, but also “modified” and “fee for service” contracts. Residents, in exchange for a one-time initial entrance fee and monthly service fee, are guaranteed a lifetime of housing, supportive and health care services for the rest of their lives. The entrance and monthly service fees vary depending on the type of contract a person executes with the CCRC.
There are primarily three types of CCRC contracts:
- Extensive or “life-care” contract: Residents receive full health care benefits for as long as they need them, without paying additional fees for health care or experiencing substantial increases in their monthly service fee other than normal cost-of-living adjustments.
- Modified contract: Residents may receive a specified number or limited amount of health care (e.g., a certain number of days) at no additional charge; however, once they’ve gone beyond the specified amount of care, additional fees are incurred. Another form of modified contract may involve the resident receiving health care services at discounted rates (e.g., 10 percent off the current daily skilled nursing rate).
- Fee for service or “rental” contract: Residents are responsible for all costs of additional health care services, as needed.
Because of the life-care concept and its provisions, people who want to live in a CCRC must meet certain physical and financial requirements. Prospective residents must be able to function independently at the time of their admission and demonstrate the financial resources to meet the CCRC’s initial and monthly fee requirements.
Now let me expound upon what I’ve been hearing and seeing recently in the industry. A CCRC, for the most part, is an option that requires a significant upfront financial investment, which many Americans cannot afford to pay. With 78 million baby boomers beginning to retire this year, many senior housing and care companies are recognizing the overwhelming need for more affordable senior housing options. What I’m seeing is a focused shift toward developing more affordable independent living units complete with supportive services and senior-friendly design features that allow its residents to remain independent and age in place for a longer period of time.
Affordable senior housing with supportive services is a key component to our nation’s long-term care continuum. The US Department of Housing and Urban Development (HUD) Section 202 Supportive Housing for the Elderly Program funds affordable housing for low-income seniors and enables seniors to age in place with the help of supportive, community-based services. Today there are over 300,000 Section 202 units throughout the United States and an estimated ten seniors that are waiting for each Section 202 unit that becomes available. The demographics show that this demand for senior housing will increase at an incredibly high rate over the next couple of decades. On January 1, 2011, as baby boomers begin to celebrate their 65th birthdays, 10,000 people will turn 65 every day and this will continue for 20 years. With the population of persons age 85 and over expected to increase by 20 percent to 7.1 million by 2020 (this is less than 10 years for now, mind you), the overwhelming demand for this type of housing is evident.
The problem is many of the existing affordable housing units were built in the late 1960s and early 1970s. These accommodations were originally designed for seniors in their 60s and early 70s. Today these units are occupied by older, frailer seniors who are oftentimes well into their 80s and even 90s. These living units lack many of the state-of-the-art senior-friendly design features that make these accommodations safer and more comfortable for an aging adult. These features are key components to helping our seniors maintain their independence for a longer period of time and providing them a better quality of life. Some of these senior-friendly design features include overall building designs that are completely stair-free, wider doorways and hallways for better accessibility, the location of countertops, cabinets and shelving at lower heights for easier accessibility, drawers instead of kitchen cabinets to hold pots and pans for easier access, lever handles on doors, cabinets and faucets instead of knobs for ease of use and shower stalls with molded pull down seats instead of tubs to help prevent frequency of falls.
With Medicaid costs already straining state budgets across the nation, it’s going to be incredibly important for our state governments to work together and collaborate with experienced developers and operators of senior housing and care communities to both increase the number of new, state-of-the-art, affordable senior housing units as well as offer incentives to preserve, renovate and retrofit the existing senior housing units. They’ll also need to support and fund community-based services that support our seniors and allow them to age in place and stay out of nursing homes. The public and private sectors both recognize the tremendous value and benefit of collaboration here to meet the tremendous demand that lies ahead. The opportunity cost for all involved is too great to ignore.
Editor’s Note: Mike Campbell’s new book When Mom and Dad Need Help was recently selected as a finalist for the ForeWord Reviews’ 2010 Book of the Year Awards in the Family and Relationships category (www.bookoftheyearawards.com/finalists/2010/category/family-and-relationships/).