CCRC Retirement Communities and the Benefits of an Entry Fee

It may seem counterintuitive, but entrance fees can ultimately make retirement communities more affordable—and provide greater predictability.

The entrance fee is a sum of money paid upfront to secure a place in the community. This upfront investment can actually lower your monthly fee, which covers services such as maintenance, cleaning and transportation.

Entrance fees at continuing care retirement communities (CCRC) cover the entire continuum of care, so healthy and active seniors can enter the community as part of residential living and, if necessary, move through more advanced levels of care without having to relocate to another community.

“People who are planners want security and peace of mind,” says Robbi Hogan, director of sales at Redwood Terrace. “They want to be a part of a community for the rest of their lives. In a month-to-month, it can be a revolving door of people moving in and out. There’s a sense of stability in an entrance fee community.” 

How Entrance Fees Work 

Seniors typically encounter two types of entrance fees:

• Non-refundable entrance fees carry a smaller price tag, but they generally do not allow money to be returned to a senior or his or her family in the event of a move or death after five years of living in the community.

• Refundable entrance fees are higher in cost, but at least 75 percent of the fee can be returned upon a senior moving or passing away.

At HumanGood communities, refundable plans come with a roughly 60 percent price premium, but they allow for estate planning, says Daniel S. Ogus, executive vice president and chief operating officer of HumanGood.

“Refundable plans are there if you want to make sure there’s something left for your heirs,” Ogus says. 

The Right Price

Whether refundable or non-refundable, entrance fees are based on apartment size, location, view and other residence-specific amenities. Paying more up front lowers your monthly fees if you move up to assisted living, skilled nursing or memory care.

Incoming residents generally pay entrance and monthly fees through a combination of savings, income from investments and pension or retirement plans, and proceeds from the sale of a home. Residents do not pay property taxes on their community apartments, and they also qualify for sizable tax breaks on portions of their entrance and monthly fees in retirement communities that provide health care services.

Contrary to what many may think, living in a community with an entrance fee is affordable for almost anyone who’s owned a home, Ogus says. But seniors who choose a continuing care community before they need a higher level of care experience the greatest financial benefits.

Some seniors deemed financially qualified to live in a continuing care community still worry about depleting their assets. So, be sure to ask if the community has a benevolence plan. Many communities owned and operated by nonprofits like HumanGood provide financial assistance to residents who need it.