Why Thousands of Older Adults May Be Forced Out of Their ‘Forever’ Homes | Global News Avenue

At least 16 continuing care retirement communities (CCRCs) have filed for bankruptcy since 2020, putting thousands of seniors at risk of losing their six-figure savings and homes. While these facilities promise lifelong care, with admission fees ranging from $200,000 to more than $1 million, complex financial structures and inadequate oversight are part of an increasingly unstable system.

The good news is that there are some important warning signs you can look out for and take the necessary steps before choosing a CCRC.

What are CCRCs and how do they work?

CCRC is designed for retiree. The minimum age range for residents is 55 to early 60s, but most residents are in their 70s to early 80s. The CCRC provides a full range of care as residents age. They have independent living units, assisted living facilities and nursing homes. They offer amenities such as dining, housekeeping, and social activities.

Residents, who typically enter when they are relatively healthy, pay admission fees ranging from $200,000 to more than $1 million, plus thousands more in monthly fees. They can choose from three contract types:

• Type A (life care): Offers unlimited assisted living and nursing services at no additional cost
• Type B (modified): Provide a fixed set of services within a specified period of time
• Category C (fee-for-service): Additional care fees are paid separately at market prices.

Financial crisis of some CCRCs

CCRC bankruptcies were caused by rising operating costs, labor shortages and rising wages. Experts say some CCRC operators do not retain enough funds to meet their long-term care commitments, instead using new residents’ deposits and tax-exempt bonds to meet existing obligations, creating potentially unstable financial structures.

The fees residents pay have not always kept pace with rising CCRC costs. Because many CCRC operators also offer refundable admission fee programs at higher prices, this means that when residents choose a refund, some operators don’t have the money to pay.

What happens when CCRC fails

When a CCRC declares bankruptcy, residents face two major risks. First, they may lose their entrance fee deposit because residents are considered unsecured creditor And be last in line waiting for repayment. Second, they may face the possibility of being evicted from their homes.

How to assess the financial health of a CCRC

Before implementing a CCRC, experts recommend checking the following key financial indicators:

• days cash on hand: Look for at least 120 to 200 days of operating cash reserves.
• operating income: Look for facilities that maintain operating income within 5% to 10% of expenses.
• Occupancy rate: Check if the ratio is higher than 90%. Sustained low occupancy rates may signal financial difficulties.
• Bond Ratings and Debt: Review the agency’s municipal bond disclosures and Debt ratio (if applicable). Its cash should cover at least 40% of outstanding debt.

Experts also make the following recommendations:

• Request annual financial reports and state filings.
• consult financial advisor Be familiar with the CCRC contract.
• An elder law attorney should also review all contracts.
• Review long-term capital improvement plans and maintenance plans.
• Verify the facility’s history of paying admission fee refunds.

bottom line

While many CCRCs operate successfully and provide valuable services to seniors, the risks are too great to skip proper due diligence – and there have been too many poorly managed CCRCs in recent years to not do so.

Before committing a large sum of money to one of these communities, work with a qualified professional to thoroughly examine the facility’s financial status.