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Should You Consider a Continuing Care Retirement Community?

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Retirement can bring about many changes. Deciding where you should live is usually a major retirement decision as well as a major expense to plan for. In the U.S., housing in retirement is one of the top three retirement expenses. (Healthcare and, surprisingly, transportation are the other two.) The home you shared with your family for many years may no longer fit your needs or your budget. However, you should carefully consider your housing options before pulling up stakes.

retirement community

Summary and Takeaways

For most people, one of the biggest retirement decisions is your selection of where to live, and the living expenses involved. In the U.S., for example, housing in retirement is one of the top three retirement expenses. One option is a Continuing Care Retirement Communities (CCRC). These are popular because they offer maintenance-free housing and lifestyle amenities, plus they may offer a contract for health care services. That may allow you the freedom and flexibility to enjoy independent living – with the option for greater assistance or nursing care if and when you require it.

Key Takeaways

  • You can choose between CCRCs specifically designed for independent living, assisted living, skilled nursing, or dementia care.
  • Some offer multiple levels of care within the same community, so if your needs change you don’t have to be uprooted and move to a different CCRC.
  • There are also a variety of contracts and options for services available in the continuing care industry. The costs can vary widely, based on the quality of care and types of services provided. 
  • It is important to anticipate your needs, check references, and carefully compare what each CCRC has to offer and how much it will cost. Before signing any contracts, always consult a qualified attorney.

One of the many housing choices for seniors are Continuing Care Retirement Communities (commonly referred to as CCRCs). During the COVID-19 pandemic they may have lost a little bit of their appeal due to limiting visitors. However, there are approximately 1,900 Continuing Care Retirement Communities in the United States, and they continue to be a relevant choice for housing in retirement.

CCRCs, or life care communities as they are sometimes called, offer maintenance-free housing and lifestyle amenities with a contract for health care services. The goal of these communities is to allow residents to age in place.  CCRCs offer an appealing option for independent seniors who want to enjoy an active, community lifestyle while preparing for the future. They provide different housing options and levels of care on a single property. Most include:

  • Independent Living – This care level is geared to the independent senior. It may include an abundance of amenities such as meal plans, housekeeping services, organized social activities, wellness programs, transportation, library, and beauty salon/barber services.
  • Assisted Living – This care level is for people who need assistance with the activities of daily living (or ADLs), which are routine activities that people tend to do every day (such as bathing, dressing, eating, etc.). Assisted living services bridge the gap between independent living and skilled nursing facilities. Residents who need assisted living care are not able to live by themselves. However, they do not require constant care, either.
  • Skilled Nursing – This care level provides higher levels of medical care for persons who are unable to perform ADLs without assistance. Skilled nursing is sometimes used for acute short stays after a hospitalization. However, it can be used long-term as well.
  • Memory Care – This type of care provides a secure environment with staff that has additional training in caring for persons with dementia.
contracts

Understanding the various types of contracts offered by a continuing care retirement community is an important financial consideration.  There is usually an entrance fee plus a detailed contract that spells out the services provided by the community. How much you get for your money will depend on the range and quality of facilities and services the CCRC offers as well as the type of contract you sign. The four common types of contracts are:

  • Extensive Agreement – An extensive agreement (also called a “life care” agreement) is typically the most expensive type of contract and includes housing service, amenities, and unlimited health-related services (including assisted living and long-term care services).
  • Modified Agreement – A modified agreement includes the same coverage as the extensive agreement, except that only a specified amount of healthcare or long-term care services are provided. This type of agreement is typically less expensive than the extensive agreement because the resident must shoulder some of the risk of future long-term care costs.
  • Fee-for-Service – A fee-for-service agreement is far less expensive than either the extensive or modified agreement but offers little security when it comes to healthcare costs. Healthcare costs or long-term care services may be guaranteed but the resident will need to pay for them out-of-pocket.
  • Rental – A rental agreement allows residents to rent housing but does not guaranteed health-related services.

Some additional considerations are finding out how much the fees have increased over the last few years, for what reasons, and how much notification is given. What happens if a resident can no longer cover their monthly fees? What happens if a resident wants to leave after a month, year, or several years? Is a portion of the entrance fee refunded to the estate after the resident passes away?

Exact figures for CCRCs are hard to come by. Assisted living and nursing home cost are published annually, but since there are so many variables to CCRCs there is not much published about prices. However, the entrance fee for an extensive agreement can range between $160,000 to $500,000 or more depending on the type of housing you choose. Monthly rates can run between $2,500 to $5,000.

Once you have determined your needs and decide a CCRC may be a good choice for your retirement housing, it is important to evaluate your options before settling.  The list below can serve as a guide.

  1. Make a list of the communities you are interested in visiting.  It is a good idea to visit a community at least a few times to get a feel for the environment. The first visit should be scheduled with someone at the community who can answer your questions and give you a tour.  The second visit should be unannounced, preferably in the evening or on a weekend. This will give you a second perspective of the community.
  2. Get references. One of the best ways to evaluate a facility is to talk with its current residents as well as professional in the community.
  3. Involve loved ones. Input from family and friends is important to the success of any transition.
  4. Consider ancillary services that may make your transition smoother. For example, Geriatric Case Managers, Medical Social Workers, and Certified Caregivers are experienced in this area.
  5. Facilities that are licensed by the state (such as skilled nursing facilities) should be checked for deficiencies. Ask to see the most recent inspection reports.
  6. Determine which level of care and contract options best suit your personal circumstances.
  7. Before signing a contract, have your attorney review it.

For many seniors, it comes down to figuring out their monthly expenses while living on their own and comparing them to the costs and benefits of moving to a continuing care retirement community.

Possible U.S. Tax Changes for Snowbirds

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tax-blockA sweeping GOP victory has led to both houses of the U.S. Congress being controlled by Republicans. American voters also chose Republican governors in a majority of states. How do these and other recent changes affect snowbirds?

First, there is the so-called “snowbird visa,” which has been held up in the current Senate after passing the House. The new GOP majority could revive the Act, titled Encouraging Canadian Tourism to the United States, which proposes to let Canadians who meet age and residence tests stay in the U.S. for up to 240 days within a calendar year.

Second, three U.S. senators are encouraging closing the border permanently to those who renounce U.S. citizenship.

Third, while it is not likely that the new leadership will call for a change in personal income tax, it will probably address corporate tax avoidance.

However, even before the elections, the IRS announced inflation adjustments for income, gift, estate and expatriation taxes. These affect more than 40 tax provisions. A few of the notable changes include: the tax rate on singles and married couples; standard and itemized deductions; exemptions and Alternative Minimum Tax. Chances are, even before the newly elected officials take office, these and other IRS-mandated changes will have an impact on your taxes, as well as your short- and long-term financial planning.

Travel Insurance Between Canada and the U.S.

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Do You Need It?
For our Canadian and U.S. clients, cross-border travel includes an array of possibilities, from a weekly commitment to the rare excursion. The question is: do you need travel insurance? In this article, we look at considerations that keep your best interests in mind.

Many of Cardinal Point’s clients enjoy the best of two worlds. Whether travel is for business, pleasure, or annual snowbird getaway, our clients frequently make the trip across the U.S.-Canada border and have the process down pat: pack your bags, book your flights and keep track of the days spent in each country. But how much consideration have you given to travel insurance? It’s not just for cancelled flights anymore. Travel insurance covers a range of situations from a last-minute change of plans to, in the worst-case scenario, a medical emergency away from home. Here’s the good news: you may already have coverage through your insurer or even your credit card company.

Let’s begin with the trip itself. If you are traveling by airline, it’s tempting to rush through the online booking process in order to secure the best price—and your seat of choice. Take the time to review cancellation policies. If the small print is burdensome, call the airline directly. The moment you are ready to hit the “purchase ticket” button is the time that airline representative are trained to provide you with all the information you need to make that decision. Depending on how and from whom you purchase your tickets, cancellation policies may vary, even for the same flight. If there is a chance you will need to change plans at the last minute, be sure that you will not be forced to purchase tickets for an entirely new itinerary.

Are you planning to drive across the border? Check with your auto insurance provider about international coverage. For your peace of mind and safety, it’s good to know the extent of your liability in case of an accident. Further, some automotive policies that cover theft in your home country do not extend to international travel. The good news is: your homeowner policy may cover items that are in your vehicle when you travel. Getting the details can be as simple as a telephone call.

While you are across the border—either north our south—medical insurance coverage is critically important. As the saying goes, “An ounce of prevention….” In the case of health insurance, whether in Canada or the United States, plan ahead to prevent excessive costs for anything from a sprained ankle to a medical emergency. First, check with your insurance policy to determine coverage. If your plan does not cover international travel, consider purchasing insurance for the duration of your trip. The peace of mind this affords is well worth the investment of time and money.

Finally, look for opportunities to save by finding out what coverage you already have. Many credit card providers offer insurance for parts of your trip booked and paid for by their card. Again, a telephone call or online request can clarify what is covered for you and your family.

Whether you travel on a schedule or “on the fly,” researching your insurance options ahead of time will allow you the opportunity to enjoy your journey.

The IRS Offshore Voluntary Disclosure Plan (OVDP) Expands Eligibility for Streamlined Version

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The IRS has recently expanded the eligibility requirements for streamlined OVDP. If you are a U.S. taxpayer with offshore accounts, the streamlined procedures could be beneficial for you, with some penalties waived.

To qualify for the streamlined procedures, you must certify that your conduct (not having reported foreign accounts) was “non-willful.” The IRS defines “non-willful” as negligent, inadvertent or due to a misunderstanding of the law.

Is this an opportunity to come into compliance in an organized, timely manner or, as is asked in this Forbes column, is it the government’s attempt “to entice unsuspecting taxpayers into placing their head onto the FBAR chopping block?”

Read the full article here.

With Clock Ticking On FATCA, Financial Firms Brace For Headaches

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The clock is ticking down for financial institutions as the Foreign Account Tax Compliance Act (FATCA) takes effect this July. With three months to go until implementation, firms face significant logistical challenges to comply with FACTA. Compliance executives at this week’s OpRisk North America conference point to the challenge for multinational banks with legal entities in various jurisdictions, each with their own reporting requirements under FACTA. Intergovernmental agencies like the IRS are only adding to the challenge. The IRS has been slow to provide clear guidance, and other organizations worldwide look to the IRS to set the pace. Read the full article here.