Yahoo News: Carolina Continuing Care Consultants’ President, Brad Breeding, quoted in Kiplinger Magazine of Personal Finance. Click Here: Yahoo News Press Release

In the wake of the Senate Hearing on CCRC’s articles continue to come out weekly about the importance of making sure you understand the details before entering a CCRC. (This is what we have been saying!) These communities are wonderful places and the residents we talk to are very happy. We recently heard a new resident of a local CCRC tell us that she felt “liberated.” But, as we have been saying for quite some time- and as the Senate Special Committee on Aging is starting to recognize- there are some risk involved and prospective residents need to be aware of what they are. Here is a link to a recent article on NewJerseyNews Room.Com: Retirement Communities: Baby Boomers Should Go Slowly

We at Carolina Continuing Care Consultants have done the research. We have asked the questions you need to ask. We have compared financial statements of the area communities. Using this information we are prepared to serve as YOUR resource for in-depth and objective information about CCRC’s and other retirement communities.

This past month the U.S. Senate Special Committee on Aging held a hearing called “Continuing Care Retirement Communities: Secure Retirement of Risky Investment.” During this hearing Senator Franken (D-MN) said, “…but it’s critical that seniors have access to all the information they need to decide whether a CCRC is right for them.” Here is a link to video of the full hearing: http://www.aging.senate.gov/

Great new article out in Kiplingers September issue about the latest in CCRC’s: “On Sale: Retirement Havens.” I was honored to have been quoted in the article, which you can read here.

Choosing a CCRC or other retirement community is a big decision. At Carolina Continuing Care Consultants we are here to help by reducing time, effort, and confusion and providing you with the tools to make the best decision!

In my conversations with people about Continuing Care Retirement Communities it often becomes apparent to rather quickly that many people are not entirely clear on the difference between a CCRC and an assisted living community or other type of long-term care facility. Therefore I thought a quick post to address the confusion might be helpful.

The main thing that distinguishes a CCRC from other types of long-term care communities is that a CCRC embraces the “continuum of care” concept. This means that ta person will typically enter a CCRC while still healthy and active and, in exchange for a fee, will be guaranteed by the community that the appropriate level of care will be provided in the future as the resident’s lifestyle and care needs change.

A non-CCRC community will often provide the sames levels of care but without a guarantee that the care will be available to you and without accepting pre-payment for future care needs.

CCRC’s are a viable retirement option for “Baby Boomers.” There are several things that have changed the face of retirement communities over the years and have helped to create a growing demand for CCRC’s. For more information, see our recent article in the December 2009 issue of Raleigh’s Midtown Magazine: http://www.carolinacontinuingcare.com/inc/files/editor/files/Midtown.pdf

There is a nice article in today’s issue of the Raleigh-based News and Observer, written by David Bracken, that presents a clear and concise explanation of the development progress being made by a couple of the new CCRC’s in the Raleigh-Cary region. (http://www.newsobserver.com/business/story/233786.html?story_link=email_msg) The article speaks briefly to the requirements that the state of North Carolina has in place for non-profit versus for-profit CCRC’s, as it relates to percentage of units that must be under contract before construction can begin. It also talks a little bit about how debt service for development will be covered, which is a very important aspect when considering the mid-long term financial stability of a community. Finally, Mr. Bracken mentions the refund options offered by the communities. Refund options are a big selling point for many CCRC’s but may not always be the right choice. Everyone’s situation is different and it is important to consider different aspects before determining if a if a refund option is best for you. For more information visit our website at www.carolinacontinuingcare.com or send us an email at info@carolinacontinuingcare.com.

People often wonder where to turn for information about Continuing Care Retirement Communities. There are many resources but the problem is getting below the surface level stuff. Gathering information will only help so much because what is right for one person may not be right for another person. Like any other big decision in life, it really comes down gaining an understanding of the issues and then planning appropriately. You have to be able to sort through the maze of details and apply them to your unique situation. Simply visiting communities and reading marketing materials does not constitute proper planning. It is important to understand the details and contracts, and how they vary from one community to another, and begin real planning to determine which type of community is ultimately best for you and your family.  At Carolina Continuing Care Planning we use our depth of knowledge and research to help people plan appropriately.

People often ask me, “What is the best way to compare CCRC’s?” Since this appears to be a popular question I think the answer merits a post on this blog.

First and foremost, it is extremely difficult to use a single formula or measure to compare CCRC’s. For example, the contracts, fee structures, amenities, health care, and financials can differ drastically from one community to another. In fact, many communities offer multiple contracts and fee structures to choose from within their own community so this makes an apples-to-apples comparison among different continuing care retirement communities even more difficult.

Let’s suppose for a minute that it was possible to prepare a side-by-side comparison that somehow incorporates all of the details of the different CCRC’s. Until you understand all of the specifics, and more importantly, how the specifics would apply to your personal situation, it wouldn’t be very helpful and could actually cause more harm than good.

Therefore, I recommend that you begin the CCRC research process not with a comparison of the communities but, instead, with a personal analysis of what you most desire out of a community. In other words, the process must begin with you! For instance, what do you most desire out of a community? Close your eyes and visualize it? Also ask what you DO NOT desire out of a community. These two questions alone can go a long ways. There are many other questions you need to ask of yourself before you will begin to paint a picture in your mind of the type of community that would be best for you.

Next, you will need to have a clear understanding of the inner workings of  contracts, fee structures, refund options, insurance, and the financial stability of the communities. This is an education process and is critical to choosing the right community.

Once you narrow it down to a few communities then you can begin to focus in on the communities. I wouldn’t describe this so much as a comparison as I would an in-depth analysis of each retirement community individually.  I have developed a four part process for my clients that will walk them through the important details of this stage.

In summary, choosing a CCRC is a very significant lifestyle and financial commitment. It is important to make sure your first choice of a community is the right choice. As with any other important life decision, there is an in-depth planning process that should be followed and the process must start with you.

I spoke with someone recently who is a resident of one of the Continuing Care Retirement Communities in our area (sometimes referred to as “CCRC’s” or “Life Care Communities”). I asked him why he chose  that particular community and he responded that it was because of a  golf package they offer with membership. I have to say that his answer caught me a bit off guard. Okay, I completely understand that for someone who really enjoys golf this is a nice benefit but surely there was  more to his decision, right?

A couple of weeks later I met with a local elder care attorney to tell her about our business and how we help people make the right decisions when it comes to choosing a CCRC. When I told her about the gentleman who said his decision was based on the golf benefits offered she quickly exclaimed, “What happens when he can’t play golf any longer?”

Her response was spot-on. As an elder law attorney she has seen what can happen when poor decisions are made or, perhaps, when a lack of thought and planning goes into making big life decisions. If you have ever visited a Continuing Care Retirement Community you know that most are very nice. I have heard them described as living at a country club or a resort hotel and they offer wonderful amenities. It is easy for a prospective resident to get caught up in these amenities, and all of the exquisiteness of the independent living stage, without thinking through the really important details that need to be considered.

Ultimately, the main purpose of the CCRC is, as the name implies, to provide continuing care as the resident progresses through stages of care. CCRC’s are unique from other retirement communities primarly because they operate under this “continuum of care concept.” Yet, it seems that very few prospective residents think about the care that will be available when they need it when, in fact, this is probably where most of the attention should be given.

Consider a situation where a couple moves in to a CCRC in their early 70’s. They are very active and still very healthy. However, 10 years later the husband begins developing dementia and the wife is no longer able to get around without assistance. At that point, the exquisite amenties will not matter nearly as much. What will matter is that the couple payed several hundred thousand dollars, plus monthly fees, to make sure the appropriate level of care would be there for them when they needed it most. Neither they, nor their adult children, would want anything less than the best level of care. If it turns out that the care provided is not what they hoped they may be stuck in a situation where they cannot move without losing their entire entrance fee.

Moving to a CCRC is a big decision. It is a significant financial and lifestyle commitment that is probably unique from any other decision you have ever made. Please be sure to do the appropriate research and think through the long-term aspects of your decision.If you desire to have professional guidance from a totally objective resource about the details you need to consider please contact us at 877-699-2272 or locally at 919-773-2386. You may also send an email to info@carolinacontinuingcare.com or visit our website at www.carolinacontinuingcare.com.

Whether you are a prospective resident of a Continuing Care Retirement Community (CCRC) or already a resident of one, the financial stability of the community should be well examined. After all, moving to a CCRC is a major financial and lifestyle commitment and it is important to know that the community will be there when you need it most.

The economic downturn has brought this issue to the forefront as evidenced by the recent Chapter 11 filing of a major CCRC developer out of Maryland, Erickson Retirement Communities. According to “The Bond Buyer” Erickson is the developer of 19 CCRC’s throughout the U.S. and at the time of filing had over $500 million of outstanding debt on various properties. Despite discussions and negotiations with its creditors Erickson was unable to reach an out-of-court agreement. http://www.bondbuyer.com/issues/118_203/Erickson-Retirement-Bankruptcy-1002845-1.html.

Like any other business you might give your money to it is important to do the appropriate research. Of course, there is ultimately no way to guarantee that your CCRC will always remain financially stable but there are a number of  things you can look for that will likely increase the odds that it will.

Before getting to a few helpful hints there are some things you should understand about CCRC finances in general. First, the accounting for CCRC’s is rather unique from that of most business. Many of the communities accept a large entrance fee up- front, although only a portion of it will be considered income in the first year while, the remainder will be considered deferred income.

Second, there are various types of contracts among communities and the accounting will be handled differently depending on the type of contract. (I will address these contracts in a future post.)

Finally, many communities offer refund options, which further confuses the process. These differences in contract types and refund options also makes it very difficult to do an “apples-to-apples” comparison of the finances among different communities.

Despite the type of contracts and refund options your community offers there are a few common things to look for as a starting point:

1. Does your state have minimum reserve requirement? In the state of North Carolina all Continuing Care Retirement Communities are regulated by the department of insurance, which has strict minimum reserve requirements that each community has to meet.

2. Is the continuing care retirement community a “mature community” or a start-up? A mature community is typically considered to have been in existence for 8 years or longer. A start-up community may be managed very well but it does not have a track record and will usually face financial challenges that many mature communities are not contending with. Also, although the actual community you are considering may be newly developed there is a chance it may be owned by a parent company that has been in business for decades.

3. Is the CCRC accredited? The Commission on Accreditation of Rehabilitation Facilities/Continuing Care Accreditation Commission (CARF/CCAC) represents the only accrediting body just for CCRC’s. The retirement communities have to apply for accreditation so if a community is not accredited it does not necessarily mean that it isn’t in good financial standing. Additionally, the finances of the community are only one aspect of the accreditation process. Nonetheless, the commuities that have acheived accreditation have met the financial requirements of CARF/CCAC, which are rather rigid.

4. Has the community or its bonds been rated by one of the major rating agencies such as S&P or Fitch? If the community has issued bonds for start-up or for planned additions the rating agencies will rate the bonds and the bond is an indication of the financial stability of the community. The CCRC itself may also request to be rated. An investment grade rating will be considered favorable, although start-up communities will likely not recieve an investment grade rating.

5. Are the management team and board of directors proficient with varying backgrounds and strong business experience? Ultimately these two groups will be making the major decisions that affect your retirement community so experience and background are important.

6. Is there a history of high occupancy rates? Be sure to find out what the rate of occupancy has been over the past 18 months or so. Has it been consistent or growing? Have there been major changes in occupancy rates? If so, why? Occupancy rates are a major factor in the financial stability of CCRC’s.

7. Is the community able to generate cash flow from profitable operations, without the benefit of new advance fees or does the community rely on advance entrance fees as part of operating cash flow? Also, is there a heavy dependence on ongoing fundraising support or philanthropic contributions to subsidize operations and debt service? The ability to generate cash flow from operations sufficient to cover debt service will add another layer of financial security for the CCRC.

There are many other factors to consider that fall outside of the level of detail that I want to get into in this post, including financial ratios and actuarial projections. There is also an additional set of issues to address for start-up communities. My opinion is that is almost impossible to cover every base when it comes to determining the financial soundness of a CCRC. There are many, many moving parts. But if you know several pf the key items to look for you can go a long way in doing your due diligence.

Several of the above items, among many others, are discussed in the Fitch Ratings publication: “Rating Guidelines For Non-Profit Continuing Care Retirement Communities,” which can be found at www.fitchratings.com. If you would like to discuss CCRC finances in more detail feel free to contact our office at 877-699-2272 or if local you may call 919-773-2386. Also feel free to contact us via email at info@carolinacontinuingcare.com.

Brad C. Breeding, President

Carolina Continuing Care Planning, LLC.