Mark A. Hebert's Money Sense: Choosing a continuing-care retirement community

Some retirees are questioning where they should live as they age. Continuing Care Retirement Communities (CCRC) are one option. These are campuses that often appeal to people who are currently in good health but believe they might need care later on.

Typically, the CCRC and the resident sign a contract that guarantees that the CCRC will provide housing and assisted living/nursing home care throughout the resident's life. In exchange, the resident pays an entrance and monthly fee. When the resident dies, the entrance fee might be retained by the CCRC. The apartment is then assigned to someone else.

If you are considering such a community, here are a few items to consider:

First is the type of contact. An extensive agreement is usually the most expensive. It will provide services such as housing, amenities and unlimited health-related care.

A modified agreement will include the same coverage as the extensive agreement, except that at a certain point the resident must pay for additional health or long-term care services.

A fee-for-service agreement offers little certainty when it comes to health-care costs. Health services might be guaranteed but at a cost to the resident.

Then there is a rental agreement, which allows the resident to rent housing. This option, however, does not guarantee health-related services.

The bottom line here is to pay attention to entrance fees, monthly fees, insurance requirements, facilities, medical care and the financial condition of the CCRC. Read the contract carefully and, as with any contract, discuss it with your attorney. The contract is a legal document. We have already mentioned entrance fees. It's necessary to understand if, and when, the fee is refundable.

A CCRC will usually charge a monthly service or rental fee. Determine if these are fixed and, if not, how and when they are adjusted. Question what the monthly fee includes. When planning for this, make sure to consider the possibility of increasing fees.

A CCRC may require you to have insurance to cover the health care costs. This could take the form of long-term health care, Medigap or Medicare Part B.

It is important to see what happens if a spouse or partner needs a different level of care. Can they continue to live in the same place?

The last step is to review the CCRC's financial condition. A resident might live at the facility for a long time, so the CCRC needs to be in top financial shape. Review the facility's projected revenue and costs for a few years out. See if the records are examined by an outside party. Are there audited financial statements? Is there a large amount of debt? Do liabilities exceed assets? How long has the company been in business? Have other CCRCs that the company operates been in business for a long time? Are other residents happy with the fees and service? Are many apartments vacant and is there a future funding shortage? Some of these facilities have become insolvent, so do some homework.

As part of the review, inspect the facilities. Are they clean? Do they meet your needs? Are they safe? Is there handicapped access? How secure is the facility? Have a meal in the dining room. Check if transportation and community activities are available.

Also, make sure the medical care facilities, if provided, are going to meet your standards. Find out who decides when a resident moves from an apartment and into a different level of care.

Contact the state in which the CCRC is located to see what the licensing rules are, what needs to be disclosed to consumers, and what other protections might be available just in case something goes wrong.

Marc A. Hebert, MS, CFP, is a senior member and president of the wealth management and financial planning firm The Harbor Group of Bedford. Email questions to Marc at Your question and his response might appear in a future column.