You may be considering a Continuing Care Retirement Community (CCRC) for yourself or for an elderly loved one. CCRCs offer a wide range of care and options that can increase over time. However, each of those increased levels of care increase the monthly cost of the CCRC. There is also an entry fee that can be quite sizable. Being able to fund a CCRC will take a fair amount of preparation and financial planning.

There are several ways that you can fund an entry fee for a CCRC. Here are a few of them.

 

The Entry Fee

Entry fees to a CCRC can be considerable, with some as high as one million dollars, but most are much less than that. These entry fees are collected and held in an escrow account. They can be used by the CCRC to cover costs that are not able to be covered by the resident under the terms of the contract with the CCRC.

If you choose to end your stay at the CCRC or have other reasons that you cannot continue with your contract, most communities will refund your entry fee to you, minus anything that was paid out of it.

 

Home Sale for CCRC Fees

One way to cover these fees are with the sale of a home. Your home is an excellent source of equity in a situation like this. Since you are going to be moving from your home to the CCRC, the sale of it should not have a large impact on you. The equity in your home, in this case, is better spent on your new home.

Using the money to cover these costs is a good idea, but there are some drawbacks. Money from the sale of a home used for these fees does not count for capital gains rollover. This means the fees will be taxed with the rest of the sale of the home.

 

The Sale of Assets

While it may not be encouraged by your financial advisor, you may be able to fund your entry fee by selling things like stocks or mutual funds that you currently own. Make sure to check your portfolio to see how this sale will impact your monthly dividend income. Putting yourself in a worse place on a monthly basis may not be worth it.

 

Medicaid Considerations

Since the fees for a CCRC are a large amount of money, you may be wondering if there is a relaxation of the Medicaid penalty when these fees are paid. Prior to 2006, these fees were not counted against the Medicaid assets penalty since they were not able to be accessed by the patient. The law has since changed, and these funds are now counted against your Medicaid assets.

Contact Elder Law Attorneys before Signing Any Contract

As always make sure to contact your elder law attorneys at Stano Law Firm before entering into any long term contract. For legal assistance in reviewing CCRC contracts or entry fee requirements, contact Stano Law Firm.