News article headlines often grab my attention when they talk about seniors, particularly those who lose their hard-earned income. Recently, Dan Mariaschin, B’nai B’rith’s chief executive officer knocked on my office door to show me an article about Continuing Care Retirement Communities (CCRCs) going bankrupt and its impact on older adults. Admittingly, this is not something that I have previously thought about, though, this article grabbed my attention.

CCRCs are facilities that offer different levels of care, ranging from independent and assisted living to nursing home care. Entrance fees for these types of facilities often are between $200,000 to $1,000,000. On top of that, there are expensive monthly fees associated with being a resident.  However, when a resident passes away or moves, they or their estate receive a percentage of the entrance fee back. LeadingAge reported that there are about 1,900 CCRCs in this country, assisting about 900,000 people.

Unfortunately, the CCRC model has become problematic for some seniors. According to Bloomberg, since 2020, 16 CCRCs have filed for bankruptcy. These properties have run into trouble for a variety of reasons, such as the pandemic, increased costs, higher salaries and labor shortages. In addition, building reserves for replacement accounts are falling short, making the financial problems more troubling.

A CCRC facility declaring bankruptcy can be devasting for the residents. Firstly, where are seniors supposed to live if they are kicked out of their homes?  These facilities cater to seniors on lots of different levels including community dining, design features geared towards older adults and varied levels of care for residents. That’s why older adults who can afford it move to these facilities.

Now you might be asking “why don’t residents just move into another CCRC?” When a facility declares bankruptcy, there is no guarantee that residents will be refunded their entrance fee. Consequently, many residents won’t have the finances required for another CCRC property. Moving in with family is just not a viable option for some seniors, which is why many rely on these retirement communities.

In December, Bloomberg reported on Bob and Sandy Curtis, who spent $840,000 upfront to reside in a CCRC facility in New York. The agreement with the building stipulated that they or their heirs would receive 90% of the entrance fee back upon moving out, unless the building declared bankruptcy.  If the couple were required to move, Sandy, who has dementia, would require $12,000 to $19,000 a month for care. Plus, Bob’s housing would cost another $8,000 a month, making the loss of their entrance fee on top of everything else a huge financial burden.

There is a push for more oversight to ensure financial security of these properties, while the CCRC industry believes this will make operating a facility more expensive and less affordable for residents. Prospective residents should research a facilities’ financial condition before moving into the building. Seniors living in CCRCs want to avoid the unpleasant decisions that come with having to move out of their community. A CCRC facility can be a great residence for older adults; let’s just hope it remains a viable option in the future.

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Evan Carmen, Esq. is the Legislative Director for Aging Policy at the B’nai B’rith International Center for Senior Services. Click here to read more from Evan Carmen.