Choosing a Continuing Care Retirement Community (CCRC)

Choosing a CCRC: A Guide to Life Plan Communities

A Continuing Care Retirement Community — also known as a Life Plan Community — represents one of the most significant financial and lifestyle decisions a senior will ever make. The promise is compelling: move once, age in place through every stage of care, from independent living to skilled nursing, all within a single campus. But the financial structures are complex, the contracts are long, and the due diligence required is substantial.

This guide explains how CCRCs work, what types of contracts exist, and how to evaluate one properly.

What Is a CCRC?

A CCRC (Continuing Care Retirement Community) or Life Plan Community is a residential campus that provides multiple levels of care under one roof or within one community:

• Independent Living — For active seniors who want community amenities without requiring care
• Assisted Living — For seniors needing help with daily activities
• Memory Care — For residents with Alzheimer's or other dementias
• Skilled Nursing — For residents needing full-time medical oversight

The defining feature of a CCRC is the contractual commitment — residents typically pay a substantial entrance fee (often $150,000–$1,000,000+) in addition to monthly fees, in exchange for a guarantee of housing and care for life, regardless of changing care needs.

The Four CCRC Contract Types

Not all CCRCs are structured the same way. The contract type is one of the most important factors in evaluating a community.

Type A — Life Care / Extensive Contract The entrance fee and monthly fee cover all levels of care, including skilled nursing, at the same (or similar) monthly rate regardless of care level. This provides maximum financial predictability and the greatest protection against future care costs. Type A contracts are the most expensive but protect the resident's assets most comprehensively.

Type B — Modified Contract The entrance fee covers a defined number of days of skilled nursing care at the monthly fee rate, after which market rates apply. Offers partial protection at lower upfront cost than Type A.

Type C — Fee-for-Service Contract The entrance fee is typically lower, but skilled nursing and assisted living are billed at market rates when needed. Provides the least financial protection; residents bear the full cost risk of future care needs.

Type D — Rental Contract No entrance fee. Monthly fees at market rate. Maximum flexibility, minimum financial commitment. Common in communities that offer a CCRC-like continuum but without the traditional contract structure.

California's Regulatory Framework for CCRCs

In California, CCRCs are regulated by the California Department of Social Services (CDSS) under the Continuing Care Contracts Act. All California CCRCs must:

• Obtain a Certificate of Authority (COA) from CDSS before accepting deposits or contracts
• Maintain specific liquid reserve requirements to protect residents
• File annual financial disclosures that are available to prospective residents
• Provide a Disclosure Statement before any resident signs a contract
• Submit to CDSS oversight and periodic audits

CareGrade™ displays COA certification status directly on CCRC profiles — this is a meaningful indicator of regulatory compliance and financial accountability.

Financial Due Diligence: What to Review

Before signing a CCRC contract, every prospective resident should review:

Audited Financial Statements — At least the past 3 years. Look for:

• Operating surpluses or deficits
• Debt load and debt service coverage ratio
• Occupancy rates (below 85% is a yellow flag)
• Entrance fee refund reserve adequacy

Disclosure Statement — California requires a comprehensive Disclosure Statement that covers the community's history, financial structure, management, services included, and fee adjustment history.

Fee Increase History — How much have monthly fees increased over the past 5–10 years? Average increases above 5% annually warrant scrutiny.

Entrance Fee Refund Policy — What percentage is refundable and under what conditions? Is the refund declining (the longer you live there, the less is refunded) or fixed?

Key Questions to Ask During Evaluation

• What is the average wait time to transfer from Independent Living to Assisted Living or Skilled Nursing?
• Are skilled nursing beds guaranteed to current residents, or subject to availability?
• What happens if I outlive my assets — is there a benevolent care fund?
• Can I see the past 5 years of audited financial statements?
• What is the current occupancy rate across all care levels?
• How has the monthly fee changed in the past 10 years?
• What services are included in the monthly fee vs. billed additionally?

Red Flags

• Declining occupancy without a clear explanation
• Operating deficits in recent financial statements
• High debt relative to reserves
• Refusal to provide financial statements
• Vague answers about skilled nursing bed availability guarantees
• Management team with high turnover

How CareGrade™ Can Help

CareGrade™ profiles California CCRCs and Life Plan Communities with COA certification status, care component data, and SeniorTrust™ Scores. For CCRC-specific contract review, consult a California elder law attorney who specializes in continuing care contracts before signing.