DeVol Insurance & Financial Services
Winter 2015  

The ABCs of CCRCs


A major threat to financial independence in old age is the need for long term care. That is, what happens if you are no longer able to care for yourself and you need help? Such so-called "custodial care" is not covered by Medicare or health insurance policies. The available financing solutions are:


►   Family members

►   Medicaid

►   Your own resources

►   Continuing Care Retirement Communities

►   Long Term Care insurance


I briefly evaluated each of these in our summer 2014 newsletter, but I would like to address Continuing Care Retirement Communities (CCRCs) more fully in this issue. They are a uniquely attractive solution for the following reasons:


  1. You will have nursing care at a preferred facility, predetermined by you before you need it.
  2. Married couples may have different health care needs as they age and the CCRC model can accommodate this. That is, if you are in your home and your spouse needs care in a facility, you may be unable to visit them as often as you would like. In fact, you may not be mobile enough to visit them independently at all. In a CCRC, the units that provide care are close by.
  3. The quality of life is quite appealing and includes a social network. Those who live independently often end up isolated.

There are basically three types of contracts and here's how each of them works. This is for illustrative purposes only and may not be indicative of your situation.


Type A:

You pay a sizeable upfront fee, think 250K plus, and a monthly fee, say $3,000 plus. Typically you obtain the funds for the upfront fee from the sale of your long-time residence. Then, if you need additional care, you move into a section that provides additional care with no increase in your monthly fee. Some have assisted living, some have Memory Care (one in four adults will experience some form of dementia), and all have a Skilled Nursing facility on the campus. In the Boston area, these facilities have an arrangement where they will return up to 90% of your upfront fee if you leave or when you pass away. Examples in the Boston area are North Hill in Needham (, Brookhaven in Lexington (, and The Commons in Lincoln (


Type B:

Here you pay a smaller upfront fee, say 150K and a monthly fee, say $2,000. Then when you need care you are guaranteed space in Assisted Living, Memory Care or Skilled Nursing, but the fee goes up. In the Boston area, the same 90% refund applies. Brooksby Village, in Peabody, MA ( follows this model.


Type C:

Here everything is "a la Carte." With Type A you are prepaying for care you may not need. An attractive feature of Type C, along with Type B to a lesser extent, is that if you pass away without needing care you have saved money. This is a likely outcome -- most people do not need long term care. Locally, Newbury Court in Concord ( and North Hill in Needham ( offer this type of arrangement.

Additional Considerations:

  • It is often suggested that the entrant's income should be twice the amount of the monthly fee.   
  • This is typically a once-in-a-lifetime decision and requires a great deal of thought, research, and planning.   
  • There is a health assessment prior to entry, almost like applying for insurance. The facilities want healthy individuals. So it is inadvisable to "wait until the need arises" prior to applying. "The time to fix the roof is when the sun is shining."

  • Since the down payment and monthly fee for Type A facilities include a prepayment of medical expenses, a portion representing that prepayment qualifies for a deduction as a Schedule A medical expense. This is very valuable and it is not available in Type B or C arrangements.
  • A strategy I've seen employed successfully is to buy Long Term Care insurance until the point where one has been accepted into a CCRC and then drop the coverage. This strategy does not apply for Type B and C arrangements, where you will need the insurance to pay the increased cost of care, if it is needed.
  • I can also add from personal experience with my father that residents of CCRC's often incur extra costs of care in at least the following situations:

    1. They may want to stay in their Independent Living arrangement within the facility and have care brought in, rather than move to Assisted Living or the nursing facility. I knew of a woman who was quite wedded to her afternoon cocktail and didn't want to lose that in the nursing section.
    2. They may want to receive additional care in the nursing facility. 
Insurance can be very useful in these situations, and I would caution against cancelling a good insurance contract irretrievably without a lot of thought for the consequences.

The Commons in Lincoln 


I have recently come to know Elizabeth Dupree, the Senior Director of Community Relations for one of the newer CCRC facilities. Elizabeth has a wealth of experience in this field and I've asked her to describe the facility she represents.  

Click here for her comments.


A Moment for Social Security

Determining when to file for Social Security benefits for couples
is one of the most complex and important decisions we have to make. Click here  to learn what you need to know.  


Thomas Phelps DeVol is the founder of DeVol Insurance & Financial Services. His focus is on retirement income planning. He enjoys listening to his clients' ideas about their plans for retirement and helping them transform those ideas into an attainable plan for the future. His persistence and diligence are the keys to his success - and that of his clients.   


Tom has three children and lives with his wife, Connie, and their two younger children in Newton, Massachusetts. He enjoys gardening, tennis, biking and opera.


Tom can be reached at 617-964-6404 or via email.  

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