Older Americans: Continuing Care Retirement Communities Can Provide Benefits, but Not Without Some Risk

This testimoney discusses continuing care retirement communities (CCRC), the risks they and their residents face, and their regulation. A growing population of older Americans is seeking options for ensuring that their assets and income in retirement will cover the cost of their housing and health care needs. One option for meeting these long-term care needs is to enter a CCRC, which aims to provide lifelong housing, household assistance, and nursing care in exchange for a sometimes sizable entrance fee and ongoing monthly fees. These communities may appeal to older Americans because they offer an independent lifestyle for as long as possible but also provide the reassurance that, as residents age or become sick or frail, they will receive the care they need within the same community. But choosing to enter a CCRC can be a difficult decision and is not without risk. Moving to a CCRC generally involves a significant financial and emotional investment. Many older Americans sell their homes, which are often their primary assets, to pay the required fees, and, as a result, their ability to support themselves in the long run is inextricably tied to the long-term viability of their CCRC. Further, many CCRCs may be financially vulnerable during periods of economic decline--such as the recent downturn--that can result in tight real estate and credit markets. My testimony is based on our June 2010 report, which is being publicly released today and addresses four issues: (1) how CCRCs operate and what financial risks are associated with their operation and establishment, (2) how state laws address these risks and what is known about how adequately they protect CCRCs' financial condition, (3) risks that CCRC residents face, and (4) how state laws address these risks and what is known about their adequacy. To address these questions, we reviewed CCRC statutory provisions from eight states--California, Florida, Illinois, Ohio, New York, Pennsylvania, Texas, and Wisconsin--and interviewed regulators from those states.