Fees can be a confusing aspect of selecting a retirement community. After all, single-family houses and apartments don’t usually come with extra charges already built in.
A condominium, with its monthly association fee meant to pay for common area maintenance, comes closest to the financial model of the retirement community.
Most retirement communities charge fees on top of rent to cover the services available to residents. But how these fees are structured can vary greatly depending on the type of community you select, or need.
– Active adult communities. These projects cater to adults who are still quite independent. Single-family homes are often the norm.
One-story townhouses or so-called villas are another popular design. Residents typically buy their units or homes outright. But as part of the deal, residents also will be charged a monthly fee — somewhat similar to association fees charged by condominium developments.
The monthly fee at an active adult community pays for grounds upkeep and snow removal. It also may be used for security measures, such as a safety patrol officer or guarded front gate.
Large active adult communities often have a recreation component. This may include a fitness club, swimming pool, golf course or dining facilities. The fee for these services may be included in the monthly homeowners association fee, or it may not. Meals and golf are usually billed separately on a pay-as-you-go basis.
– Assisted living homes. As seniors age and require more help, fees for services become a large part of the monthly expenditure. Fees and billing get more complicated too.
Generally, assisted living facilities require a signed residency agreement, which is something like an apartment lease.
The agreement doesn’t just cover the monthly rent for the unit you are leasing, however. The document also should detail the extras, or services, for which you will have to pay each month.
Some assisted living facilities include a few services with the monthly rent; others don’t.
For example, you may pay a monthly rent of$2,500 for a one-bedroom unit (a fairly typical rent). That rent will also entitle you to meals, plus an hour of daily assistance. This could be for dressing, bathing, medication reminders or escort services to activities and the dining room.
If you need more help, you pay for more help. A charge of $300 a month for 30 minutes of extra help each day is not uncommon. Assisted living homes may also offer several different service packages.
Which package you pick will depend on how much service you need. The nice thing about a package is that you know in advance what your monthly bill will be.
Don’t think, though, that once you have signed an agreement you are set forever. Routine evaluations, sometimes as often as four times a year, are performed on residents to make sure they are not using more services than they are paying for.
The fee structure at some assisted living facilities is a la carte. The advantage of this arrangement is that you only pay for the services you use. With a package plan, you may end up paying for more help than you get, or need.
According to Washington, D.C-based Assisted Living Federation of America, only about 6 percent of assisted living homes have pay-as-you-go pricing.
The most common billing method by far is the bundled service approach, with extras added as needed. About 40 percent of assisted living facilities rely on this tiered pricing formula.
Of note, not all assisted living facilities are licensed, which is the case with many homes in Illinois.
This means that an outside health care agency provides day-to-day help for the residents. The health care agency fee may be included in the monthly bill, or it may not. In some cases, the health care agency will send you a separate bill each month.
– Continuing care retirement communities. These developments offer housing and services from the time you enter until you leave or die.
The big difference with this type of community is that residents pay an entrance fee, as well as the monthly fee, which is paid like rent.
Entry fees vary widely and not just by amount, which can range from thousands of dollars up to almost a million dollars. Fees can be refundable, non-refundable or something in between. The entry fee may guarantee you a lifetime of care, or only a specified amount.
Nowadays, many continuing care communities offer to refund at least a portion of the entry costs. A 90 percent refundable fee is fairly common. When you leave the community, you or your estate gets back 90 percent of the entrance fee. The money is not returned with interest, however.
Other refund arrangements are possible. The amount of refund may decline over time. Some communities have a full refund, but with a service charge which is deducted before the refund is made.
Seniors and their families like the idea of refunds, but it comes at a price. Most communities that offer refunds put a cap on the amount of care you receive.
For example, if you join a community with a refundable entry fee, you may only receive, say, 180 days of nursing home coverage included in your monthly rental rate. If you stay longer, you pay the daily rate.
At some communities, though, you may be able to “spend down” your entry fee in order to pay for a lot of nursing care.
Resources
Apartments for low-income seniors are available at a new assisted living facility in Chicago. Rush-Barton Senior Living Residence at 1245 S. Wood St. has 139 units, consisting of studio and two-bedroom apartments. For seniors whose annual incomes are less than about $25,000, monthly rent is $440 for the studio apartment. To apply for an apartment, call 312-421-5220.
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Jane Adler is a Chicago-area freelance writer. If you have questions or information to share regarding housing for senior citizens, write to Senior Housing c/o Chicago Tribune Real Estate Section, 435 N. Michigan Ave., Chicago, Ill., 60611. Or e-mail adler@corecomm.net
