By Catey Hill for Smart Money
When 85-year-old Al Green was ready to make his last move, he settled on a residential community that offered tiered care – independent, assisted, and nursing – near his alma mater, Penn State. But it wasn’t as easy as picking a place and packing a moving van. First Green faced many decisions: Did he want unlimited health care at a relatively fixed monthly cost? Should his up-front fees be refunded to his heirs upon death? Each decision had a price–and it wasn’t trivial, he says: “Some people pay double what others do.”
Some 800,000 people — and counting — have already confronted the confusing costs associated with “continuing care facilities,” which have grown rapidly over the last 20 years to almost 2,000. Before the recession slowed construction, the industry had added another 200 facilities this decade, according to preliminary data from Ziegler Inc., an investment bank that underwrites such facilities. And as baby boomers — and their parents — age, even more will have to confront the confusing costs of continuing care.
But more facilities means more unique, byzantine fee structures, critics say. For retirees who are managing a finite nest egg, the distinctions are critical: A 10-year stay at one facility might cost well over $1 million; at another, a resident might pay just $300,000. And even within a single facility, the primary costs — the entry and monthly charges — can be structured in many different ways, making it hard to compare the value of one to another, says Steve Maag, the director for assisted living at the Association of Home & Services for the Aging. “If you’ve seen one CCRC [continuing care residential community], you’ve seen one CCRC,” says Maag.