Charles E. Smith Life Communities (CESLC) is uniquely different than Life Plan Communities (also known as Continuing Care Retirement Communities or CCRCs). One of the main differences is the financial consideration between paying a small one-time community fee in contrast to paying a large upfront entrance fee and the flexibility of contract terms. In this article, we will explain these differences as succinctly as possible so you can determine what will work best for you and your lifestyle. After reading this article, we recommend having a conversation with your financial planner and meeting with a CESLC advisor to discuss your options.
How does entrance into a Life Plan Community work?
Many Life Plan Communities offer a full continuum of care but ask for prepaid entrance fees starting at $400k, plus additional monthly service fees. This arrangement guarantees access to escalating care services that start with moving into independent living at a Life Plan Community. As care needs increase, residents migrate to assisted living, memory care and skilled nursing (long-term care). Short-term rehabilitation is also available. They are given priority access over non-residents for these services.
Moreover, a Life Plan Community will request prospective residents to undergo an extensive medical exam to determine if they are healthy enough to join a community as an independent living resident. The value of the entrance fee is partly determined by an actuarial table of one’s life expectancy, dependent upon age and the prognosis of a medical exam. Even though residents pay an entrance fee, it is essential to note that the monthly service fees are subject to rate increases. The monthly fees depend on many factors, including the size of the apartment home, meal plans and optional amenities and services. Finally, there is little to no flexibility if a resident later decides to move to another community. In many ways, a Life Plan Community is a permanent commitment. Part of the entrance fee is refundable up to a specific period. Some Life Plan Communities also offer Life Care contracts, which vary widely and are beyond the scope of this section but are briefly covered later in this article.
How CESLC works and how it differs from a Life Plan Community.
At CESLC, our community gives residents access to a full continuum of care without the hefty entrance fee. A small community fee is required but is much less than the full entrance fee at a Life Plan Community. CESLC residents only pay for supportive health or medical services when needed. This contrasts with many Life Plan Communities, which require a steep entrance fee. A Life Plan entrance fee is a pre-payment for possible future medical expenses residents may never use or need.
As a CESLC resident, you will not need to pass a medical exam to be eligible to live in any of CESLC independent living communities. Residents sign a rental agreement with an agreed-upon monthly service fee and an affordable community fee to join.
If your needs change, you will have full access to escalating services and support, including skilled nursing, assisted living, memory care and rehabilitation services. As a rental agreement, it is flexible, and you are free to move later, depending on your needs and how satisfied you are with the community and services you receive.
The purpose of entrance fees.
One might wonder, “Why do people pay Life Plan Communities large entrance fees when they receive no interest or return on investment?” After all, $400k up to $1 million is a lot of money to take off the table.
The reason is simple: Many retirees are looking for long-term peace of mind and security that access to a full continuum of care provides. Also, some Life Plan Communities promise that benevolence funds will pay for part of their living expenses if the resident should outlive their money. Still, these are based on long-term endowments and are seldom guaranteed. Some contracts, such as a Life Care contract, can also promise to freeze monthly living costs (or give residents a discounted rate, depending on the contract type) for future possible changes in healthcare needs, such as moving from a $5,000 monthly fee for independent living to a $10,000 monthly memory care expense.
In a perfect world, all Life Plan Communities would be well-managed and have a solid financial position. However, that isn’t always the case. You’ll want to evaluate the financial health, longevity and occupancy of any Life Plan Community you join prior to giving them an entrance fee.
Because CESLC is a nonprofit community governed by a board of directors, we have a robust financial position. CESLC is a stable bet, even without a Life Plan guarantee. Therefore, people moving to CELSC pay a small, one-time community fee along with a conservative monthly fee that is on par with many Life Plan Communities. CESLC also provides access to a high-quality, full continuum of care, if needed, and complete flexibility if they decide to move later.
Meeting the need for affordable senior housing, assisted living and skilled nursing services in Rockville, MD.
The CESLC team helps aging adults navigate our continuum of care on our 38-acre campus. Whether it is independent living, assisted living, memory care, skilled nursing, long-term care or short-term rehabilitation, we can help.
However, what if someone doesn’t have the financial resources to afford living at CESLC? Or later, they outlive their resources? The good news is that CESLC owns and operates a limited number of HUD housing and accepts Medicaid in skilled nursing. The state of Maryland also helps CESLC set aside a limited number of independent living apartment homes that are affordably priced. That means if a resident moves into Ring House with sufficient funds today but later runs out of funds due to no fault of their own, the CESLC team can help residents qualify for reduced rental rates ranging from 20 percent to 60 percent of the monthly fee.
We hope this discussion about entrance fees was helpful to you. For more information or questions about CESLC, please don’t hesitate to contact one of our advisors.
