What is a continuing care retirement community?

Key takeaways

• A continuing care retirement community, or CCRC, is the only senior living model that offers independent living, assisted living and skilled nursing care in one location.
• The financial commitment is substantial, and the contract type you choose determines who bears the risk.
• Careful due diligence is essential before signing a contract.

If you are planning for your senior years, you may have heard the term "continuing care retirement community," or CCRC. It is also sometimes called a life plan community. The concept can be confusing because it combines elements of housing, health care and long-term financial planning into a single arrangement. The payment of a large upfront fee to join the community is like paying cash for a property, while the monthly payments are for medical services the community offers, not rent.

A continuing care retirement community is a type of retirement community where a continuum of care needs, including independent living, assisted living and skilled nursing care, can all be met within the same community.

The idea is that you move in while you are still healthy and independent, and as your needs change over time, you transition to a higher level of care without leaving the community you already know. Residents may move from independent living to assisted living or eventually to memory care or a skilled nursing unit for 24-hour medical support.

• Maintenance-free living: Meals, transportation, housekeeping, laundry, security and some utilities are typically included.
• Social connection: Many communities offer activities, outings, opportunities to take classes on a university campus, clubs and organized travel. For single or widowed seniors, the sense of community can be a significant draw.
• Continuity of care: Residents can move from one level of care to another without leaving the community. If one spouse needs a higher level of care, they can transition while the other remains in independent living, and they can still see each other daily.

• Cost: Entrance fees range from the low six figures to upward of $1 million, plus a monthly maintenance fee. For seniors on a fixed income, this can be prohibitive.
• Financial risk: If a community is not financially stable, residents could lose their investment. Whether the organization is for-profit or nonprofit can affect its long-term stability.
• Lifestyle adjustment: Leaving a familiar home and neighborhood is difficult. A continuing care community is composed almost entirely of older adults, which may not appeal to everyone.
• Timing: Residents must sign their contract and move in while still healthy enough to live independently. That means making long-term decisions about health care and living arrangements early.

Continuing care communities offer different contract types that determine how much you pay upfront, how much you pay later and who bears the financial risk.

• Type A (life care contract): The highest upfront cost but the most predictable over time. It includes future care such as assisted living or skilled nursing. Monthly fees adjust annually, typically 3% to 5%, and are usually lower than market rates for higher levels of care.
• Type B (modified contract): A moderate upfront cost that covers a limited amount of care. After you reach the limit, you pay out of pocket. Monthly fees start lower than Type A but may increase as care needs grow.
• Type C (fee-for-service contract): The lowest upfront cost, but no prepaid care is included. Residents pay full market rates for any future care services.

Some continuing care communities also offer a Type D or rental agreement, which requires no entrance fee but charges a monthly fee for basic independent living amenities with guaranteed access to community services.

There can be variations between these care models, said Kevin Quinn, an attorney and founder and president of Legacy Counsellors PC, an estate and business planning law firm in Easthampton, Massachusetts. "It is crucial that you understand what you are purchasing," he said.

Potential residents should hire an attorney to review a continuing care community contract before they sign, said Evan Farr, a certified elder law and estate law attorney at Farr Law Firm in Fredericksburg, Virginia. They should ask about and understand:

• Exactly what type of contract scenario they are committing to
• What changes occur to monthly payments if and when they need more assistance
• Who determines when they need more assistance
• If spouses can remain together after entry into a higher level of care
• What happens if they outlive their assets

Continuing care communities typically will not send residents directly to Medicaid if they run out of money, said Quinn. Instead, they will pull money from the resident's entry fee until it is depleted, he said.

Children are another consideration, Quinn said.

"Are they on board with this? What is the arrangement for kids to be able to come and visit me? Where will they stay when they come to visit?" he said. Some facilities have rooms set aside for kids to have a place to stay, he said. They are small, clean, comfortable and inexpensive and better than a hotel, he said.

Continuing care communities generally charge in one of two ways: an entrance fee model or a rental model.

Under the entrance fee model, residents pay an upfront fee that can range from $100,000 to more than $1 million. The average entrance fee for a continuing care retirement community exceeds $480,000, and the average monthly fee for independent living in entrance-fee communities is approximately $4,246, according to the National Investment Center for Seniors Housing & Care, or NIC, an Annapolis, Maryland, nonprofit organization that provides data and analytics on the senior housing market.

Under the rental model, residents pay a monthly charge without a large upfront commitment. On average, monthly rent for a continuing care community at the independent living level was $3,873 in 2025, according to NIC.

Most residents fund their entrance fee by selling their home. Medicare does not cover entrance fees or monthly service fees, though it may cover some skilled nursing care under its standard rules.

It depends on the community and the contract. Partially refundable entrance fees return a portion, typically ranging from 50% to 90%, when the resident moves out or dies. Some continuing care communities offer fully refundable entrance fees, though these contracts often come with higher upfront costs.

Contract language on refunds deserves extra scrutiny, Farr said. It can be confusing, such as clauses that say residents will get a refund but delay payment until the unit is re-rented and occupied by another resident, he said.

The contract must also explain deductions, administrative costs, conditions surrounding the sale of the unit back to the provider, priority of refund distribution and what will happen following an event of insolvency, Farr said.

Prospective residents should look beyond what they might see on a tour and research the financial health of the community, said Farr.

"The most important factor when considering a CCRC is not what the dining room looks like, how well landscaped the property is or the finishes on the apartment," he said. "It is whether the organization will be able to fulfill its promise of providing a continuum of care over several decades."

Review audited financial statements, cash reserves, debt, operating results, planned capital expenditures, any recent increases in fees and the financial condition of any parent organization, Farr said. Occupancy rates are also a critical factor, he said.

"This is because high occupancy levels are crucial to the business model of most CCRCs, which rely heavily upon entrance fees from new residents and monthly charges from current residents," Farr said.

LeadingAge, a Washington, D.C.-based advocacy association for nonprofit providers such as Commission on Accreditation of Rehabilitation Facilities International, the only accreditor of continuing care retirement communities, recommends that prospective residents evaluate communities carefully before signing a contract. The following tips are based on guidance from those organizations, state regulators and senior housing advisors:

• Review audited financial statements: Ask for at least three years of financials. Look at occupancy rates, operating revenue and debt levels. In Virginia, for example, the State Corporation Commission requires continuing care communities to file audited financial statements and updated disclosure statements annually and many other states have similar requirements.
• Understand the contract type: Know exactly which contract you are signing and what it covers. Ask what happens to your monthly fee if you move to a higher level of care.
• Ask about the refund policy: Find out whether the entrance fee is refundable, partially refundable or nonrefundable and under what conditions.
• Tour multiple communities: Many continuing care communities allow prospective residents to spend a night or weekend on the grounds. Eat in the dining room, attend a social event and observe how staff interact with residents.

• Check for accreditation: CARF International accredits continuing care retirement communities that meet its standards for quality, financial stability and governance. CARF has a financial advisory panel that provides input on the development of financial standards and strategic education resources for continuing care communities.

  Accreditation is voluntary but is a useful marker of accountability.

• Consult a financial adviser: The entrance fee is one of the largest financial commitments you can make in retirement. A financial adviser or accountant who understands continuing care community contracts can help you evaluate whether it fits your budget and estate plan.
• Ask about state regulation: Oversight of continuing care communities varies by state. Some states require financial reserves, escrow of entrance fees and annual disclosure filings.

The key to any successful transition is to start early, said Daniel Preston, the founder of LiveInCare USA, an online marketplace of independent caregivers and home care agencies in the U.S.
"From my perspective, the most successful families begin planning before a health crisis forces quick decisions," he said. "When people wait until after a hospitalization, fall or dementia diagnosis, they're often trying to evaluate care options, understand contracts and make major financial decisions under tremendous stress."

The best long-term care decision isn't necessarily the most expensive one, he added. "It's the one that best matches a person's health needs, financial situation and personal preferences. Understanding all available care options before they're needed gives families more choices and greater peace of mind."

More on this topic:

• Is a 55-plus community right for you?
• How to age in place as a senior
• Ask Homes.com: What's the best way to stretch my inheritance to qualify for a mortgage?