Choosing a retirement community is no small task. There are a lot of factors to think about – from your own comfort to how much your new home will cost you. Having a good idea of what moving to a retirement community will do to your financial situation is vital, and it often helps to involve your financial and legal advisors in the decision.

Here are 10 important questions you and your team should ask a retirement community before making your decision.

What does the Disclosure Statement say?

Each retirement community in Pennsylvania, and most other states, must publish a “Disclosure Statement” annually.  The Disclosure Statement contains critical information including a financial statement, general organizational information, a description of fees and an agreement for services. This is the first place to look to get a general idea of what the community offers and how much it will cost.

What does the service agreement say?

The service agreement contained in the Disclosure Statement will detail the services and fees. When reviewing the agreement pay special attention to:

• What Types of Services are offered?

Exactly what services are available and what services are included at no additional cost? Services and fees vary widely in CCRCs (Continuing Care Retirement Communities) since the statutory definition of CCRC is quite broad. Additionally, in Pennsylvania there has been a flood of communities applying for and receiving CCRC licenses due to some tax benefits for the provider. Make sure you are aware of exactly what’s being offered and are comparing apples to apples.

• What are the fees?

One of the most important questions about services relates to the potential for future fees. Do the charges to the resident remain stable if the resident needs to move to the community’s nursing or assisted living sections? Since charges for these services are substantial, make sure you are clear on exactly what future charges apply, and consider every possibility for the type of care you may need in the future.

• What are the requirements for entry?

Some communities have a type of insurance product that provides prepayment for future services. This is typically known as Lifecare.  Some Lifecare communities require residents to be in good health upon admission or to pay additional fees if they are not, and then require added help for this pre-existing condition.  In addition, a refusal to admit disabled residents may have Fair Housing Act implications.

• What if you run out of money?

Some Agreements in non-profit organizations provide for financial assistance if a resident runs out of money through no fault of their own.

• What are the tax implications?

There is a possibility of an income tax deduction for medical expenses since part of the fees in some communities are considered prepaid medical expenses. Has medical deduction information been provided to residents in the past and what has been the amount? Who pays the real estate taxes?

• How can a resident terminate the agreement?

How and when can a resident terminate the Agreement and what are the financial implications?

• If a refund is due, who gets the refund – individual estate or trust?

The community should be able to adapt this section if needed by your client for estate planning purposes.

A typical condition for a refund is that the unit is resold. Is this realistic given the market and occupancy of the community?

If a you terminate an agreement, how long do you or your survivors have to move out of the living unit? This can be a big issue if you have only out of town family.

If a prospective resident has already signed an agreement there is a possibility that they may be able to rescind the agreement. In Pennsylvania agreements may be canceled within seven days of signing with no penalty. When can a community terminate an agreement?

• What dispute resolution process is available?

Who has the final say? The community or a third party?

Is there a “no retaliation” provision for residents who complain?

Who controls the community?

Non-profit communities operate approximately 80% of CCRCs nationally. Hence the term “ownership” is not really relevant.  However, non-profits can be single site or larger multi-site organizations. Who is on the board? Family members of the managers or independent directors? You may want to review the IRS Form 990 to find out. Try entering the organizations name into the Guide Star website atwww.Guidestar.org.

What is the financial strength of the community?

Review the financial statement that should be included with the Disclosure Statement to see if the community has assets, operating income and other signs of financial stability. A lot of debt is fairly typical – not necessarily a deal killer. However, the relative age of the community and its occupancy over the years are critical elements.

Is the community accredited?

There are several accreditation bodies for CCRCs. The Continuing Care Accreditation Commission (CCAC) is probably the best. They look at the finances, governance, planning and the community’s process improvement efforts. However, do not let this deceive you. The CCAC only visits a community once every five years. You need to pay attention to all of the critical factors in this list and not rely solely on the CCAC.

What is the community’s Center for Medicare Services “Star Rating”?

If the community services include a skilled nursing facility (this is a plus as skilled nursing facilities are able to provide higher levels of care) the quality of the services offered as rated by Medicare can be researched bygoing towww.medicare.gov/NHCompare. Medicare rates all skilled nursing facilities into one to five star categories. Seek four stars or above. Especially important are the staffing levels as compared to the state and national standards. Staffing can be viewed directly on the CMS website above.

What is the resident satisfaction?

Ask a resident who lives there if he or she likes the services and the community. If you don’t know anyone living there, ask the community if they do regular resident satisfaction surveys and what the results have been.

How do the community’s services fit in with the prospective resident’s long term care insurance program?

Some communities have programs that discount their fees in return for residents maintaining long term care insurance policies.

What have the fee increases been over the past 5 years?

Relatively high or low fee increases deserve further investigation.

Finally, how does the community look and feel?

It goes without saying that you should visit the community. Many communities have extended visit programs and we recommend taking advantage of these if they are available.