Senior Rental vs Buy-In Retirement Communities: What’s Right for You?

Deciding to move to a senior living community is a significant step and having the right information will make your journey smoother.  There is a lot to learn, but the good news is there are communities for all tastes and all budgets!

How to start the journey? Assess your needs, consider your finances and learn all you can about the living options that best meet your needs.

Next … explore what’s  available in your desired area.  It’s always helpful to talk with friends or family who are already living in senior living communities. Even better … visit as many communities as possible to determine what’s right for you.

It’s vitally important to understand the different types of senior living communities, their contracts and what they include. In this article, we’ll focus on comparing the pros and cons of senior rental communities vs buy-in retirement communities.

Terminology

As you explore your options, you’ll begin to hear several new terms. Here’s a basic glossary to get you started:

Continuum of Care: This is a range of senior care that allows a resident to age in place while getting the care they need. A typical continuum of care includes assisted living , memory care, and skilled nursing and rehabilitation services.

Senior Living Rental Community: As it sounds, you’ll pay a monthly fee for your residence. Rentals may or may not offer senior care or a continuum of care. If they do, care likely won’t be included in your independent living monthly fee, and you’ll pay higher rates for the level of care you need.

Continuing Care Retirement Community (CCRC) or Life Plan Community: Depending on the contracts offered, these communities can be rentals or buy-ins. Both types of communities offer independent living plus a continuum of senior care.

Rental CCRCs provide flexibility for those who may not want to commit to a substantial financial investment upfront. Residents pay higher monthly rates for care should it be needed.

Buy-in CCRs require an initial entrance fee (also known as a “buy-in”) plus a monthly service fee. While there’s an obvious upfront expense, the buy-in secures future healthcare at a lower monthly rate.

Life Care: Technically, Life Care refers to a specific all-inclusive financial contract that requires an entrance fee in return for priority access to onsite care with little or no increase in monthly fees (Type A). Some communities that offer this contract call themselves a “Life Care Community.” If you hear this term, remember: All Life Care communities are CCRCs, but not all CCRCs offer Life Care.

Senior living buy-in vs monthly rent: Understanding the difference

Most importantly, contracts define each senior living community, essentially detailing how much you’ll pay and what’s included. Details vary by community, but contracts fit into a finite number of structures.

What to expect at a senior living rental community

Most senior living communities are month-to-month rentals. Rental communities are usually the least expensive path to downsizing and moving into an independent senior living situation. There’s no entrance fee or buy-in, but there will likely be a security deposit, which may or may not be refundable.

Some rental communities provide limited services such as housekeeping, activities, meals and scheduled transportation that are included in the monthly fee. Others also include supportive care services that are provided in the residence or within a different area of the community.

For care services in excess of base rent, pricing allows each resident to pay based upon the level of need and services required.  This means each resident is charged only for the care and services they utilize, which helps to lower costs for residents with fewer needs. As resident needs change and more care and caregiver staff time is required, fees are adjusted to reflect the additional care and service provided.

What to expect at a buy-in retirement community

Life Plan Community. CCRC. Continuing Care Retirement Community. Buy-in Community. These terms all refer to a senior living community that offers independent living plus a continuum of care. While many CCRCs are rental communities, a buy-in community not only provides access to care, the large upfront –or entrance — fee also secures lower rates for that care should it be needed in the future. With the upfront investment, a buy-in option may look more expensive. However, the plan for long-term care adds value that’s both tangible and intangible.

The most comprehensive contract (Type A, Life Care) offered in buy-in communities allows for unlimited care at any level with no or minimal increase in your monthly fee. Other contracts offer more nuanced benefits. For example, a Type B, Modified Plan contract (aka Modified CCRC or Modified Agreement) may offer any of the following benefits:

• A limited number of free days in the health center, with additional care billed at daily market rates.
• Care may be billed at a minimally discounted rate.
• Care may be billed at an equalized rate, which means if you’re an independent living resident and you need to move to a higher level of care, your monthly service fee will change to be equal to the average of all independent living monthly service fees being charged at that time.

Let’s Compare

Questions to ask as you explore your options

As you narrow down your list of preferred communities, you should make an appointment to visit with a sales counselor, either in person or virtually. Before your conversation, prepare a list of questions. Here are some starter ideas:

• Do you offer a rental option, or is an entrance fee required?
• What services and amenities are included in the monthly fee?
• What levels of care are accessible on-site?
  Is the cost of care fully or partially included in the monthly fee or not at all?
• If there’s an entrance fee, is any portion of it refundable?
• Does the community include a benevolence benefit, ensuring residency for life?

Get answers to these and all your questions before you choose any senior living community. Here is valuable information on how to vet the financials of a continuing care retirement community … the more you know, the happier you’ll be with your decision.

As you continue your research into senior living communities, it’s good to understand your local options. Use this tool to find a community near you.

Where You Live Matters

Where You Live Matters is powered by the American Seniors Housing Association (ASHA), a respected voice in the senior housing industry. ASHA primarily focuses on legislative and regulatory advocacy, research, and educational opportunities and networking for senior living executives, so they can better understand the needs of older adults across the country.

_{Originally Published: April 19, 2021 – Updated On: June 13, 2024}

Resources:
Genworth Cost of Care
The Senior Care Spectrum
Senior Living Contracts Explained