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Life Plan Communities Offer An Alternative To Aging In Place

Mark and Sharon Brender, retirees who live in a townhouse in Arlington, Va., love living in an urban environment, walking to shops and restaurants and hopping on Metro for cultural opportunities in normal times.

But at 70, Mark Brender says he realizes that he and his 73-year-old wife may not always want to live in a three-level home with stairs.

“We’re planners who want to maximize our life and enjoy it without worrying about how we’ll take care of each other as we age,” he says.

The couple made a deposit at the Mather, a “life plan community” in Tysons Corner that is anticipated to be ready for its first residents in 2023. A life plan community, also known as a continuing care retirement community, is a hybrid of an active adult community and other types of senior housing.

At the Mather, the amenities will include dance classes, play-reading groups, seminars, an art studio with group and individual classes and concierge services for everything from event tickets to private chef services. The community will have a fitness center, an exercise studio for classes, a spa, an indoor pool, a library, a movie theater and multiple dining venues. In addition, residents will have valet parking and housekeeping twice per month.

Unlike most active adult communities, which are designated for people 55 and over, life plan communities target residents at different ages such as 60 or 62 or perhaps older. In addition to the recreational and social amenities of an active adult community, they also usually include several sections or buildings that offer independent living, skilled nursing, assisted living and sometimes a memory care center for people with dementia.

“Life plan communities typically appeal to people who want a lifestyle component similar to an active adult community and are also planners who want their future care secure,” says Beth Mace, chief economist and director of outreach with the National Investment Center for Seniors Housing and Care (NIC). “They don’t want to wait for a health event to occur or to have to go to a place they don’t want if they need assisted living in the future.” 

Typically, residents live in the independent section of the community as long as possible and sometimes for their entire stay in a life plan community, says Lana Peck, a senior principal with NIC. They can be moved to the skilled nursing center to recover from a hip replacement or other surgery and move back to their home or move to the community’s assisted living or memory care center when they need more help.

“These communities allow people to age in place in the same location and they are guaranteed to be able to stay there until the end of their lives,” says Peck. “Couples want to stay together and enjoy the lifestyle and wellness services of the independent living section. Then, if one of them needs more care they can at least be on the same campus or even in the same building for easier visits.”

Planning for all possibilities…

Like the Brenders, Diane and Curt Stowell opted for a life plan community in part because they don’t have children and wanted to make sure they don’t burden friends or other relatives with the potential need for care in the future.

“I’m 75 and Curt is 81 and we’re very active now,” says Diane Stowell, a resident at Mather’s Splendido Life Plan Community in Tucson. “We moved from Alaska to an active adult community in Tucson 15 years ago, but we wanted to move to Splendido so we know our health care needs will be taken care of.”

When not physically distancing themselves because of the coronavirus, the Stowells participate in line dancing, yoga classes, hiking, biking and social activities just as they did at their active adult community. While the Stowells typically enjoy restaurant meals in their community, all meals currently are delivered to follow social distancing guidelines.

Peggy and Jim Love, a retired couple with three children and five grandchildren, recently made a deposit at the Mather in Tysons.

“My husband is retired from the military and both of our parents are military families, so we’ve naturally relocated and spent most of our lives overseas,” says Peggy Love, who sold her global corporate relocation business before retiring in 2015. She is 71 and her husband is 73.

“Our kids live in New York, Mexico and Malaysia at the moment and are global nomads,” Peggy Love adds. “My parents and Jim’s parents moved to life plan communities and so we always intended to do the same. It’s a gift our parents gave us that we want to give to our kids.”

The Loves, who live in Arlington near the East Falls Church Metro station, chose the Mather for its semi-urban location in Tysons where they will be able to walk to shops, restaurants and the Metro.

“We like the idea of moving into a brand-new high-rise building with a contemporary feeling and an urban environment,” says Peggy Love.

Typically, life plan community residents move in when they are in their late 70s to mid 80s, according to a report by CBRE, a company that provides investment opportunities across a broad spectrum of senior housing properties. At the Mather, residents must be 62 or older.

Paying for future care…

A life plan community is neither a rental apartment nor a condo, says Gale Morgan, senior vice president of sales for Mather, a not-for-profit organization and developer of Life Plan Communities in Tucson, Evanston, Ill., and Tysons Corner.

“Residents pay an entrance fee and then ongoing monthly fees that cover the amenities, housekeeping and dining,” says Morgan. “The residents can choose between two types of contracts for their services, which also covers any future health care they may need. Ninety percent of the deposit they make is returned to them when they move out or goes to their estate if they pass away before moving.”

Those deposits can be steep. According to CBRE’s report, the average deposit in 2018 was $335,000 and can rise to nearly $1 million in some high-cost housing markets.

“The effect of the deposit is to subsidize the monthly fee and future health care,” says Peck. “Often people sell their home and use the proceeds to pay the deposit. Depending on the market area, some developers tie their deposit amount to the median sales price for homes in the area.”

At the Mather, 7929 Westpark Dr., required deposits will range from $660,000 to more than $4 million when the community opens in 2023, says Morgan. The amount varies because the apartments range from an 850-square-foot one-bedroom to a penthouse with more than 3,300 square feet. The Mather is currently accepting deposits at discounted preconstruction pricing.

Nationally, the average monthly fee for a life plan community was $3,251 in 2018, according to CBRE’s report. But fees vary widely according to the services provided and residents can choose different contracts that impact their fees. Monthly fees at the Mather range from $3,500 to $11,000.

“We pay about $7,000 a month but whatever we pay now is the same as what we pay if we go into the assisted living section,” says Diane Stowell. “If one of us goes into assisted living and the other one stays in our current apartment, we’re technically getting two homes for the same fee. The only extra we would pay is for the additional meals in assisted living.”

Most life plan communities, including the Mather, offer people a choice of an all-inclusive contract that covers unlimited lifetime care or a contract that covers 90 days of care and then requires a higher monthly fee after 90 days. Usually people with long-term care insurance choose that second option, says Morgan, because it’s about $1,000 less per month.

“Everyone has to make a choice about which contract they want when they move in and they can’t change it,” says Morgan. “Couples don’t have to have the same contract, but they can’t transfer the contract from one person to the other.”

While the monthly fees are costly, at the Mather they cover all services and amenities, one meal a day at one of its three restaurants, housekeeping and all utilities. At the same time, the fees function as an insurance policy for future care. Nationally, the monthly cost of a private room in a nursing home facility averaged $8,517 in 2019, according to Genworth, a long-term care insurance provider. In the Washington area, that average cost was $12,440.

“Knowing our costs takes the worry out of our financial plan for the future,” says Mark Brender. “The expectation is that the fee may increase by two or three percent annually but some years there may be no increase at all.”

Life plan communities have various ways to handle someone struggling to pay the monthly fees.

“We had one woman live to 112, but she only spent a couple of months in the assisted living facility,” said Morgan. “If someone outlives their resources, they have the option of drawing down from their deposit or staying in the community on a scholarship.”

Life plan communities typically require financial and medical approval for residents, says Mace.

Depending on someone’s age, the Mather requires new residents to demonstrate that they have 1½ times or more of the entrance fee in assets and the monthly income from investments to pay the monthly fee. For example, someone paying an entrance fee of $1.5 million would need $2.5 million to $3 million in assets and the ability to pay about $7,500 per month.

In addition to the financial approval, new residents undergo medical certification by a health professional from the Mather to show that they are in average health for their age and can currently live independently, Morgan says.

“The majority of the people making deposits at the Mather are under 75, with most between 65 and 75,” she says. “The time to move in is when you’re enjoying your retirement. If you wait, you won’t qualify.”

Wellness is a big component of the Mather, which offers personal training in the fitness center, yoga and Pilates classes, guided meditation and, nutritional coaching.The first building at the Mather will have 186 units and in 2024 the second building is anticipated to open with 114 residences.

The Mather offers a luxurious level of senior housing which most people fund by selling their house, says Morgan.

“We want to move under our own steam and redecorate a new home rather than have to be moved because of an intervention by our kids,” says Peggy Love. “This isn’t desperation, this is a fun move.”

Tips for choosing a life plan community

● Read and understand the contract with the help of an attorney.

●Consult a financial adviser about the tax and estate planning implications of your choice.

● Understand the different services provided in different contract choices.

● Ask what’s included in the monthly fee.

● Ask about potential fee increases.

● Find out how much of the entrance fee may be refunded.

● Ask about the services provided in each section of the community, such as help with housekeeping, transportation and daily activities in the independent and assisted living areas.

● Tour all sections of the community, including skilled nursing and assisted living, not just the independent living section.

● Find out about social and recreational amenities to see if they match your interests.