As discussed in last month's indicator, The Cost of Senior Care by State, the aging population in the United States, coupled with constant evolution of technology is generating an ever-increasing need for senior care. Medical improvements have increased the national life expectancy; however, the senior and elderly care industries are seeing an increase in dementia and memory loss cases as a result. With this shift comes a need for a plethora of care options for the elderly at every stage of the aging process. This profile outlines the different types of senior care, which vary by range of care needs and level of independence for the resident or patient. In summary, the graphic below created by SeniorLiving.org shows the range of senior living offerings. Level of care tends to increase with cost but has an inverse relationship with a resident’s independence.
The following senior living types are covered in this profile. Note that all information is based on national trends and pricing, and will vary by market:
- Independent Living
- Assisted Living Facilities
- Nursing Care
- Continuing Care Retirement Communities (CCRC)
Retirement communities or independent living communities are communities that provide an aging retiree with fewer responsibilities, more recreational and social opportunities, and stress-free living among others of the same demographic. These communities have a key distinguishing factor in that they often do not offer onsite nursing care because residents usually retain most of their mobility and autonomy and are able to complete most everyday tasks. Independent living communities can take the form of senior apartments or age-restricted communities. These facilities all offer residential and personal care services.
Independent living communities are communities built to accommodate the living preferences of seniors. They are helpful for aging residents who can no longer manage a home or property, but still seek independence and autonomy, as they provide assistance with tasks such as home management, housekeeping, laundry, and meal preparation. Amenities found in independent living communities may consist of a beauty salon and barber shop, community activities, concierge services, transportation, game & TV room, golf course, health center, rental hall, laundry, dining hall, security, and fitness and swimming center.
Independent living communities are among the least expensive senior living options. Residents typically fund a move to a retirement community through the sale of assets, specifically the sale of their homes. As a result of the recession, retirees struggled to sell their homes, leading to a decline in retirement community occupancy rates. However, recent increases in occupancy reflect the economy’s ongoing recovery, and projections are strong for this industry going forward.
According to the Retirement Living Information Center, age-restricted communities are those that require at least one member of the household to be 55 years old or older for at least 80% of the community’s occupied units. In addition, these communities prohibit any residents under the age of 19. Age-restricted communities target those seeking a lifestyle change, but that do not necessarily require health care and thus, they often offer recreational amenities, such as walking trails, golf, or hobby and recreational centers. Age-restricted communities offer a peaceful environment for the aging population, while maintaining a neighborhood feel. Age-restricted communities can take the form of single-family homes, duplexes, condos, townhomes, or mobile homes.
Price: $400-$5,000 per month
Senior apartments are residential offerings that allow elderly residents to retain their independence by making everyday tasks easier through architectural features tailored to seniors. Senior apartments require a minimum age, typically either 55 or 62 years, to join the community. According to the IBISWorld Retirement Communities in the US industry report, some characteristics often found in senior apartments are elevators, interior halls, common areas, and one-floor, one- and two-bedroom layouts, all features that facilitate mobility. These communities usually do not include a central kitchen, as senior apartment complexes do not provide meals to their residents; rather, they more closely resemble multifamily complexes. Senior apartments offer few additional amenities, if any, and are usually a single building, versus a campus setup. Transportation and housekeeping may be available, if services are offered.
Price: $400-$1,900 per month
Pricing Models for Independent Living
Renting is the most affordable of the senior housing pricing models in most cases because it necessitates a smaller out-of-pocket payment. Depending on the potential longevity of the patient or resident’s care needs, renting is the least capital-intensive. Rentals require monthly rent payment plus monthly payments for utilities and additional services offered, based on the facility.
Purchasing a senior living home is similar to purchasing a regular home in that it requires similar costs. A mortgage and homeowner’s association fees are typical costs associated with independent senior living ownership. Outside financing is usually secured in the case of ownership, as opposed to cooperative ownership, which requires a monthly fee to a master mortgage. Ownership is the most cost-effective choice for long-term residents.
In cooperative housing scenarios, each senior resident owns a piece of the community and therefore has a say in how the community is kept and run. Share values are based on square footage of the unit, but each owner has equal contribution when it comes to decision making. Cooperative arrangements provide residents with tax benefits of home ownership, while eliminating the burden of other responsibilities of property maintenance.
Acquisition of these shares consists of a down payment, followed by monthly payments that cover the master mortgage, utilities, etc.
Federally Subsidized Housing
Subsidized senior apartments exist for low income, independent seniors, where residents pay no more than 30% of their monthly income. HUD currently offers three affordable rent programs: public housing, multifamily subsidized housing, and housing vouchers.
Assisted Living Facilities
Assisted living facilities are the next stepping stone from independent living residences and age-restricted communities in terms of care and supervision. Assisted living facilities are state-regulated and provide continuous personal care and assistance in everyday activities, such as laundry, housekeeping, preparation of meals, management of medications, bathing, dressing, using the toilet, transportation, and exercise. Assisted living is ideal for the elderly resident who desires independence but cannot carry out everyday tasks on their own. Residences are commonly private apartments featuring kitchenettes, closely resembling a regular apartment, but providing residents with features that enhance mobility. Support services and supervision is available around-the-clock in these communities; however, services usually exclude inpatient or skilled nursing, hospice, and 24/7 companionship. Some assisted living communities offer a unit specific to memory care patients, which offers even more comprehensive care and supervision. Compared to nursing homes, assisted living communities tend to provide more privacy and personal space, at a lower cost.
Price: $3,500-$10,412 per month
Residential Care Homes
Also known as group homes or adult family homes, residential care homes offer a space for multiple patients, such as spouses, to live together with a live-in caretaker. These facilities closely resemble private homes and offer assistance with daily activities and other similar services as assisted living facilities. Amenities and nursing care offerings vary across facilities. Residential care homes serve residents in a smaller setting than assisted living facilities, offering more intimate relationships between residents. This, in turn, means that fewer organized activities are offered in residential care homes than assisted living facilities.
Price: $1,000-$8,000 per month
Nursing homes are facilities that provide living accommodations and basic nursing care to elderly patients or those with chronic illness in need of assistance with daily activities. Services include social activities, personal care, nursing supervision, and access to medical services. A licensed nurse is guaranteed to be on call 24 hours a day in these facilities. These services can be provided in the short or long term. Short-term care is available for those recovering from injury, surgery, or illness, while long-term care is usually for patients with complex conditions. Some, but not all nursing homes provide a memory care unit.
Skilled Nursing Facilities (SNF)
Skilled nursing facilities are a subcategory of nursing homes. Most, but not all nursing homes are designated SNFs. Care by SNFs is covered under Medicare and other health insurance plans. This is because SNFs can provide more specialized services, such as memory care for Alzheimer’s patients, ventilator and oxygen care, HIV care, traumatic brain injury care, etc. These homes commonly have pharmacies and medical equipment on-site.
Price: $6,000-$13,000 per month
Alzheimer’s and memory care units are often offered as a part of a general nursing home or assisted living facility; however, standalone memory care treatment centers do exist. These homes provide additional structure and supervision for their patients, as well as more highly-trained staff. A key difference in memory care homes is the addition of security features that prevent wandering, such as alarmed exit doors.
Price: $3,500-$6,600 per month
Hospice and Palliative Care
Hospice care can be provided in-home, in a nursing facility, residential community, hospital, or designated hospice facility and is defined as supportive care throughout the final stages of a terminal illness. As is becoming common across senior care industries nationally, hospice services are more frequently being performed in the home. The key difference in hospice care is that its objective is to increase quality of life and comfort for the last six months of the patient’s life, as opposed to curing an illness.
Costs for hospice care tend to be much higher than general senior care, as care needs are much more intensive. According to Debt.org, the average cost per patient per day for care within the last two months of life in a skilled nursing home was $622 in 2010. End of life costs are commonly covered (about 85% in 2010) by government programs, such as Medicare, Medicaid, and private insurance.
Price: $150-$900 per day
Also referred to as adult daycare, respite care is a short-term relief solution for caregivers, permitting patients to enjoy the benefits of an assisted living facility or nursing home at a daily rate. Respite care can also serve as an introduction to senior living for the resident. Stays range from one week to one month, varying by specific patient and caregiver needs.
Price: $90-$250 per day
In-Home Nursing Care
The high cost of nursing homes coupled with an increased desire to remain at home for as long as possible, or “age in place,” has boosted demand for in-home nursing care throughout the nation. Currently, agencies providing at-home care are subject to state laws, which dictate the exact services that can be provided. In general, in-home senior care agencies can provide skilled nursing care, companionship services, physical therapy, occupational and vocational therapy, nutritional services, wound care, medication and pain management, and hospice care. In addition, these in-home services often incorporate non-medical care, which includes assistance with Activities of Daily Living (ADLs) and Instrumental Activities of Daily Living (IADLs), such as bathing, dressing, transportation, housekeeping, meal preparation, and others.
Price: $20-$40 per hour
Continuing Care Retirement Communities (CCRC)
Continuing Care Retirement Communities (CCRCs) are the most comprehensive options on the senior care spectrum. They are age-restricted communities with diverse service offerings, with the intention of providing residents with long-term treatment from entry until death. CCRCs allow residents to age in place by combining independent living with assisted living and around-the-clock nursing services, as well as memory care in some cases to offer all levels of care. These communities are often set up in a campus format such that residents do not have to move off of the campus if their care needs change. Costs vary greatly for these communities as residents move along the care spectrum.
CCRCs are unique from other senior care facilities in that they require a contract upon entry, which usually guarantees their services for the duration of at least one year. Often, these contracts guarantee services for the duration of the resident’s lifetime. More specifically, these contracts can take one of four different forms:
- Type A: Life Care Contracts. Type A contracts guarantee services for the duration of the resident’s lifetime, without large changes in monthly costs to the resident. These contracts require an entry fee, which can or cannot be refundable. This entry fee can range from a few hundred dollars, or equivalent to monthly rent, to up to $1 million when a large breadth of services is required for a particular patient.
Price range: $160,000-$600,000 entry fee + $2,500-$5,400 monthly fee
- Type B: Modified Contracts. Modified contracts include lower monthly fees than Life Care contracts for the same amenities and residential offerings; however, fewer healthcare services are included in the monthly cost. If additional services are needed, they are added at market rate at the discretion of the facility. Type B contracts also include entry fees similar to Type A.
Price range: $80,000-$750,000 entry fee + $1,500-$2,500 monthly fee
- Type C: Fee-for-Service Contracts. Type C contracts often require entry fees that are lower than Types A and B, or no entry fee at all. Residents pay higher prices per service than in Type A and B contracts, usually because the resident is entering the facility at a later stage.
Price range: $100,000-$500,000 entry fee + $1,300-$4,300 monthly fee
- Type D: Rental Agreement Contracts. Paying monthly rent is less common among CCRC contracts; but, in some instances, residents agree to pay a monthly rent with additional fees determined by the care and services rendered each month. These services are more expensive due to lack of entry fees in this case.
Price range: $1,800-$30,000 entry fee + $900-$10,700 monthly fee
Price: Ranges; average entrance fee per unit: $249,857
Pricing Models for Assisted Living, Nursing, and CCRC Care
For many Americans, the cost of senior care is daunting. Many families struggled to support their loved ones following the economic downturn, which caused many to dip into their savings early. However, the industry is working to provide families with different care options, making services more accessible to more seniors in need of care. According to Paying for Senior Care, there are three main models for payment for general senior care:
- All inclusive. This includes monthly rent, meals, housekeeping, laundry, transportation, security, personal care, recreational activities, and other expenses on one monthly bill.
- Tiered pricing. The facility may provide three to four levels of care, containing groups of services to be chosen based on the patient/resident’s specific needs. These tiers are often related to number of hours associated with needed services. An example of a tier is one specific to Alzheimer’s disease and memory care.
- Fee for services. This method allows the resident to pay a flat fee for rent and meals, with each additional service provided for a fee.
The table on the following page, created by SeniorLiving.org, outlines cost range, age, and types of care and amenities offered across the different types of senior housing.
- Oliver, K. “Industry Report 62311 Nursing Care Facilities in the US.” IBISWorld
- Curran, J. “Industry Report 62331 Retirement Communities in the US.” IBISWorld
- Curran, J. “Industry Report OD5597 Hospices & Palliative Care Centers in the US.” IBISWorld
- Diment, D. “Industry Report OD5597 In-Home Senior Care Franchises in the US.” IBISWorld
- Diment, D. “Industry Report OD5598 Residential Senior Care Franchises in the US.” IBISWorld
- Journal of the Royal Society of Medicine: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC1282187/
- Debt.org: https://www.debt.org/medical/hospice-costs/
- Paying for Senior Care: https://www.payingforseniorcare.com/assisted-living/pricing-models.html
- Retirement Living Information Center: https://www.retirementliving.com/arcd-community-types
- AARP: https://www.aarp.org/caregiving/basics/info-2017/continuing-care-retirem...
- A Place for Mom: https://www.aplaceformom.com/senior-care-resources/articles/senior-housi...
- Guide to Senior Housing: http://web28.streamhoster.com/apfmdev/apfm_ebook_guide-to-senior-housing...
- SeniorLiving.org: https://www.seniorliving.org/lifestyles/senior-cooperative-housing/
- SeniorLiving.org: https://www.seniorliving.org/
- SeniorLiving.org: https://www.seniorliving.org/lifestyles/ccrc/
- SeniorLiving.org; legal senior housing definitions: https://www.seniorliving.org/lifestyles/senior-care-type-definitions/
- SeniorLiving.org; HUD programs: https://www.seniorliving.org/lifestyles/hud-senior-housing-programs/