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What is an Entrance Fee at a Retirement Community?

Housing | April 5, 2023

An older man living in an entry fee retirement community.

As people get older, they deserve to live in a place that helps them lead healthier, more satisfying lives. That exact housing solution differs depending on who is looking, of course. While one senior may want to live at home, another may seek housing in a comfortable retirement community.

One such option is the entry fee retirement community. Unlike traditional monthly rental communities, entry fee communities require seniors to pay an initial entrance fee when they move into Independent Living. This initial down payment grants seniors lifetime availability and priority access to whatever is available at that community.

Trying to figure out if an entry fee retirement community is right for you or your loved one? We’ll break down how much these communities can cost, the different benefits of paying an entry fee, and other key factors that may impact your senior housing search.

How Much Do Entrance Fees for Retirement Community Cost?

An entrance fee is exactly what it sounds like – an initial payment that you must pay in order to get access to special benefits and accommodations. However, these rates can vary greatly from one community to another.

The average entrance fee is $402,000 according to AARP, with initial fees ranging from $40,000 to more than $2 million. As you may expect from that range, one entrance fee retirement community can be vastly different than another. The key is that regardless of cost, these communities charge an upfront fee to provide residents the opportunity to stay in one community that provides a wide range of care, services, and activities.

Entrance fee retirement communities also charge a monthly fee once residents move into their homes. These monthly fees change based on the size of the unit but are typically lowered with the inclusion of an entrance fee. Some communities also offer different types of plans with varying financial advantages. These include:

  • Lower upfront entry fee plan: Residents pay less to enter the community, but are not guaranteed any refunds after a few years.
  • Higher upfront entry fee plans: Residents pay a higher entrance fee, but a portion of their initial fee is refunded to them or their estate after they leave the community or pass away.

Are There Other Types of Senior Living Like Entry Fee Retirement Communities?

There are a few different types of senior living that are similar to entry fee retirement communities, or commonly mistaken as them. These include:

  • Continuing care retirement communities (CCRC)
  • Life plan communities

A CCRC is a senior living community where residents have access to all levels of care in one space, including independent living, assisted living, skilled nursing, and memory care. It’s common for an entry fee retirement community to be a CCRC, but not all CCRCs are entry fee communities. Many entrance fee communities offer all levels of care, but some do not. As such, a CCRC only qualifies as entry fee if they charge an upfront cost for entry.

A life plan community has a similar relationship in that some entry fee communities offer life plans to residents. Residents are able to pay for a life care plan that helps them lock in the average independent living rate, even if their level of care changes in the future. Like a CCRC, some entrance fee retirement communities offer this type of service (or allow residents to use a previously-purchased plan), but not all do.

Why Sign up for an Entry Fee Retirement Community?

While the inclusion of an entrance fee is a major difference from traditional rental communities, there are several benefits to paying an initial down payment.

A long-term home with medical flexibility

One of the biggest benefits of paying an entrance fee is peace of mind. With a single, upfront fee, older adults can commit to their desired independent living residences and know that they won’t need to leave unless they choose to or can’t meet the monthly fees. That means you have a guaranteed community to stay in even as your health needs change.

Higher-end living with lots of amenities

Simply put, entry fee retirement communities are nice places to live. Some communities are truly luxury living, but even less ritzy options typically offer a lot of attractive amenities. In addition to health care services, residents can enjoy access to benefits like a community center, indoor pool, wellness center, and other amenities depending on the community.

Tax benefits

Entrance fees can help some tax-savvy seniors take advantage of paying upfront for their community. Some people can write off some of their initial entrance fee as a prepayment for medical expenses. Check with your accountant to see how you can maximize your senior living investment.

Where Can I Find an Entry Fee Retirement Community?

Entry fee retirement communities can be found around the country, but it’s important to find the right community for you or your loved one’s needs. Don’t be afraid to take the time to compare and evaluate each community to make sure it’s the right place

At National Church Residences, we have a proven track record of helping seniors live healthier, more satisfying lives. If you’re looking for the right entry fee retirement community in Ohio, give us a call at 844-465-6063 to talk to one of our friendly staff members today.

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National Church Residences does not discriminate against individuals based on race, color, disability, familial status, national origin, religion, sex, sexual orientation, gender identity or expression, payment source, or any other class protected by applicable law, whether in employment or its activities, programs, or services. National Church Residences also does not discriminate based on age, except as required by government entitlements or permitted by applicable law for seniors.