Methodology
Continuing Care Retirement Communities ask residents to pay large entrance fees — often $100,000 to $1,000,000 or more — in exchange for guaranteed access to a continuum of care. Those fees are at risk if the community encounters financial distress. Here is how we collect and interpret public financial data to help families evaluate that risk.
Most senior living options involve only monthly fees that stop when you leave. CCRCs are different: the entrance fee is typically paid upfront and is partially or fully non-refundable. If the community declares bankruptcy, enters receivership, or is sold under financial distress, residents may lose all or most of that money — and face forced relocation with little notice.
CCRC bankruptcies and near-failures are not hypothetical. Several high-profile cases have left hundreds of residents without refunds and with significantly disrupted care. In some cases, residents who had paid Type A (life care) contracts found that promised healthcare coverage was renegotiated or eliminated as part of a restructuring.
Unlike nursing homes, CCRCs are not regulated by the federal Centers for Medicare & Medicaid Services unless they contain a Medicare/Medicaid-certified SNF wing. Financial oversight comes from state insurance regulators, bond disclosures, IRS Form 990 filings for nonprofits, and, in some states, mandatory annual actuarial reports. The quality and consistency of this data varies significantly by state.
The contract type determines how much financial risk you carry as a resident and how exposed your entrance fee is to the community’s financial condition.
You prepay — through a large entrance fee and elevated monthly fee — for lifetime access to higher levels of care (assisted living, memory care, skilled nursing) with little or no increase in monthly cost. The community bears the actuarial risk that your care needs will be extensive. If it miscalculates this risk or faces economic headwinds, the promised care guarantee may be worth less than you paid for it. Your entrance fee is fully exposed to the community’s solvency.
You receive a defined number of covered care days included in the contract, after which care is billed at market rates (or at a discounted rate). Your exposure is lower than Type A because the community is not guaranteeing unlimited care, but the entrance fee is still substantial and the community’s solvency still determines whether contracted care remains available.
You pay for healthcare services as you use them at prevailing market rates. The contract itself carries the lowest financial risk because you are not prepaying for care. An entrance fee may still be required (and may be non-refundable), and market-rate care costs can be unpredictable if health needs increase significantly.
Regardless of contract type, we recommend requesting audited financial statements and an actuarial report (if the state requires one) before signing any CCRC contract.
Where financial data is available, we display four indicators with a traffic-light signal (green / yellow / red). These thresholds are informed by standards used by CCRC bond rating agencies (Fitch, Moody’s, S&P) and published actuarial benchmarks, though no single ratio should be read in isolation.
The number of days the community could cover operating expenses from unrestricted cash and short-term investments alone — without collecting any revenue. This is the most widely cited CCRC liquidity indicator.
Strong
Moderate
Weak
Total operating expenses divided by total operating revenue. A ratio above 1.0 means the community is spending more than it earns from operations — a sustainable situation only if offset by entrance fees, investment income, or endowment draws. Chronic ratios above 1.0 are a warning sign.
Strong
Moderate
Weak
Net income (or net operating income) divided by annual debt service (principal + interest). Measures the community’s ability to meet bond or loan obligations. Many CCRC bond indentures require a minimum DSCR of 1.20× — a value below that can trigger technical default provisions.
Strong
Moderate
Weak
The percentage of total units occupied by residents. Occupancy is the primary revenue driver for CCRCs. Sustained low occupancy compresses operating margins and can signal difficulty attracting new residents — which in turn reduces entrance fee income that many CCRCs depend on for capital.
Strong
Moderate
Weak
Important caveat
These indicators are useful for comparison and trend-spotting — not for definitive conclusions. A community with weak scores may be executing a turnaround. A community with strong scores can still fail quickly if it carries hidden contingent liabilities or faces a large capital project. Always request audited financial statements from the community directly.
Several states (California, Florida, Maryland, Virginia, and others) require CCRCs to file annual financial reports with a state insurance or health department. These are the most reliable source when available, as they follow a standardized format and are subject to audit requirements.
Most nonprofit CCRCs file Form 990 with the IRS, which is publicly available via ProPublica Nonprofit Explorer and the IRS. 990s provide operating revenue, expenses, endowment balances, executive compensation, and related-party transactions. They do not include all CCRC-specific metrics.
Many CCRCs fund construction or renovation through tax-exempt revenue bonds. The MSRB’s Electronic Municipal Market Access (EMMA) system requires annual financial filings as long as the bonds are outstanding. These often include the most detailed financial statements available, including DSCR calculations.
Some CCRCs publish voluntary annual reports with financial summaries. We include this data when available but treat it as less reliable than audited filings.
We recommend consulting an elder law attorney or fee-only financial advisor who specializes in senior housing before executing any CCRC contract.