Three years ago, when Bob and Sandy Curtis moved into an upscale continuing care retirement community in Port Washington, NY, they thought they had found the best possible solution for senior care.
In exchange for a steep entry fee — about $840,000, financed by the sale of the Long Island home they’ve owned for nearly 50 years — they would be taken care of for the rest of their lives at Harborside. They selected a contract from several options that set a stable monthly fee at about $6,000 for both of them and that would reimburse half of the entry fee to their estate after their deaths.
“This was the final chapter,” Mr. Curtis, 88, said. “That was the deal I made.”
CCRCs, or community living plans, provide increasing levels of care on a single campus, from independent and assisted living to nursing homes and memory care. Unlike most senior living facilities, they are predominantly nonprofit.
According to LeadingAge, which represents nonprofit senior housing providers, more than 1,900 CCRCs house approximately 900,000 Americans. Some communities offer increasingly lower refunds, many avoid buy-in fees altogether and operate as rentals, while others are hybrid.
For the Curtises, Harborside offered reassurance. Mr. Curtis, an industrial engineer who works as a consultant, rented a comfortable one-bedroom apartment in the independent living wing. “It was a vibrant community,” he said. “Meals. Services. A gym.”
Every day he spends time with Sandy, 84, who lives in the facility’s memory care unit, accessible by elevator. Staff members “treat Sandy with love and care,” Mr. Curtis said. “It would have been wonderful if he could have continued.”
But in 2023, Harborside, for the third time since opening in 2010, filed for bankruptcy. Its services and activities have declined, residents and families say. A group of about 65 residents, mostly in their 90s, have hired a lawyer, but it remains uncertain whether they will ever get the reimbursements their contracts supposedly guarantee.
“Everyone is panicking,” said Ellen Zlotnick, whose parents also live separately in Harborside’s independent living and memory care units. Their contract provides a 75% refund. “A group of people are moving and others refuse to move.”
Data tracking senior housing bankruptcies and closings is scarce. Dee Pekruhn, who leads community policy on life plans at LeadingAge, said there have been “very few examples of outright failures,” although there have been moments of risk recently.
But Lori Smetanka, executive director of the National Consumer Voice for Quality Long-Term Care, said state and local long-term care ombudsmen are increasingly reporting “problems with financially distressed facilities.”
Recent crises include the closing of Unisen Senior Living, a CCRC in Tampa, Florida. After filing for bankruptcy for the second time last spring, more than 100 residents had to move.
In Charlotte, North Carolina, in 2023, state officials stepped in to oversee a long-standing CCRC called Aldersgate, which had struggled financially for years. The state approved a “corrective action plan” and Aldersgate avoided bankruptcy. But it remains months behind on reimbursement payments and state oversight continues.
In Steamboat Springs, Colorado, a CCRC called Casey’s Pond went into receivership by court order last summer. Since it was sold to a nonprofit health system, it will continue to operate, but only after two municipalities, a local foundation and hundreds of community members raised $30 million to save it.
Other types of senior housing may also close. About 1,550 nursing homes closed between 2015 and mid-2024, according to the American Health Care Association.
But when CCRCs fail, residents and families face not only the physical and psychological ordeal of relocation, but also the possible loss of their life savings.
In bankruptcy, residents entitled to refunds “are at the bottom of the list” among creditors seeking payment, said Nathalie Martin, a University of New Mexico law professor who has written about insolvent CCRCs
Collateralized lenders have the first shot at collecting what they are owed, followed by lawyers, accountants and employees.
Because people living in a CCRC that has promised repayments are unsecured lenders, “residents are in a very vulnerable position and don’t know it,” Ms. Martin said. Without reimbursement, they may not be able to afford to pay for treatment elsewhere if forced to move.
At Harborside, a previous proposed sale to a national chain would have kept the facility open and refunded fees to residents who had moved out or died. The deal collapsed last fall when state regulators refused to approve it.
“It is astounding that the Department of Health allowed this to happen,” said Elizabeth Aboulafia, the attorney representing some Harborside residents.
Now a Chicago investment firm, Focus Healthcare Partners, wants to buy Harborside and close everything except the detached apartments, which would become rentals. (Focus said it plans to apply for state licenses for assisted living and memory care. Approvals could take several years.)
A skeptical federal bankruptcy judge cast doubt on that offer last month and instead urged the parties to reach a deal that protects residents.
“We deeply empathize with residents,” Curt Schaller, co-founder of Focus, said in a statement. He added that “we cannot undo the money lost by others that led to this failure.”
Harborside’s attorney said he could not comment during ongoing litigation. The next bankruptcy hearing is scheduled for February 12.
While the federal government regulates nursing homes within CCRCs, other living arrangements and contracts are subject to a mix of state laws. Many require various disclosures from prospective residents or supervise contract terms.
But few enforce what Ms. Martin sees as crucial to protecting refunds: reserves. If they were mandatory, “when you pay these high amounts, the facility would be required to set aside a certain amount of money for your future care,” he explained.
A handful of states, including California, Florida, New Mexico and, most notably, New York, require reserves, “but as we’ve seen, that doesn’t stop communities from not setting aside those funds and still filing for bankruptcy,” he said. stated the lady. . Martin added in an email.
“We need our regulators to pay more attention,” said Ms. Smetanka of The National Consumer Voice, referring to state regulators and the federal Centers for Medicare and Medicaid Services.
“Licensing agencies should engage forensic accountants to examine the books of accounts. There should be better controls.”
Additional regulation does not sit well with the senior housing industry. “The more we regulate and make everything more expensive, the less we can house people,” said Robert Kramer, co-founder of the National Investment Center for Seniors Housing & Care.
Requiring reserves, he said, would mean “many fewer CCRCs built – and the people who move in will have millions in net worth.”
One solution for senior care buyers: Select a CCRC that operates as a rental, without expensive buyouts or refunds. This path makes potential financial failure less threatening, but it also means that monthly costs increase as care levels increase.
Industry sources urge prospective residents to carefully investigate a facility’s financial strength and applicable state laws, and to have attorneys or financial advisors review contracts.
“Harborside has been in the news for years — it was no secret,” Kramer said.
To help, the National Continuing Care Residents Association publishes a consumer handbook. CARF International and MyLifeSite also provide consumer assistance.
But Bob Curtis and his sons, both in finance, consulted accountants and even interviewed the chief financial officer of Harborside’s parent company. Yet here they are.
Mr. Curtis attends every bankruptcy court proceeding via Zoom. If he loses his refund, “Where will Sandy go?” you ask. “How will he cope? How will I pay for it?”