About Independent Living
Independent living can be a great choice for seniors who can still manage themselves on a day-to-day basis, but who are looking to downsize or to have certain services close at hand, such as medical services. Typical independent living communities can vary broadly, but typically provide seniors with their own accommodation. Apartments, townhouses, and condos are all available as examples of independent living accommodation. Among of the biggest benefits of independent living communities, also sometimes called retirement communities, are the social benefits they offer seniors.
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What is Independent Living?
Independent living units are intended for seniors who wish to remain independent while living in a private space such as a studio, apartment or home. These residences are also known as senior communities or retirement communities. They are designed for those who may pay for some congregate services such as meals or housekeeping as part of the monthly fee or rental rate, and who require little, if any, assistance with activities of daily living such as dressing and bathing. Residents of independent living units may have some home health care-type services provided to them by staff or an outside agency. Typically there is staff onsite as well as building security.
Independent Living vs. 55+ Apartment Communities
Senior apartments, or a housing community restricted to residents age 55 or older, are for independent seniors who are able to care for themselves with little to no daily assistance. Unlike independent living communities, 55+ senior communities typically do not offer additional services such as assistance with daily living, meals or transportation. These age-restricted communities are regulated by the U.S. Department of Housing and Urban Development (HUD).
According to an American Housing Survey conducted in 2011, it is projected that there will be an increase in demand for housing in 55+ communities going forward, as the share of households age 55+ is expected to grow annually, and to account for nearly 45% of all U.S. households by the year 2020.
Independent Living vs. CCRCs
Continuing Care Retirement Communities (CCRCs) offer a combination of independent living apartments, assisted living units and skilled nursing care rooms all available on one campus. Unlike an independent living community which typically offers no daily living assistance services or skilled nursing, CCRC residents can transition to other areas within the community that will serve their increasing care needs. The demand for CCRCs continues to increase as the number of people reaching retirement age rises. CCRCs have evolved over the past several years and offer enticing service packages and entrance-fee options. Providing 24-hour staff and security, gourmet meals, religious, social and leisure activities, housekeeping, laundry, transportation, wellness and fitness programs, CCRCs are an attractive all-inclusive housing option for seniors.
CCRCs are governed by state regulations in most states, and typically are classified as an insurance model and governed by the state department of insurance. Each of the components making up a CCRC are subject to separate regulations - the housing units may be regulated at the local level, the assisted living regulated by the state, and the nursing home portion of the community is governed by state and federal regulations.
What Are the Costs of Independent Living?
According to AARP, one of the most expensive of all long-term-care options, CCRCs require an upfront entrance fee ranging from $100,000 to $1 million as a prepayment to receive care under contract. In addition to this initial buy-in, there are monthly fees ranging from $3,000 to $5,000, which are subject to change as resident care-needs increase. These monthly charges are dependent on a variety of factors including health, the type of housing such as a studio or larger dwelling, whether to rent or buy, the facility’s occupancy and other stipulations and amenities included in the service contract. In addition, fees may be incurred for additional services such as housekeeping, meal service, transportation and social activities. Each CCRC operates differently so it is important to carefully read what is included or omitted from the agreement.
Independent living costs significantly less than a CCRC, a nursing home, or even assisted living. The monthly fees for independent living vary mainly due to size and location, with the average cost ranging from $1,500 to $3,500 per month. Some communities require an entrance fee, also called a "buy-in" fee, while others only require monthly rent. Similar to any long-term-care option, independent living costs and options vary by area – it is important to explore each facility, ask questions and read over agreements carefully to be sure the community offers what is desired.
How to Pay for Independent Living?
Long-term care insurance or life insurance may help pay some of the costs of an independent living community, but most independent living residents pay out-of-pocket for their living expenses.
Long-Term Care Insurance
Long-term care insurance is a policy that is purchased through a private insurance company. Similar to health insurance policies, the price varies greatly depending on age, general health and amount of coverage needed. Coverage could be denied for people with pre-existing conditions such as Alzheimer's disease or Parkinson's disease. Not all insurance will deny based on these conditions so it is important to explore different insurance companies.
Medicaid is a Federal and State health insurance program for those with low income and limited assets. Administration of the program varies by state, according to the Centers for Medicare and Medicaid Services (CMS). Medicaid does not cover the costs of independent living but may pay for services used in conjunction with a facility such as skilled nursing or home health. Unlike Medicare, Medicaid has strict eligibility requirements.
Medicare is a federal government program for those 65 or older with low income and limited assets. It generally does not pay for independent living but it will cover skilled nursing or home health services that may be used while living at an independent living facility.
In situations when costs aren’t covered through other means, paying via private funds is an option. Sources of private funds for assisted living include retirement accounts and 401Ks, savings accounts, annuities and insurance plans (including life settlements), trusts and stock market investments. Home equity and bridge loans can also be used when transitioning to an independent living community.
Additional Independent Living Resources
- What Is Senior Co-Housing?
- What is Independent Living for Seniors?
- Independent Living or Assisted Living? What is the Difference?
- Paying for Independent Living