Buy-In or Rental Senior Living: Which One is Best for You?
As if making the decision to move to senior living isn’t difficult enough emotionally, navigating all the details and the lingo can be downright overwhelming. We get it and are here to help. There’s often a lot of confusion around the types of payment models senior living communities offer: buy-in or rental. Let’s explain and help you determine which could be best for your needs.
Payment Models Defined
Quite simply, this is the way in which you will pay for your senior living community’s services. Many communities offer either rental or buy-in. But some communities give you both options so it’s important to understand how they differ.
Rental
You pay a monthly fee based on the level of care you receive (independent living, assisted living, skilled nursing, etc.) with the cost increasing as your needs increase. Your typical monthly fee often includes the following:
- Meals
- Home maintenance
- Housekeeping
- Social activities
- Some utilities
- Emergency call monitoring
- Security
Buy-In
A buy-in or entry fee community is typically a continuing care retirement community (CCRC). A CCRC offers at least three levels of care on one campus. Although there are rental CCRCs as well, in a buy-in situation you would move into independent living and pay an upfront fee in addition to your monthly fee. You could consider this fee as a down payment for your future care should you need to move to assisted living or skilled nursing for example down the road.
The Pros
By and large the main pro of the rental model is the flexibility. You’re not locked into a long-term contract. In addition, you can get many of the same perks of the buy-in option and retain complete control of your assets.
With the buy-in payment model, you’re really giving yourself peace of mind for the long term. Should you need to move to assisted living or skilled nursing, your buy-in may ensure you have priority access. In addition, this money can help to offset those more expensive care costs and is considered a prepaid medical expense by the IRS, so tax deductions may be available. Lastly, you may also have the option for up to 90 percent of your buy-in fee to be returned to your estate or designated beneficiary.
The Cons
In a rental model you don’t have the predictability of knowing now what you’ll pay for future care and having that money set aside. The fear of not being able to pay future health expenses is a top concern for seniors.
The upfront fee for the buy-in model can run into the hundreds of thousands of dollars. Although many fund this through the sale of their house, realistically not everyone can afford it.
What’s Best for Your Needs?
Both rental and buy-in payment models are great options for senior living in the right circumstance. And that’s really what will drive which you choose – your wants and needs for the future as well as your budget.
For more information on moving to a senior living community, check out our Guide to Funding Senior Care & Housing today →
