Three years ago, when Bob and Sandy Curtis moved into a luxury continuing care retirement community in Port Washington, New York, they thought they had found the perfect senior care solution.
In exchange for a hefty entry fee — about $840,000, financed by the sale of the Long Island home they’ve owned for nearly 50 years — they’d care for the rest of their lives at Harborside. They chose a contract from among several options that set fixed monthly fees at about $6,000 for both of them and would return half of the entry amount to their estate upon their death.
“This was the final chapter,” Mr. Curtis, 88, said. “That was the deal I made.”
CCRCs, or life plan communities, 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 primarily non-profit.
More than 1,900 CCRCs house about 900,000 Americans, according to LeadingAge, which represents nonprofit senior housing providers. Some communities offer lower and higher refunds, many avoid purchase fees altogether and operate as rentals, while others are hybrids.
For the Curtises, Harborside offered reassurance. Mr. Curtis, an industrial engineer who works as a consultant, got a comfortable one-bedroom apartment in the independent living wing. “It was a vibrant community,” he said. “Meals. Amenities. Gym.”
Every day he spends time with Sandy, 84, who lives in the facility’s memory care unit, an elevator ride away. Staff members there “treat Sandy with love and care,” said Mr. Curtis. “It would have been great if it could have continued.”
But in 2023, Harborside, for the third time since it opened in 2010, filed for bankruptcy. Its services and activities have declined, residents and families say. A group of about 65 residents, most in their 90s, have hired a lawyer, but it remains uncertain whether they will ever receive the refunds their contracts are supposed to guarantee.
“Everybody is panicking,” said Helen Zlotnick, whose parents also live separately in Harborside’s independent living and memory care units. Their contract stipulates a 75% refund. “A bunch of people move and some people refuse to move.”
Data tracking bankruptcies and closings in nursing homes are scarce. Dee Pekruhn, who directs community life plan policy at LeadingAge, said there have been “very, very few examples of actual bankruptcies,” although there have been recent close calls.
But Lori Smetanka, the executive director of the National Consumer Voice for Quality Long-Term Care, said state and local long-term care ombudsmen have increasingly reported “issues with financially distressed facilities.”
Recent crises include the closing of Unisen Senior Living, a CCRC in Tampa, Florida. After it filed for bankruptcy a second time last spring, more than 100 residents were forced to leave.
In Charlotte, NC, 2023, state officials stepped in to oversee a long-running 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 in refund payments and government oversight continues.
In Steamboat Springs, Colo., a CCRC called Casey’s Pond went into receivership last summer. Since being sold to a nonprofit health care 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 be closed. About 1,550 nursing homes closed between 2015 and mid-2024, according to the American Health Association.
But when CCRCs fail, residents and families face not only the physical and psychological ordeal of relocation, but also the potential loss of their life savings.
In bankruptcy, residents eligible for refunds “are at the bottom of the list” among creditors seeking payment, said Nathalie Martin, a law professor at the University of New Mexico who has written about CCRC insolvencies.
Secured lenders have the first crack at collecting their debts, followed by lawyers, accountants and workers.
Because people living in a CCRC that has been promised refunds are unsecured lenders, “residents are in a very vulnerable position and they don’t know it,” Ms. Martin. Without reimbursements, they may not be able to afford to pay for care elsewhere if they are forced to move.
In Harborside, a previous proposed sale to a national chain would have kept the facility open and refunded fees to residents who had moved or died. That deal expired last fall when state regulators refused to approve it.
“It’s unbelievable that the Department of Health allowed this to happen,” said Elizabeth Abulafia, the attorney representing some Harborside residents.
Now a Chicago investment firm, Focus Healthcare Partners, wants to buy Harborside and close all but the independent living apartments, which would become rentals. (Focus said it next plans to apply for state licenses for assisted living and memory care. Approvals could take several years.)
A skeptical federal bankruptcy judge challenged that offer last month and instead urged the parties to reach an agreement that protects residents.
“We deeply empathize with the residents,” said Curt Schaller, co-founder of Focus. He added that “we cannot undo the money lost by others that led to this bankruptcy.”
Harborside’s attorney said he could not comment during the pending trial. The next bankruptcy hearing is scheduled for February 12.
Although the federal government regulates nursing homes within CCRCs, the rest of their living arrangements and contracts are subject to a host of state laws. Many require various disclosures to prospective residents or oversee contract terms.
But few impose what Ms. Martin sees critical to protecting returns: reserves. If it were mandatory, “when you pay these large fees, the facility would have to set aside a certain amount of money for your future care,” he explained.
A few states, including California, Florida, New Mexico and — notably — New York, require reserves, “but, as we’ve seen, that doesn’t preclude communities from setting aside such funds and filing for bankruptcy anyway,” Ms. Martin added in an email.
“We need our oversight agencies 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 bring in medical examiners to look at the books. There needs to be better control.”
Additional regulation is no match for the senior housing industry. “The more we regulate and make it more expensive, the less we can house people,” said Robert Kramer, co-founder of the National Investment Center for Housing & Seniors.
Requiring reserves, he said, would mean “far fewer CCRCs built – and the people who move will be net worth in the millions”.
One solution for senior care buyers: Choosing a CCRC that operates as a rental, without expensive buy-ins or refunds. This route makes potential financial failure less threatening, although it also means that monthly costs rise with increasing levels of care.
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,” said Mr. Kramer.
To help, the National Continuing Care Residents Association publishes a consumer handbook. CARF International and MyLifeSite also provide guidance to consumers.
But Bob Curtis and his sons, both in finance, consulted accountants and even interviewed the CFO of Harborside’s parent company. And yet here it is.
Mr. Curtis monitors every bankruptcy proceeding via Zoom. If he loses his refund, “Where Will Sandy Go?” he wonders. “How will he manage? How am I going to pay for it?’
