Let's say you paid an entrance fee of $500,000 and the contract states a 90% refund. When will you receive $450,000 after moving out?

If you can't answer this question, you shouldn't sign yet. The real important factor is the refund conditions rather than the refund percentage.

CCRC stands for Continuing Care Retirement Community. The California Department of Aging describes it as a structure where you pay a large one-time entrance fee and monthly maintenance fees to receive lifelong housing and various levels of care.

The entrance fee amounts vary quite a bit across sources. MyLifeSite reports that the national average will exceed $480,000 by 2025, while another consumer guide estimates the average for 2026 at $400,000. Since these are not government statistics, take them with a grain of salt.

First, let's look at refundable contracts. These contracts return a certain percentage of the entrance fee when you leave, with refund percentages ranging from 25% to 100%, and reports suggest that 90% is common in new communities.

However, the higher the refund percentage, the more expensive the entrance fee becomes.

Non-refundable contracts can be a bit misleading. They often use a declining balance method where the refund amount decreases monthly rather than starting at $0.

Some contracts reduce the refund by 1% each month, leaving 88% after 12 months. If it decreases by 1-2% each month, it could reach $0 between 50 to 100 months.

This means that the longer you live, the less money you will get back later. However, the entrance fee is cheaper, allowing you to invest the remaining money yourself.

MyLifeSite calculated for a couple aged 78 and 79 over 12 years, and found that at a 3% return, the total amounts for both the 75% and 90% refundable options were nearly the same, both outperforming the declining balance.

Interestingly, while the totals were similar, the 75% contract provided significantly more cash on hand.

If you increase the return to 6%, the declining balance catches up somewhat, but when combined with the refund, it still didn't surpass the other options. However, this was based on a price list from one community.

In California, there is one crucial term to be aware of: refundable versus repayable.

Repayable contracts promise to return part of the entrance fee but condition it on the next person moving into that unit or its resale. State law prohibits calling or advertising this money as a refund.

Refundable contracts must pay out within 14 days after vacating the unit or 90 days after death or termination notice, whichever is later. Repayable contracts have a 14-day payout after resale. The starting points are different.

If the repayment is delayed, interest accrues. After 180 days, it's 4% simple interest; after 240 days, it's 6% simple interest; and after one more year, it's 6% compound interest. This is based on contracts signed after January 1, 2017.

A 2015 legislative analysis mentions a CCRC in Pacific Grove that withheld $530,600 from the heirs of a resident who died more than three years prior, citing resale conditions.

There are also differences in safeguards. Places selling refundable contracts must build a refund reserve in a trust and recalculate it annually to report to the state, while repayable contracts are not treated as part of this reserve.

Honestly, this can be frustrating. If the money you paid when selling your home depends on the next resident, I believe the state should provide stronger protections. This year, AB 1983 also addressed this delay issue, but I haven't confirmed the final outcome.

You can cancel without reason within 90 days of the actual move-in date with written notice, and for non-equity contracts, you will receive the amount paid minus the costs incurred for care.

Taxes also differ. The refundable portion is treated like a loan and does not qualify for medical expense deductions, while only the non-refundable portion provides deductions, according to common explanations from case law and expert materials.

IRS Publication 502 (2025 edition) recognizes the portion of life-care fees that qualifies as medical expenses. However, only the amount exceeding 7.5% of AGI is deductible.

In a hypothetical calculation from 247 Wall St., if the medical expense proportion is set at 40%, a $500,000 90% refundable option would have $20,000 eligible for deduction, while a $350,000 non-refundable option would have $140,000. These figures are before applying the 7.5% threshold.

It's also worth noting that any refunds received later could be counted as income for previous deductions. Tax and contract choices vary based on individual circumstances, so be sure to consult a tax advisor and a senior law specialist before signing.

Don't forget about the time value of money. Using the same article's calculations, if you receive $450,000 after 15 years, with a 3% inflation rate, it would be worth about $289,000 today. That 90% isn't really the same 90%.

Also, keep in mind the questions recommended by the California Department of Social Services (CDSS). Is the refund timing at the end of the contract or triggered by another event? How much will the monthly fees increase?

If you move to assisted living or nursing care, how will the monthly fees change? What is the long-term debt? Is the reserve sufficient?

Is the occupancy rate for different levels of care stable? Is the cash flow positive?

CDSS also clearly states that their approval is not a recommendation or guarantee of implementation. The contact number for the department is 916-654-0591.

If it were me, I would look at it in this order. First, I would check whether the contract is refundable or repayable.

Next, I would look at the payout timing. The refund percentage comes after that.

If inheritance is really important, I would consider refundable options but prioritize contracts without resale conditions. If not, I would compare the 90% option with 75% or lower and calculate accordingly. The larger number doesn't always win.