Three years ago, when Bob and Sandy Curtis moved into a luxury retirement home in Port Washington, New York, he thought they had found the best possible solution for elder care.
In exchange for a high entrance fee—about $840,000, financed by the sale of the Long Island home they had owned for nearly 50 years—they would receive care at Harborside for the rest of their lives. They selected a contract from several options, with the monthly cost for both stable at about $6,000, and they would return half of the entrance fee to their estate upon their death.
“This was the last chapter,” said 88-year-old Curtis. “That was the deal I made.”
CCRCs, or life plan communities, increasingly offer care on a single campus, from independent living and assisted living to nursing homes and memory care. Unlike most senior housing, they are predominantly non-profit.
According to LeadingAge, an organization that represents senior housing nonprofits, more than 1,900 CCRCs house approximately 900,000 Americans. Some communities offer lower and higher refunds, many avoid buy-in fees altogether and operate as rentals, and others are hybrid.
For the Curtises, the harbor side offered reassurance. Mr Curtis, an industrial engineer who works as a consultant, took a comfortable one-bedroom apartment in the independent living wing. “It was a vibrant community,” he says. “Meals. Facilities. A gym.”
Every day he spends time with Sandy, 84, who lives in the facility's memory care unit, an elevator ride away. The staff there “treat Sandy with love and care,” Mr Curtis said. “It would have been wonderful if this could have continued.”
But in 2023, the Harborside declared bankruptcy for the third time since it opened in 2010. Services and activities have declined, residents and families say. A group of about 65 residents, most in their 90s, have hired a lawyer, but whether they will ever receive the reimbursement their contracts supposedly guarantee remains uncertain.
“Everyone is panicking,” said Ellen Zlotnick, whose parents also live separately in Harborside's independent living and memory care units. Their contract specifies a 75 percent refund. “A group of people move, and others refuse to move.”
Data on bankruptcies and closures of senior housing is scarce. Dee Pekruhn, who leads community life plans policy at LeadingAge, said there have been “very, very few examples of actual bankruptcies,” although there have been close calls recently.
But Lori Smetanka, executive director of the National Consumer Voice for Quality Long-Term Care, said state and local long-term care ombudsmen were increasingly reporting “issues with financially distressed facilities.”
Recent crises include the closure of Unisen Senior Living, a CCRC in Tampa, Florida. After it filed for bankruptcy for the second time last spring, more than 100 residents had to move.
In Charlotte, N.C., state officials stepped in in 2023 to oversee a long-standing CCRC called Aldersgate, which had struggled financially for years. The state adopted a 'corrective action plan' and Aldersgate avoided bankruptcy. But the country is months behind on repayments and state surveillance continues.
In Steamboat Springs, Colorado, a CCRC called Casey's Pond went into receivership last summer. Since it was sold to a nonprofit health care system, it will continue operations — but only after two municipalities, a local foundation and hundreds of community members raise $30 million to save it.
Other forms of senior housing may also be closed. 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 moving, but also the potential loss of their life savings.
In a bankruptcy, residents entitled to reimbursement are “at the very bottom of the list” among creditors seeking payment, says Nathalie Martin, a law professor at the University of New Mexico who has written about insolvent CCRCs.
Secured, collateralized lenders have the first chance to collect what they owe, followed by lawyers, accountants and employees.
Because the people living in a CCRC that has promised repayments are unsecured lenders, “the residents are in a very vulnerable position, and they don't know it,” Ms. Martin said. Without reimbursement, they may not be able to afford care elsewhere if they are forced to move.
On the harbor side, a previously proposed sale to a national chain would have kept the facility open and refunded fees to residents who had moved or died. That deal fell through last fall when state regulators refused to approve it.
“It's mind-boggling that the Department of Health has allowed this to happen,” said Elizabeth Aboulafia, the attorney representing some Harborside residents.
Now a Chicago investment firm, Focus Healthcare Partners, wants to buy the Harborside and shutter all the apartments except the independent living apartments, which would become rental properties. (Focus has said it next plans to apply for state licensing for assisted living and memory care. Approvals could take several years.)
A skeptical federal bankruptcy judge last month questioned that offer and instead urged the parties to reach an agreement that protects residents.
“We deeply sympathize with the 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 bankruptcy.”
Harborside's attorney said she could not comment during the ongoing litigation. The next bankruptcy hearing is scheduled for February 12.
Although the federal government regulates the nursing homes within CCRCs, their other residential facilities and contracts are subject to a mix of state laws. Many require various disclosures to potential residents or oversee contract terms.
But few mandate what Ms. Martin sees as crucial to protecting refunds: reserves. If they were mandatory, “if you pay these high costs, the facility would have to set aside a certain amount for your future care,” she explained.
A handful of states, including California, Florida, New Mexico and – most notably – New York, require reserves, “but as we have seen, this does not prevent communities from failing to set aside such funds and still filing for bankruptcy ,” she says. . Martin added this in an email.
“We need our regulators to pay more attention,” said Ms. Smetanka of The National Consumer Voice, referring to state regulators as well as the federal Centers for Medicare and Medicaid Services.
“The licensing authorities should engage forensic accountants to look at the books. There should be better control.”
Additional regulations are not a good fit for the senior housing sector. “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 Seniors Housing & Care.
Requiring reserves, he said, would mean “far fewer CCRCs being built — and the people who move in will have net worth in the millions.”
One solution for senior care buyers: select a CCRC that is rental, without expensive buy-ins or refunds. That route makes potential financial failure less threatening, but also means that monthly costs increase as the level of care increases.
Industry sources urge prospective residents to carefully research a facility's financial soundness and applicable state laws, and to have attorneys or financial advisors examine contracts.
“Harborside has been in the news for years – it was no secret,” Mr Kramer said.
To help, the National Continuing Care Residents Association publishes a consumer guide. CARF International and MyLifeSite also offer consumer guidance.
But Bob Curtis and his sons, both in the financial industry, consulted accountants and even interviewed the chief financial officer of Harborside's parent company. And yet here they are.
Mr. Curtis attends every bankruptcy court proceeding via Zoom. If he loses his money, “Where does Sandy go?” he wonders. 'How is she going to make it? How am I going to pay for that?”
