Three years ago, when Bob and Sandy Curtis moved into an upscale continuing care retirement community in Port Washington, N.Y., he thought they had found the best possible elder care solution.
In exchange for a steep entrance fee — about $840,000, funded by the sale of the Long Island house they had owned for nearly 50 years — they would have care for the rest of their lives at the Harborside. They selected a contract from several options that set stable monthly fees at about $6,000 for both of them and would refund half the entrance fee to their estate after their deaths.
“This was the final chapter,” Mr. Curtis, 88, said. “That was the deal I made.”
C.C.R.C.s, or life plan communities, provide levels of increasing care on a single campus, from independent and assisted living to nursing homes and memory care. Unlike most senior living facilities, they’re predominantly nonprofit.
More than 1,900 C.C.R.C.s house about 900,000 Americans, according to LeadingAge, which represents nonprofit senior housing providers. Some communities offer lower and higher refunds, many avoid buy-in fees altogether and operate as rentals, and others are hybrids.
For the Curtises, the Harborside 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 said. “Meals. Amenities. 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 members there “treat Sandy with love and care,” Mr. Curtis said. “It would have been wonderful if it could have continued.”
But in 2023, the Harborside, for the third time since it opened in 2010, declared bankruptcy. Its services and activities have declined, residents and families say. A group of about 65 residents, most in their 90s, has hired a lawyer, but whether they will ever get the refunds their contracts supposedly guarantee remains uncertain.
“Everybody’s panicked,” said Ellen Zlotnick, whose parents also live separately in the Harborside’s independent living and memory care units. Their contract specifies a 75 percent refund. “A bunch of people are moving, and others refuse to move.”
Data tracking bankruptcies and closures in senior housing are scant. Dee Pekruhn, who directs life plan community policy at LeadingAge, said there had been “very, very few examples of actual bankruptcies,” though there were recent close calls.
But Lori Smetanka, the executive director of the National Consumer Voice for Quality Long-Term Care, said that state and local long-term care ombudsmen were increasingly reporting “problems with facilities that are financially troubled.”
Recent crises include the closure of Unisen Senior Living, a C.C.R.C. in Tampa, Fla. After it filed for bankruptcy for the second time last spring, more than 100 residents had to move out.
In Charlotte, N.C., in 2023, state officials stepped in to oversee a long-established C.C.R.C. called Aldersgate, which had floundered financially for years. The state approved a “corrective action plan,” and Aldersgate avoided bankruptcy. But it remains months behind on refund payments, and state supervision continues.
In Steamboat Springs, Colo., a C.C.R.C. called Casey’s Pond entered court-ordered receivership last summer. Since sold to a nonprofit health care system, it will continue operations — but only after two municipalities, a local foundation and hundreds of community members raised $30 million to rescue it.
Other kinds of senior housing can shut down, too. About 1,550 nursing homes closed between 2015 and mid-2024, according to the American Health Care Association.
But when C.C.R.C.s fail, residents and families face not only the physical and psychological ordeal of relocating, but also the possible loss of their life savings.
In bankruptcy, residents entitled to refunds “are at the very bottom of the list” among creditors seeking payment, said Nathalie Martin, a University of New Mexico law professor who has written about insolvent C.C.R.C.s.
Secured lenders with collateral have the first crack at collecting what they’re owed, followed by lawyers, accountants and employees.
Because the people who live in a C.C.R.C. that has promised refunds are unsecured lenders, “residents are in a very vulnerable position, and they don’t know it,” Ms. Martin said. Without refunds, they may be unable to afford to pay for care elsewhere if forced to move.
At the Harborside, an earlier proposed sale to a national chain would have kept the facility open and refunded fees to residents who had moved out or died. That deal fell through last fall when state regulators declined to approve it.
“It’s mind-boggling that the Department of Health allowed this to happen,” said Elizabeth Aboulafia, the lawyer representing some residents of the Harborside.
Now a Chicago investment firm, Focus Healthcare Partners, wants to buy the Harborside and shut down all but the independent living apartments, which would become rentals. (Focus has said it then intends to apply for state licenses for assisted living and memory care. Approvals could take several years.)
A skeptical federal bankruptcy judge questioned that offer last month and instead urged the parties to reach an agreement that protects residents.
“We deeply empathize with the residents,” Curt Schaller, a co-founder of Focus, said in a statement. He added that “we can’t undo money lost by others that led to this bankruptcy.”
The Harborside’s lawyer said she could not comment during pending litigation. The next bankruptcy hearing is scheduled for Feb. 12.
Though the federal government regulates the nursing homes within C.C.R.C.s, their other living arrangements and contracts are subject to a hodgepodge of state laws. Many require various disclosures to prospective residents or oversee contract terms.
But few mandate what Ms. Martin sees as crucial to protecting refunds: reserves. If they were compulsory, “when you pay these big fees, the facility would be required to set a certain amount of money aside for your future care,” she explained.
A handful of states, including California, Florida, New Mexico and — notably — New York, do require reserves, “but as we have seen, this does not preclude communities from failing to set 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 to the federal Centers for Medicare and Medicaid Services.
“The licensing agencies should bring in forensic accountants to look at the books. There should be better auditing.”
Additional regulation doesn’t sit well with the senior housing industry. “The more we regulate and make it more expensive, the less we can house people,” said Robert Kramer, a co-founder of the National Investment Center for Seniors Housing & Care.
Requiring reserves, he said, would mean “far fewer C.C.R.C.s built — and the people who move in will have net worth in the millions.”
One solution for elder care shoppers: Selecting a C.C.R.C. that operates as a rental, without expensive buy-ins or refunds. That route makes potential financial failure less threatening, though it also means that monthly costs rise with increasing levels of care.
Industry sources urge prospective residents to carefully investigate a facility’s financial soundness and applicable state laws, and to have lawyers or financial advisers vet contracts.
“Harborside has been in the news for years — it wasn’t a secret,” Mr. Kramer said.
To help, the National Continuing Care Residents Residents Association publishes a consumer manual. CARF International and MyLifeSite also provide consumer guidance.
But Bob Curtis and his sons, both in finance, consulted accountants and even interviewed the chief financial officer of the Harborside’s parent company. Yet here they are.
Mr. Curtis attends every bankruptcy court proceeding via Zoom. If he loses his refund, “Where’s Sandy going to go?” he wonders. “How’s she going to manage? How am I going to pay for it?”