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Differences Between the ARC and For-Profit CCRCs

November 14, 2022

“What is the difference between a not-for-profit community such as the Army Residence Community (ARC) and a for-profit community?” This is a popular question among prospective residents of Continuing Care Retirement Communities (CCRCs), also referred to as Life Plan Communities.

Many not-for-profit CCRCs like the ARC are single site organizations, although some are part of a larger group. The distinguishing feature of the ARC, as with other not-for-profit organizations, is that all of the money earned or donated goes towards pursuing the organization’s objectives, instead of to the owners. The ARC is typically structured as a 501(c)(3) organization, which, by definition, requires that it operates for charitable purposes. Providing lifetime housing and health care services, even if a resident’s personal finances are depleted, is often core to that charitable purpose. The ARC will maintain a foundation or endowment fund which, if properly funded, can greatly enhance the organization’s ability to provide such financial assistance.

Providing continued housing and services to those who have depleted their assets, due to no fault of their own, is a mission and not a guarantee. While the vast majority of not-for-profit CCRCs have been successful in fulfilling their mission, financial assistance is ultimately conditional on the community’s ability to provide funds while operating on a sound financial basis. In some cases a community may even require that financial subsidies be repaid by the heirs or the estate at death.

By contrast, for-profit communities are often owned by a larger parent organization and are typically more profit-driven than charitably driven. This is not inherently bad because; after all, leaders of a quality organization know that if they do not offer a desirable product and look after their residents then eventually there will be no profits. And while a for-profit CCRC may be more inclined to ask a resident to leave if they are no longer able to pay, most operators understand that it is good business practice to accommodate residents to the extent possible and do not want a reputation in the community of being uncompassionate. In fact, some for-profit CCRCs also maintain separate charitable funds to provide financial aid for residents.

In theory, the chances of a resident requiring financial assistance from the community should be relatively low, regardless of whether it is a for-profit or not-for-profit provider. This is because most CCRCs go through a financial qualification process with new residents. A thorough process will help ensure that there is a higher than average chance that the resident has enough money, under average circumstances. Furthermore, many providers such as the ARC offer a refundable entry fee, and in this case, if the resident runs out of money then their entry fee refund will almost always be used to offset healthcare expenses before any financial assistance will become available. Finally, for providers that accept Medicaid such as the ARC, residents may qualify for government assistance to cover healthcare expenses when they exhaust their funds.

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