The A’s, B’s, C’s and D’s of Life Plan Communities

LongTermCare.gov reported that two-thirds of older adults ages 65+ today are likely to need long-term care support in their future, with 20% of those needing it for five years or so.

Life Plan Communities are also known as continuing care retirement communities (CCRCs). They are senior living communities providing an active and vibrant independent lifestyle, with additional healthcare services such as assisted living, memory support, and long-term skilled care available should your needs change.

Life Plan Communities typically offer one or more of the following types of contracts from which you can select.

Type A Contract

This is also called an Extensive or Full Life Care Contract and is recognized for being the most comprehensive, providing the greatest sense of financial security due to the prepayment of healthcare through the fee structure.

• Fees

With a Type A  Contract, you will pay a large initial entrance fee.

A monthly service fee covers meals, maintenance and housekeeping, utilities, access to amenities, and more.

• Benefits

You will have unlimited access to additional care that may be required in the future, provided within the same community and at a predictable rate.

A Type A Contract typically provides a refund of the entrance fee paid once a resident is no longer living at the community, though it can vary by community, with 0% to up to 90% being refundable. The speed of the refund also varies by community to community.

A person in independent living with a Type A Contract will usually pay more than those with other contract types, because of the entry fee and monthly service fees. The trade-off is that moving forward, all services, including those that are health-related, will be provided at lower than market rates with only slight increases adjusted for inflation.

Furthermore, residents with a Type A Contract typically receive tax benefits related to the prepayment of future healthcare costs.

Type B Contract

This is also known as a Modified Contract. The Type B Contract enables residents to save money initially, but with limited financial protection for future healthcare needs.

• Fees

Typically, the entrance and monthly service fees are lower than in a Type A Contract, thus saving money at the start. However, if a higher level of care is needed,  market rates may be discounted. The discount and length of time varies by city to city. Services required thereafter will be at market rate, thus increasing expenses for the care being offered.

• Benefits

The benefit of lower healthcare expenses through a Type B Contract is only temporary. There may be tax benefits, but these are lower than those with a Type A Contract. There is typically a refund of some guaranteed percentage of the entrance fee when the resident is no longer living at the community, though the timing and amount and will vary by community.

Type C Contract

ThisFee for Service Contract features a lower-cost entrance fee and monthly fees but requires residents to pay prevailing market rates for healthcare services if and when they need them.

This and the Type D Contract below are the least expensive at the start of residency, offering much greater flexibility for the resident. However, healthcare costs will be larger under these plans.

Type D Contract

Rental agreements are month-to-month with no long-term commitment.

• Fees

The communities offering this option do not require a substantial entrance fee, but a much smaller fee known as a community fee. The monthly service fee is typically higher than that of other types of contracts, and residents are responsible for paying all healthcare costs at full price. The tradeoff is that it is much easier for the resident or their families to end an agreement with little to no outstanding obligation.

Equity or Co-Op

Through this agreement, residents have ownership of their home and pay monthly service fees for amenities and services similar to those of a homeowners’ association. The property can be sold at the conclusion of your residency. Healthcare is provided out of pocket and/or through long-term care insurance.

Lifesite.net recommends you do your homework to understand and compare contracts and communities in order to best understand your options.

The Barclay at SouthPark is a rental community offering a continuum of care, independent living, assisted living, memory support, rehabilitation, respite, and skilled care.

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