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Types of Continuing Care Retirement Community Contracts (CCRC): Which is right for you?

pen on top of a contractWhen considering living in a senior living community, accessible quality care is an important factor to consider. Health care is the largest and most unpredictable expense you will likely face, and not all senior living communities offer the same level of care. Continuing care retirement communities (CCRC), also referred to as life plan communities, offer the most expansive level of care including:

  •  Independent living
  •  Assisted living
  •  Skilled nursing care (e.g. long-term care, memory support)

Generally, there are three types of CCRC contracts:

Type A – Life Care Contract
A Life Care Community with a Type A contract often ensures you will have a home for the rest of your life. Under the Type A contract there’s:

  • An entrance fee, which is often partially refundable to you or your estate
  • A monthly service fee, which typically covers utilities, services and amenities, dining, activities, scheduled transportation, maintenance and more.

This type of contract offers guaranteed access to all levels of care at essentially the same monthly fee paid previously for independent living. While this type of contract is most commonly associated with not-for-profits, be sure you read the contract carefully, as not all CCRC’s have a benevolent care fund to help pay for your living/care expenses if you should exhaust your financial resources.

Type B – Modified Life Care Contract
The Type B contract usually has a lower monthly fee and, possibly, a lower entrance fee than a Type A Life Care contract. It may also include nearly all the same services and amenities that a Type A contract offers.

However, if higher levels of care; like assisted living, memory care or skilled nursing are needed; you’ll have access to the CCRC’s health care center for a limited time, and/or health care services that are offered at a discounted rate. Once the limited period of time is completed, you will pay for these services at the standard rate that would apply to a non-resident.

Type C – Fee-for-Service Contract
The Fee-for-Service contract generally requires the lowest entrance and monthly fees. Some or all of the same residential services and amenities may be provided, but if you need assisted living, memory care or long-term care, you would pay the standard daily rate that would apply to a non-resident. If you need higher levels of care, your monthly fee will increase to cover the costs.

Understanding Entrance Fee Refundability

Entrance fees are a sum of money paid upfront to secure a place in the community and cover the continuum of care, so residents can transition to advanced levels of care without having to relocate to another community.

Typically, there are two categories of a CCRC contract and refundability. The amount of your entrance fee depends on the size of the residence you choose and the number of people living in the community. In many cases, a portion of your entry fee is refundable. The two types include:

  • Declining Balance
    With a declining balance entry fee, the amount is amortized over a period of time. At the end of the amortization period, a refund would not be due if you leave the community.
  • Refundable Contracts
    Though it’s usually a more expensive option, this type allows a portion of the entry fee to be refunded to your or your estate upon leaving the community.

Contracts can be complex. Make sure you do your research, including consulting with and asking questions of community sales staff to better understand the contracts that are offered. Our Sales and Marketing team always encourages potential residents to ask questions. Additionally, consider your finances and health. Those will likely influence the type of contract you choose. You may also find it helpful to seek legal guidance before signing a contract.

You can learn more about CCRC’s at What is a CCRC?