What are Life Care contracts?
Updated: Apr 26
Many Continuing Care Retirement Communities (CCRCs) offer “Life Care” contracts, rather than straightforward rental agreements. These typically include many more services than rental agreements, which can make apples to apples pricing comparisons extremely difficult. Here, we break down what Life Care contracts are, the different types, and who they might be a good fit for.
What is a Life Care contract?
A standard “Type A” Life Care contract typically includes a one time entrance fee plus a locked in monthly rate covering housing, home maintenance, and long term care. This is a guarantee that your expenses won’t sky rocket if you need a higher level of care, particularly memory care. It is also typically a guarantee that you will be able to continue living in the community no matter what your health. CCRCs are required to include access to independent living, assisted living or personal care, and skilled nursing.
Who is Life Care for?
Life Care contracts are actually an insurance product, which is why CCRCs are licensed by the Department of Insurance. They have the advantages and disadvantages of any insurance product, namely, that on average, a LifeCare contract will cost you more than paying out of pocket, but that you are protected from paying a much higher amount if you turn out to need more care than average. Many people are priced out of this kind of contract all together. It may also be a poor fit if you have enough assets that your’e not worried about outliving them, or you have already purchased another type of Long Term Care insurance. Some communities are flexible about pricing in the event you have pre-existing long term care coverage.
Types of CCRC Contracts
There are four primary types of contracts available at CCRCs. They are:
Type A / Extensive / Life Care Generally have a high entry fee and monthly service fee that include residential services, amenities, and assisted living or skilled nursing services should they be needed. This is considered an all-inclusive option with predictable future expenses.
Type B / Modified Life Care Generally have lower entrance fees than type A contracts, but limit the amount of services (frequently number of days) they can be accessed without increasing the monthly fee. Services beyond what are guaranteed in the contract are often offered at a discounted rate or with priority placement.
Type C / Fee – For – Service Generally have a lower entrance fee and monthly service fee than Type A contracts, but do not include expenses for assisted living or skilled nursing. These services are paid for as needed at the market rate, and are often difficult to predict.
Rental Agreements Rental contracts do not require an entry fee. Rental residents often have priority access to the health care facility but are not necessarily guaranteed access, as is the case with entry fee contracts. Rates do not include expenses for assisted living or skilled nursing. These services are paid for as needed at the market rate, and are often difficult to predict.