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Understanding CCRC Contract Types: Which is Right for You?

As you research your senior living options, you’re likely to come across various terms referring to the types of senior living community contracts. Continuing care retirement communities (CCRCs) typically offer one or more types of contracts for providing residential services and care. Here are definitions of common terms that will help you understand these contracts — and the differences between Type A, B, and C  contracts at CCRCs— so you can decide which option fits you best.

What is a CCRC?

Also known as a Life Plan Community, continuing care communities  are senior living communities that offer a “plan for life.” By choosing a CCRC, you’ll be entitled to a place to live for the rest of your life, as well as services and amenities that support living independently. You’ll also be assured of a continuum of healthcare services that will match your needs as you age. A great benefit of a CCRC is that you can begin by living independently in the community, and if you or your spouse or partner ever needs long-term care, you won’t have to move elsewhere. Care can be administered in the place you’ve come to know, , from people you trust.

What is Life Care?

Life Care is a type of CCRC covered by a Type A contract, which we’ll explain below. When considering differences between Type A, B, and C  contracts, it’s good to know that Type A is considered the gold standard that communities offer, as it combines independent living with lifetime access to high-quality health care services. It keeps monthly expenses predictable and protects you from the constantly rising costs of healthcare. However, not every CCRC offers Life Care. Those that do, such as Claridge Court, are referred to as a Life Care community.

What is a Continuum of Care?

A continuum of care is part of what defines a CCRC community and makes it different from other kinds of retirement communities. It’s a collective term for additional levels of care, which will vary from community to community. It may include some or all of the following: assisted living, memory care, skilled nursing care, rehabilitation, respite care, in-home care, and hospice care. The main difference between types of CCRC contracts is how these care services are bundled, where they are provided, and how much they will cost.

What is a CCRC contract?

All CCRCs require an application and a signed contract. It will include a list of residential and community services and amenities you’re entitled to and outline your financial and nonfinancial obligations.

What Kinds of Contracts Do CCRC Retirement Communities Offer?

CCRCs will offer an entrance fee, equity, or rental contract. You’ll find combinations or variations of these in every community you visit. By far, the most common CCRC contracts are entrance fee contracts. They require residents to join the community with an upfront deposit and pay an ongoing monthly fee for services and amenities thereafter.

What are the Different Entrance Fee Contracts for CCRCs?

Life Plan Communities offer three types of entrance fee financial contracts. Here are the differences between Type A, B, and C contracts:

Type A Contract

Also known as the Extended or Life Care contract, this contract provides unlimited access to additional levels of care provided by qualified health services professionals. Everything is provided on the community’s campus. Residents pay an entrance fee and then a fixed monthly fee that helps with predictability in financial planning and budgeting. Additional charges for needed health services are significantly discounted compared to market rates. While this contract calls for the highest entrance fee of all three contracts, the trade-off is that the monthly fee remains predictable.

Type B Contract

Also known as the Modified Plan, this contract requires an entrance fee, too. However, the monthly fee is usually lower than a Type A contract, as it only provides for a set menu of health services for a predefined time. Often, the resident will be entitled to a certain number of days in the health care center at no cost or at a discounted rate, and then will be billed for additional days and services at full market rate, or at an ongoing rate with a small discount. Healthcare services may be delivered at off-site locations. Couples who require different types of care may be separated and end up paying two monthly fees, one for each of the communities where they reside.

Type C Contract

Also known as a Fee-for-Service plan, this contract requires the lowest entrance fee and possibly the lowest monthly fee of all three contracts. Some or all of the same residential services and amenities may be provided, but if additional levels of care are needed, they are charged at fee-for-service, full market rates. Care services may be located off campus, so to maintain their residence while receiving care, a resident will have to pay for short-term housing/care costs on top of their monthly fee.

What is the Best CCRC Contract to Choose?

There’s no easy way to know if you’ll need long-term care in the future. How much you may need and for how long depends on your family and personal medical history, life expectancy, and health. However, statistics show that 7 out of 10 seniors ages 65+ will need long-term care at some point in their lives. In other words, if you turned 65 this year, you have an almost 70% chance of needing long-term care service or support in the years to come. Would you be comfortable with a certain level of risk, and do you have the financial resources to absorb the expenses of a Type C contract? Or do you prefer to have predictability built in from the very start with a Life Care plan?

Explore Life Care Contract Options at Claridge Court

Claridge Court is a senior living community in Prairie Village, Kansas. Here, residents enjoy a multitude of luxurious country club-style services and amenities, including private, spacious apartments, fine-dining restaurants, a fitness center and studio, and weekly housekeeping. For more information about how Life Care contracts work at Claridge Court and questions about Life Plan Communities, reach out to us today, or fill out the form at the bottom of this page.

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