Learn About CCRC Contract Types

◆ With Continuing Care Retirement Communities (CCRCs), you don’t have to move from an independent living community to an assisted Irving community as your health needs grow. CCRCs allow you to stay in the same community throughout the different phases of your aging process, and access different health services whenever you need them.

This makes CCRCs ideal for many older adults. If they want to maintain their independence now, but fear they may need additional medical or home care later, CCRCs let them graduate to their level of need when it’s needed, without requiring them to move to a new community. They can maintain their same friends, eat at their same dining areas, even maintain their same activity scheduled, health depending.

There are of course different levels of CCRCs contracts, with different costs and benefits. This article will look to explain them all.

Type A – Extensive or Life-Care Contract

This is the most secure contract, and also subsequently the most costly up-front, as it gives you access to assisted living and health services with little to no increase in costs. When you move in, you pay a one-time entrance fee, which can have varying degrees of refundability depending on the contract chosen. After moving in, you can expect to pay a monthly service fee that covers your home, maintenance fees and utilities, food, activities, and a host of amenities. But the main benefit is that, because of that entrance fee, you will not need to pay increased costs based solely on your changing level of need. When you need more medical care, you receive it. You’ve essentially pre-paid your long-term medical costs – in today’s health care dollars, not tomorrow’s -- through your entrance fees.

This can be a great option if you want a contract that offers predictable expenses regardless of your future healthcare needs. With Type A, no matter your level of living, you’re sure of access to health services for the rest of your time in the community.

Click here to read about the average cost of a senior independent living community.

Type B – Modified Contract

Type B contracts have lower entrance and monthly fees for residents than Type A. However, the services offered within this contract are limited. If you at some point need services beyond those in the contract, you’ll be charged at the current market rate for them.

These charges can occur in several ways. One option is to have a limited number of free days, then you’ll be charged at per diem market rate after the free period elapses. Another is to pay an ongoing, minimally-discounted rate for each service. If you need an additional level of care, you can pay another monthly fee to cater to those services.

Type C – Fee-for-Service Contract

This contract offers similar housing, residential services and amenities as those in Types A and B. It also has the lowest monthly and entry fees compared to the other two main contracts. You may even have access to some levels of care, but the charged rate will be higher than that of Type A or B. Plus, if you live in independent living and need short-term care, you’ll have to pay your monthly fee for independent living and the costs of health care services and housing.

This option, therefore, is like forgoing insurance to deal with the issues if they arise. The price will be better up front, but depending on the care needed at later stages, it could end up being much more costly.

Types D and E

Types A, B, and C are the main CCRC contracts. However, in some communities, you’ll have two more contract types: D and E.

Type D contract is also known as Rental, and it usually doesn’t have an entry fee. However, the contract might have a nominal “community fee.” In this case, the community operates like a leasing agent, charging you a monthly rental fee.

The rental option works for those who enjoy the flexibility and don’t want their money to be tied up in an entrance fee. Rentals can be a year-long or month-to-month obligations; you get to pick an option that works best for you.

Rates for care are usually high, and priority can be given to people outside the community. You can get a rental service in a CCRC or in a stand-alone community.

Then, you also have the Type E contract, which is also known as equity/co-op. In this option, instead of paying an entry fee, you can purchase a home or condominium in the community. Keep in mind, however, that you’ll still have to pay monthly fees and homeowners association dues. You also have to pay the full market rate for health care services on a fee-for-service basis. In some cases, you can get a slight discount on payments.

Which is the Best?

Knowing all the CCRC contract types is one thing, but choosing the ideal option for you is another.

The right contract for you depends on your specific needs. First, it helps to compare the averages of each contract. If your needs fall out of one or two of these contracts, then there is one that will ultimately suit you.

Since you can’t predict the future, you may be open to changing contracts or paying on a fee-for-service basis when your health needs grow. Regardless, before opting for any contract, be sure to consider your family history in regards to health and life expectancy.

If you want to play safe, you can pay more for a contract that covers every service and amenity. In this regard, you know you’re covered no matter what. On the other hand, fee-for-service obligations might make some feel like they’re getting better use of their money now, and they can worry about engaging medical services when that becomes an issue. You should also take into account the type of health insurance you have that will complement the contract you choose.

Click here to read about whether a CCRC makes sense for you.

Understand Your Options, Make an Informed Decision

By educating yourself on the different CCRC contracts, it’s easier to pick a type that will meet your health care needs and lifestyle. Keep in mind that retirement communities might offer different services for each contract.

Find out the type of services that are included in the entrance and monthly fees, and the charges of services that are not included. This should help you make an informed decision that will benefit your lifestyle during retirement.

For more information on retirement, read these articles by Acts Retirement-Life Communities:

Should I Sell My House When I Retire?

What is Retirement Like?

What Do I Need to Retire Comfortably?