Across the broad spectrum of senior living options, a continuing care retirement community (CCRC) is often considered the top-shelf option for seniors who have the means to make one move into a single community that promises to serve all of their needs over time.
Often referred to as life plan communities, CCRCs offer multiple levels of care in a single facility or campus. Levels of care often include:
— Skilled nursing
“A key differentiator is that residents can transition seamlessly between these care levels as their needs change, providing continuity and peace of mind,” says Brian G. Lawrence, chief executive officer of FellowshipLIFE, an aging services provider based in New Jersey. “What sets life plan communities apart from other senior living options is their comprehensive approach to health, wellness and lifestyle.”
As part of their comprehensive care, most offer these amenities:
— On-site medical support
— Five-star dining options
— Lifelong learning opportunities
— Recreational activities
— Wellness programs
What Is a CCRC Contract?
To enter one of these communities, a prospective resident will need to sign a contract with the company. This document is an agreement between the prospective resident and the property’s operators that outlines the parameters of the business relationship between the two parties.
Prospective residents and their families need to thoroughly understand CCRC contracts before committing, as the stipulations outlined in the contract will remain in force for the duration of the contract. In some cases, that may be for the entirety of your time living in the community.
These terms dictate everything from the type of accommodations you have and the kind of care you receive to the cost of any and all services you use.
“Residents and families should carefully review which services and amenities are included,” Lawrence cautions, adding, “Some contracts may cover housekeeping, activities, meal plans or transportation, while others may not. It’s essential to be clear about which services are important to you and ensure that the contract either includes them or allows for their addition.”
He recommends hiring an elder law attorney or trusted adviser to review any contract you’re considering.
“Despite the price tag, amenities and marketing of CCRCs, the ability to ‘age in place’ at a CCRC is not always a guarantee,” adds Christopher Norman, a Jamesville, New York-based board-certified geriatric nurse practitioner with the National Council on Aging. “So, I encourage people to understand the fine print before signing a contract.”
[READ: When’s the Right Time to Move Into a Continuing Care Retirement Community?]
Types of CCRC Contracts
There are a few different types of CCRC contracts that you may be offered when considering moving into one of these communities. Below are details about each type and what you can expect from them.
Life care contract (Type A)
Type A contracts are also sometimes called exclusive or life care contracts because they are the most comprehensive type of CCRC contract. These contracts include:
— The residence (an apartment or room within the community)
— Assisted living services
— Skilled nursing care when required
— Use of all amenities on campus
— Memory care for Alzheimer’s disease or dementia
— Other health care needs and services as needed
Because Type A contracts cover all eventualities for CCRC care, they’re typically the most expensive of all the contract types a CCRC offers. But, because they’re essentially all-inclusive, you have a set price going forward, no matter how your health needs change over time.
Type A contracts may also include an entrance fee deposit, which some communities may refer to as an initiation fee. That’s on top of a monthly fee.
“A key benefit of Type A contracts is that they lock in a fixed rate (adjusted annually for inflation), offering financial stability as residents move through different levels of care from independent living to skilled nursing,” Lawrence explains.
[READ: A Checklist for Choosing the Best CCRC Facility]
Modified life care contract (Type B)
Type B contracts, also called modified life care contracts or modified fee-for-service contracts, provide many of the same provisions as Type A contracts, including living accommodations, assisted living services, dining options and transportation.
“Modified life care contracts are prepaid, partial coverage which allows for cost of care needs to change,” Norman explains.
In other words, these contracts will include some of your anticipated future needs, but possibly not all.
Because you’re not paying for everything upfront, as you move through levels of care, you may end up spending more than if you had selected a Type A contract and locked in the total rate earlier in your tenure.
However, for people who have less cash on hand to spend, a Type B contract might offer a way into a CCRC community because they tend to be a little less expensive than Type A contracts.
Fee-for-service contract (Type C)
Type C contracts, which are also called fee-for-service contracts, “typically include entrance fees and monthly fees, but the cost of care services increase as more advanced care is needed,” Lawrence says.
With a Type C contract, the upfront or monthly fees may be lower than with a Type A contract, but “residents pay more for higher levels of care as they use them,” Lawrence says. That’s because the rate is not locked in from the very beginning of the residency; rather, it is assessed at the time of need.
Costs in the senior care space are always increasing, so if you anticipate that you will need more, costlier care later on, opting for an all-inclusive contract from the beginning might save you some money in the long run.
Monthly agreements (Type D)
Some CCRCs also offer monthly rental agreements, which are “similar to an apartment where you would pay month-by-month or for a determined amount of time,” Norman says.
The monthly rate is just for the rental of the living space exclusive of health care, assistance with daily tasks and other benefits that are billed at the market rate at the time they’re rendered. These contracts can be a good option for people who are more independent and don’t anticipate needing a lot of additional support.
Not all CCRCs offer this type of contract, and it’s important to note that health care services and other amenities are added on top of this monthly rate. Health care services may not be guaranteed under these contracts, either.
Equity contracts (Type E)
While many CCRCs offer the living space as a rental property, there are some that allow residents to buy their own home or condo within the community. These contracts typically include a monthly service fee or homeowner’s association payment in addition to property taxes.
With equity contracts, you’ll have to pay extra for most of the amenities offered through the community, such as meals and assistance with activities of daily living. These fees will be assessed at the time they’re rendered and offered at the current rate. Some CCRCs may also offer a Type B or Type C contract to cover these needs, separately form the equity contract to purchase the living space.
[READ: What Does Long-Term Care Insurance Cover?]
Key Elements of a CCRC Contract
CCRC contracts can be complicated, and nestled in those many pages and paragraphs will be all the details related to what you’re purchasing, how much it costs and what expectations you can have from the community in rendering those services.
Entrance fees and monthly charges
Most CCRCs charge an entrance fee, with costs typically billed monthly. The exact amounts will be detailed in the contract.
Generally, entrance fees can range widely, from tens of thousands of dollars to over $1 million. These fees may be assessed as a sum total upfront or may be broken into smaller payments. In some instances, they may be incorporated into the monthly bill.
The National Investment Center for Seniors Housing & Care estimates that average monthly fees starting in the independent living section of a CCRC average just under $4,000 and can go over $7,000 in memory care (the most expensive part of a CCRC).
These monthly bills tend to be different from Type D contracts; for properties that charge entrance fees (most do) and for those that bill monthly (most do), this does not necessarily mean you’re on a Type D rental contract. That’s a separate consideration, and you should talk with a legal or financial advisor if the contract isn’t clear on these terms.
Terms of care and services
Your CCRC contract will outline the specific terms related to care and services that will be covered for the fee being charged. This can include everything from meals and health care to transportation off campus.
Refund policies and transfer conditions
Some CCRC contracts offer refunds on the entrance fee.
“Both Type A and Type C contracts may offer a refundable entrance fee option (typically 50% to 90%), which involves a higher entrance fee but provides financial flexibility and estate planning advantages,” Lawrence says.
In addition, some communities may also offer discounts on long-term care services under Type C contracts, so be sure to read all the fine print carefully before committing to any contract.
Understanding CCRC Requirements and Regulations
There are also some regulatory requirements and standards that CCRCs must follow, and these will likely be referenced in the contract you’re reviewing.
State and federal regulations
Norman notes that contracts vary not only by facility, but also by the state in which the facility is located; different states have differing regulations that govern how CCRCs and other senior living facilities can operate.
Both the state and the federal government have regulations in place for CCRCs. If the community accepts payments from Medicare or Medicaid, it will be subject to stringent health care regulations from the Centers for Medicare and Medicaid Services and possibly the state. Any health care activities performed by employees of the CCRC must be in accordance with local licensure laws.
Norman adds that some CCRC contracts include stipulations whereby a person can be evicted from the CCRC.
“People often must meet physical and cognitive standards, which are determined by state regulations and also the facility itself, to be admitted and to stay within a CCRC,” he says.
Financial stability and accreditation
In some states, CCRCs must undergo annual financial auditing, and there may be some very specific requirements about operating reserve levels versus forecasted operating costs in some states. Not all states require this, however, so it’s best to talk with someone knowledgeable about the rules in your state to understand whether a CCRC you’re considering is financially stable and up to date with all necessary accreditations.
Rights and protections for residents
The contract you sign dictates your rights and what you can reasonably expect from a CCRC. These rights typically include:
— The right not to be deprived of any civil or legal rights that are guaranteed by law in the state where you live
— The right to have a voice in decisions regarding your health and financial dealings
— The right to review recent inspection reports and other documentation related to the facility’s performance
— The right to receive timely notification of changes in ownership, new construction and other developments that may affect the financial operation of the facility
— The right to live in a safe, well-maintained environment
— The right to reasonable accommodations for disabilities
However, there may be some limitations to your rights at a CCRC, depending on the terms of your contract. Norman notes that “with the exception of your personal property, you are a renter of the premises, not an owner, and thus you’re at the mercy of the CCRC contract and policies.” If it’s not in writing from the start, it may be difficult for you to pursue certain needs or changes later.
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Your Complete Guide to CCRC Contracts originally appeared on usnews.com
