Last week in the LifeSite Logics blog I described how the Type A contract, also known as an “extensive” or “full life-care” contract is the only type of CCRC contract where it could reasonably be said that a resident of a community offering such a contract may not need to maintain long-term care insurance. I then described a few exceptions to illustrate why this should not be taken as a blanket statement. Remember, with a Type A contract a resident essentially pre-pays for their future long-term care expenses via an entry fee and sometimes via a portion of their monthly independent living fee. Therefore, if and when care is required there will be no additional cost to the resident for such care, with the exception of general inflationary increases and possibly ancillary medical costs.
Today I will focus on exploring how long-term care insurance could have an impact on residents of CCRCs offering a contract other than a Type A contract. Generally speaking any other type of contract offered by a CCRC will involve some level of increase in the resident's monthly fee when care is received. Contracts that fall in this category are:
- Type B (also known as a “modified” contract)
- Type C (also known as a “fee for service contract”)
The first contract shown above, Type B, may include a discounted cost for care. For example, suppose the full market rate for assisted living is $4,500 per month. Yet the CCRC may only increase a resident's monthly expenses by $2,250. Therefore, this contract offers a 50% discount off the market rate. In contrast, a Type C contract or a rental contract, for example, would increase the resident's monthly cost by the full $4,500 per month.
(For more information on CCRC contract types visit: www.lifesitelogics.com/learn.cfm
Looking at the above example you can see why there may be a need for long-term care insurance under any of these other types of contracts. With each of these types of contracts the resident would be required to pay at least some of their long-term care expenses out-of-pocket. A good long-term care insurance policy could cover this increase in cost. Of course, the decision of whether or not you need insurance is based on your personal financial situation. You should consult with a qualified financial planner before making a decision.
If you are considering moving to a continuing care retirement community or if you currently live independently in a CCRC be sure to consult with both the medical director of the community as well as your long-term care insurance provider about your coverage and the practical steps of filing claims, as well as any particular stipulations on behalf of the community or the insurance carrier.
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