The key feature of a CCRC that distinguishes it from other retirement living communities is contractually-provided access to a “continuum of care.” The continuum of care typically includes independent living, assisted living, memory care, and/or skilled nursing care. Here is an explanation of CCRC contracts, which can vary from one community to another.
Type-A (Extensive or Life-Care): All other things equal (i.e. size of unit, services & amenities, location, etc.) this type of contract requires the highest monthly fee for resident’s living independently, and possibly even a higher entry fee. Although there are variations of life care contracts, the trade-off in paying higher fees for independent living is that almost all residential services, amenities, and health-related services- such as assisted living or skilled nursing care, are provided with little or no increase in monthly fees, other than inflationary adjustments. In essence a resident of a CCRC with a lifecare contract pre-pays for some portion of health-related services that may be needed in the future. This ensure more predictable long-term expenses regardless of healthcare needs in the future.
Type B (Modified): All other things equal, this type of contract typically requires a lower monthly fee than a Type (lifecare) contract, and possibly a lower entry fee. It may include almost all of the same residential services and amenities that a Type-A contract offers. However, if assisted living or skilled nursing care is required, the resident will be responsible for some of the cost. Often the resident will have access to a pre-defined number of days in the health care center at no cost and/or healthcare services are offered at a discounted rate.
Type C (Fee-for-Service): All other things equal, a fee for service contract typically requires the lowest monthly fees and possibly the lowest entry fees compared to the other types described above. Some or all of the same residential services and amenities may be provided, but if assisted living or skilled nursing care is required, the resident’s monthly fee will increase to reflect the market rate for care.
Rental: Rental contracts require no entry fee or perhaps a nominal “community fee.” Contracts are often month-to-month and service fee may be higher than what you would pay in a comparable entry fee community since no money is collected up-front. Residents under this contract may have priority access to the healthcare facility but not necessarily guaranteed access. In other words, access to a continuum of care may not be contractually guaranteed as it often is with entry fee providers. As with a Type C contract, the resident will pay the full market rate for healthcare.
Equity/Co-Op: An equity contract involves the actual purchase of real estate or ownership in a co-op as opposed to paying an entry-fee. A monthly service fee will still be required. Health care is generally available at the on a fee-for-service basis at the full market rate or at a slight discount.
It is not uncommon for a life plan community to offer more than one of the above contract types from which to choose. The above explanation of CCRC contracts provides a broad overview but you should consult with a representative of the retirement community and read the contract for specific details.