Retirement Communities What to Know About CCRCs 10/17/2024 | By Eileen Daspin Continuing care retirement communities offer independent living, assisted living and memory care, all within the same building or campus. To join one, though, often requires a hefty entrance fee along with monthly fees. Before you sign a contract, you should learn about CCRCs and know what you’re getting into. There are four basic models of contracts with continuing care retirement communities, and many variations on the concepts, depending on state regulations and the property. The contracts are complex and should be reviewed by a lawyer and/or accountant, as some of the costs may be tax deductible. The following descriptions cover the broad outlines only; details will vary from facility to facility. Life care In a life care contract, also called a type A contract, you pay a high one-time entrance fee, which guarantees you care for life, from independent living to assisted living to memory care to skilled nursing. It functions as insurance. In addition, you will pay a fixed monthly fee (adjusted for inflation) for day-to-day living, covering accommodations, food, services, and amenities. If you are an independent-living resident and at any point need the added care of assisted living or memory care, your monthly fee generally will not change. Additionally, depending on the contract, up to 90% of the entrance fee may be refunded to your heirs. But you still may end up paying for care you don’t use. Modified fee for service The modified-fee-for-service model, also known as type B, typically requires a smaller entrance fee and/or lower monthly fees than life care. The charges cover some future health care, but not an unlimited amount. If you need skilled nursing, the operator might offer it to you at a 20%-30% discount off the market rate. Alternatively, some modified-fee-for-service/ type B contracts offer a block of pre-paid days in health care per year; if you need more, you pay full market rate. In this model, residents are operating on the belief that they will need limited assisted living or higher level of care. Fee for service The fee-for-service arrangement, also called type C, offers the most affordable entrance and/or monthly fees; some places may only charge the monthly fee. However, if you need higher levels of care — beyond independent living — under a fee-for-service contract, you will pay market rates and be responsible for the full risk of health care costs. Rental This offers the most flexible plan. There is no entrance fee, or a nominal one compared to life care or modified fee for service. Typically, the contracts are month to month and your monthly fee is higher than it would be under another type of contract; the monthly fee will also increase as you need more care. As a resident in a rental, you typically get priority access to higher level care accommodations (instead of the unit going to someone who doesn’t live on the property already). Many rentals don’t have skilled nursing facilities, but they do offer the option of going into hospice. Eileen Daspin is a contributing writer at Kiplinger Retirement Report. For more about CCRCs and similar money topics, visit Kiplinger.com. ©2024 The Kiplinger Washington Editors, Inc. Distributed by Tribune Content Agency, LLC. Click here to read more about CCRCs and Life Plan Communities on Seniors Guide Read More Eileen Daspin