How to Finance Your Plan for Senior Care Communities
Updated: Nov 2, 2022
As you research senior living options, you’ll discover not only are there different types of communities, but there are different types of financial and admission agreements as well. Understanding the differences in senior living contracts will help you make an informed decision and create a smarter plan for the future.
There are three basic types of Life Care contracts — Type A, Type B, and Type C. Some communities will offer only one type, while others will give you options to choose from.
Type A Contracts
Communities with these agreements promise to deliver those higher levels of care with little or no increase in monthly service fees. They’re able to do this because you pay an upfront entrance fee, which essentially prepays for future care. So while you pay more initially, your monthly fees are predictable, and will remain the same even if you need care, which can give you substantial savings in the long run.
Other things to know about Type A contracts:
Entrance fees will vary based on your location, residence size, and number of occupants.
Many communities offer partially refundable entrance fees, where 50%, 75%, or 90% of your entrance fee is refunded to you or your estate.
Type B Contracts
Communities with Type B contracts typically have lower entrance fees and provide health care services as needed. While health care costs may be lower than you’d pay outside the community, your monthly fees will increase with care.
Not all Type B contracts are the same:
You may receive a limited number of free days in the health center, with additional care billed at daily market rates.
Care may be billed at a minimally discounted rate.
Care may be billed at an equalized rate, which means if you’re an independent living resident and you need to move to a higher level of care, your monthly service fee will change to be equal to the average of all independent living monthly service fees being charged at that time.
Type C Contracts
(AKA Fee-for-Service)
With Type C contracts, you only pay for the care you need. Entrance fees and monthly fees are typically lower than with other contract types, but if you do need a higher level of care, you pay full market rates. If you’re an independent living resident and need short-term care, to keep your residence, you’d still have to pay your monthly fee and the cost of housing and care you receive.
Before you make a visit to a community, arm yourself with this information about senior living contracts so you can feel confident in planning your future. Do not sign a senior living contract without first consulting with one of Fiffik Law Group’s experienced elder law attorneys. Make informed decisions before you make a commitment.