As you explore your senior living options, there’s a lot to learn and consider. And so many unfamiliar terms!
This article will explain common senior living contracts you may encounter while comparing retirement communities, with an emphasis on the tremendous financial and lifestyle benefits of one particular contract: the Type A contract, also known as Life Care.
The basics of senior living contracts
Eventually, if you’re comparing your options, the costs of senior living will enter the equation. If you’re an independent senior – that is, if you don’t need care to live safely or comfortably – your retirement community options come in one of two financial structures:
- Rental communities
- Life Plan Communities, also known as Continuing Care Retirement Communities (or, CCRCs)
RENTAL COMMUNITIES are exactly what they sound like: You pay a monthly fee, with a yearlong lease agreement being common. Your monthly rent provides you with a residence. Some rentals include a meal plan in the cost, and you might have access to a few onsite amenities – a workout room or art studio, for example. However, if a fitness or art class were offered, that would cost extra. At a rental community, just about everything is paid for a la carte.
Most notably, if you ever need care, you’ll pay full market rate for the community’s services … and that’s if the community even offers care. Many don’t. More often in a rental situation, you (or a family member) would have to shop for an appropriate provider, and a move would be required at a time when you’re vulnerable.
LIFE PLAN COMMUNITIES (aka CCRCs) offer a different financial arrangement and more long-term lifestyle security.
At a Life Plan Community, you’ll pay a one-time entrance fee plus a monthly service fee. Together, these fees cover far more than a rental community’s agreement. You’ll have a residence, access to all community amenities, on-site dining, and services like home maintenance and landscaping. Activities like onsite fitness classes, lectures, concerts, parties – these and just about everything else are all included.
Perhaps the most important difference between a Life Care Community and a rental community is this: If you ever need care, a Life Plan Community provides it on-site, and the cost is mitigated by the entrance fee structure.
It’s these costs of care that separate a Life Care contract from all other Life Plan Community contracts.
What is Life Care?
Also known as a Type A contract, Life Care is a senior living contract, which is not the same as a Life Plan Community. Also, think of it this way: Life Care is only offered at Life Plan Communities, but not all Life Plan Communities offer Life Care.
At the communities that offer it, Life Care is the gold standard of senior living plans. The entrance fee structure creates financial value, estate protection and lifestyle advantages that surpass other typical retirement living plans.
These communities tend to be more upscale than other options, with lovely homes, an array of amenities, attentive staff, and more opportunities for residents to pursue engagement and happiness. For example, Morningside offers more than 200 monthly activities, classes and special-interest committees – all included.
The tremendous value of Life Care.
So much is included. There’s a perception that Life Care – with its entrance fee and monthly fees – is unaffordable for many or at least overly expensive. The fact is, Life Care and the unique communities that offer it include so much for residents, many find living at the community is a better value than living at home.
Repayable entrance fee. While the entrance fee is an upfront investment in the engaged lifestyle at the community, a percentage is returned to the resident or heirs if the resident leaves for any reason. The repayable amount depends on how long the resident has lived at the community.
Long-term care is included. This is where Life Care truly shines. When you live at a community like Morningside, you have priority access to the adjacent health center for assisted living, memory care and long-term care in a skilled nursing center, if ever needed.
Financially, your monthly fee remains stable, protecting you and your estate from the ever-rising costs of long-term care on the open market.
Consider the peace of mind that comes with knowing that if you need care, you’ll receive it in a familiar setting from people who already know you. This kind of plan is like a gift to yourself and your loved ones.
Tax advantages. Because Life Care includes the plan for future care, in most cases, a portion of Life Care’s entrance fee and monthly fees are considered a pre-paid medical expense. Always consult a tax professional for details.
Learn more about Life Care, the most comprehensive senior living plan available.
Morningside of Fullerton is a retirement community offering residential living, plus a full continuum of care. To learn more about our community, the costs of living here and the value of our Life Care contract, please contact us today.
