| The burgeoning senior care market has introduced a | | | | apart from periodic inflationary increases. The higher |
| slew of new concepts and terms that are easily | | | | initial fee is based on the assumption that these |
| confused. Many people believe, for example, that life | | | | residents may require-and utilize-higher levels of care |
| care and continuing care communities are the same | | | | as their needs develop over time. This can add up to |
| thing, and they use these terms interchangeably. | | | | substantial savings over a resident's lifetime, |
| However, life care is actually a subset of continuing | | | | considering that Medicare does not cover custodial |
| care. While the offerings may look similar at a glance, | | | | nursing care, which currently runs $250+ daily, for a |
| don't be fooled. Let's take a look at the differences | | | | private room in a nursing home. In addition, the |
| between the two, beginning with continuing care | | | | prepayment of future health care costs qualifies |
| retirement communities (CCRCs). CCRCs vs. Life | | | | these residents for significant tax benefits (the IRS |
| Care Communities CCRCs offer contractual | | | | medical deduction). Typically, residents must maintain |
| agreements to people sixty years or older, providing | | | | a minimum level of Medicare coinsurance. Who it's |
| them with a continuum of services, usually on the | | | | good for: People who want to ensure that all of their |
| same campus. These services include independent | | | | health care needs will be covered for the remainder |
| living, assisted living, skilled nursing and sometimes | | | | of their lifetime. Type B: Modified or Continuing Care |
| memory care. Although all CCRCs offer a continuum | | | | Contract A Type B contract also provides housing, |
| of care, some rely on contracts with other care | | | | services and amenities, but access to long-term |
| providers to administer the higher levels of care, | | | | health care and nursing services is restricted to a |
| which may be located off campus. This means that | | | | specified number of days. After that, the resident is |
| residents who move in at the independent or | | | | responsible for any additional care costs incurred. |
| assisted living levels would have access to higher | | | | Some contracts allow residents to pay for the |
| levels care as their needs progress, but they may | | | | additional care at a discounted rate once they have |
| need to move off campus to access those services. | | | | utilized the care included in their contract. Just as with |
| Most contracts require payment of an entrance fee | | | | a Type A contract, residents are eligible for the IRS |
| (sometimes referred to as a "buy-in" or "purchase" | | | | medical deduction. Who it's good for: People who are |
| fee) and monthly fees. Some contracts include the | | | | able to pay for the costs of care not covered |
| purchase of real estate (i.e., the resident's apartment | | | | through their contract, and those who do not expect |
| within the community), which can be willed or deeded | | | | their health care needs to increase significantly over |
| to an heir just like any other real estate purchase. | | | | time. Type C: Fee-For-Service Contract With a Type |
| However, not all contracts involve the purchase of | | | | C contract, access to health care is guaranteed, but |
| real estate. Under these terms, the seniors would | | | | residents must pay the full cost of the services they |
| become residents of the community, but would not | | | | use. Under this type of agreement, residents receive |
| own any real estate under the contract. Buy-in or | | | | housing, services and amenities as defined in the |
| entrance fees can range from $10,000-500,000+. Life | | | | contract. Some communities do not charge an |
| care communities provide the same continuum of | | | | entrance fee for Type C contracts, instead charging |
| care to a resident for life, but the biggest difference | | | | only a monthly fee. However, other communities do |
| is this: residents who become financially unable to pay | | | | charge an entrance fee, with the funds subsidizing a |
| their monthly care fees will be subsidized by the | | | | resident's assisted living or skilled nursing care. If the |
| community, with the same access to services, and | | | | cost of care exceeds the funds obtained from the |
| with no interruption in care or change in priority | | | | entrance fee, then the resident would be charged for |
| status. In other words, residents are guaranteed the | | | | the full cost of any services utilized. This can happens |
| same quality of care and access to care from day | | | | if a resident requires extended skilled nursing care. |
| one through end-of-life, regardless of their personal | | | | For those who require higher levels of health care |
| financial situation. In addition, most life care | | | | later on, the cost can be extremely high. At a daily |
| communities offer all health care services on the | | | | rate of $250, nursing home care costs escalate |
| same campus. The idea is that, after qualifying | | | | rapidly, creating a major financial burden for residents |
| through a health and financial application process, | | | | without long-term care insurance or considerable |
| residents will never have to move again, except | | | | financial resources. Residents do not qualify for the |
| between levels of care as needed. So, for example, | | | | IRS medical deduction under a Type C contract. Who |
| a resident may be required to move from assisted | | | | it's good for: People who are willing to assume to the |
| living to skilled nursing as his or her care needs | | | | full risk of health care costs. Benefits of Continuing |
| progress, but the new place of residence will be on | | | | Care Continuing care grants residents convenient |
| the same campus. However, certain states allow life | | | | access to most of the services that they require, all |
| care communities to provide skilled nursing services | | | | in one place. With the exception of a Type C |
| off campus as long as it is under the ownership and | | | | contract, the cost of those services is included in the |
| supervision of the life care provider, and not through | | | | fees they pay under their contract. Although health |
| a contract agreement. There is one other significant | | | | care constitutes the basis of the contract, it's |
| difference. In a life care community, residents do not | | | | certainly not all about health care. Let's take a look at |
| own real estate under their life care contract. Upon a | | | | what's included under a typical continuing care |
| resident's death, the apartment (or room) that he or | | | | agreement: * Access to an on-site doctor by |
| she occupied reverts back to the community. | | | | appointment, five days a week. * House calls during |
| Because there is no federal agency that governs | | | | an illness to assess the condition. * Meal delivery |
| CCRCs and life care communities, the terminology | | | | during the illness. * Daily van service to an |
| and requirements vary from state to state. | | | | off-campus hospital. * The option to retain services |
| However, the easy way to distinguish between a life | | | | under a separate medical plan, with certain provisions. |
| care community and a CCRC is by the contract type: | | | | * Three meals a day, weekly housekeeping, and |
| Type A is considered life care; Types B and C are | | | | laundered linens and towels. * Access to banking |
| considered continuing care. The Contract Types: A, B | | | | services, recreational outings and numerous on-site |
| & C In general, there are three types of | | | | activities. Regulatory Conditions Although CCRCs and |
| continuing care contracts: Type A (Extensive or Full | | | | life care communities are highly regulated in some |
| Life Care), Type B (Modified or Continuing Care) and | | | | states, there is no federal agency that oversees |
| Type C (Fee-for-Service). Each contract type | | | | these types of retirement communities. However, |
| involves a different degree of risk to the resident | | | | there is a system of checks and balances in place to |
| and the community. The highest level of risk is | | | | protect the consumer. Here's how it works. Life care |
| assumed by communities with a Type A contract | | | | providers must submit audited financial statements |
| and the lowest with Type C. The opposite is true for | | | | and reserve reports, usually to the state Department |
| residents, where Type A is the lowest risk and Type | | | | of Social Services, on an annual basis. Various financial |
| C is the highest. Each contract type has different fee | | | | and reserve requirements are mandated by |
| structures, which correspond to the levels of risk | | | | continuing care contracts statutes, to help ensure |
| assumed by either party. Some continuing care | | | | that providers will have sufficient financial resources |
| communities offer only one type of contract, so | | | | available to meet future obligations to residents. This |
| contact the community you're interested in to see | | | | is so that residents will be protected from any |
| which one(s) it offers. Here's an overview of how | | | | financial difficulties that may affect the life care |
| each contract operates: Type A: Extensive or Life | | | | provider. Providers must recalculate reserves each |
| Care Contract With this type of agreement, | | | | year. If the Department of Social Services |
| consumers assume the least amount of risk, but pay | | | | determines that a provider is in unsound financial |
| top dollar. A Type A contract provides housing, | | | | condition, it will exercise its statutory authority to |
| services and amenities, and unlimited access to | | | | require that corrective measures be taken. |
| long-term nursing care at little to no additional cost, | | | | |