May 5 2023

Answers to 6 important questions about life care contracts for seniors

A couple looks over paperwork together.

Len Weiser, White Horse Village president and CEO

When it comes to researching senior living options, you’ll want to know your ABCs—specifically, the different kinds of contracts you may encounter, often known as Type A, B, C, or D.

These are common plan options at continuing care retirement communities (CCRCs), also called life plan communities. These provide a range of services in one location, from independent living to skilled nursing and other medical care. If seniors need more care, they can add services without going elsewhere.

People can get confused by the different options, so here’s a quick overview of what you need to know.

What are the main kinds of plans at continuing care communities?

Type A: This is what’s known as a “life care contract,” where seniors pay an entrance deposit, then a flat monthly fee. The fee does not increase if they need more intensive healthcare down the road, and they get unlimited access to those services. 

Type B: This is a hybrid life plan, similar to Type A, but with a lower price tag. Seniors get a limited number of days of healthcare at no additional cost. After seniors use those days, they’re responsible for paying market price for their care. 

Type C: This is what’s known as a fee-for-service plan. It also typically involves an entrance fee and a flat rate. Type C provides some services, but when you need extra healthcare, you pay the market rate. 

Type D: This is more like a rental and has fewer services than the other options. It costs less, and usually doesn’t require an entrance fee. Residents aren’t tied to a contract.

Why is there such a price difference between plans?

The short answer is, you’re getting a lot more with a Type A or B life care contract. Type A is the most expensive version, because the community guarantees access to future healthcare without an increase in monthly rate as your needs increase or services become more expensive. Type B costs less, because the healthcare is limited.

Of course, the C and D types are less expensive but don’t offer the same long-term security benefits. With these, the monthly cost increase for healthcare could be significant.

A group of seniors enjoys a jigsaw puzzle.

How do I know which option is best for me?

It comes down to a mix of finances and personal preference. Some people may decide they want to keep their money and only pay for healthcare if they end up needing it. They’re willing to take that risk—perhaps it makes sense considering their finances or health insurance. Others decide that since they know they can afford Type A, they’d rather pay into it and be sure they are covered for the rest of their lives.

Here at White Horse Village, we’re actually seeing an increased demand for the hybrid Type B model.

Prospective residents can sit down with our chief financial officer and really dig into what makes the most sense for them, and how the total long-term costs could vary under the various options.

Are financial safeguards in place?

Depending on what community you choose, those who run into financial difficulty through unforeseen circumstances may have some protection. 

Most nonprofits, including White Horse Village, maintain a fund to assist residents who may need it down the road. For-profit providers don’t typically have any kind of charitable fund that supports those who outlive their resources, so that’s an important point to consider.

Seniors enjoy their retirement with a pet.

Why is there a health screening and financial review?  

Continuing care communities assume a responsibility to look after their residents even if their health changes. That’s why we take applicants through a financial qualifying process and medical review to ensure we’ll be able to meet that commitment responsibly.

When should I start looking into my options?

I always recommend that people start investigating senior living choices before they face a crisis. That gives them time and space to find a destination that matches their needs. Are they looking for an urban setting, or do they want something more rural? What kinds of activities are there? What are the healthcare options? Don’t wait until the last minute to start exploring. 

Some people just decide they don’t want to worry about their house anymore. Communities like White Horse Village will take care of your lawn, shovel snow, and do maintenance. We’re open to people 62 and older, and spouses as young as 55 can join.  

This is a quick overview of some of the most common questions. To learn more, I recommend that you visit a continuing care retirement community to learn more about the options.