Life Plan Communities - Understand Options, Entry Fees & Contracts

Life Plan Communities are properties offering a combination of living options for older adults. These communities offer an active lifestyle for residents, as well as a wide array of amenities and services.

Life Plan Communities were formerly known as Continuing Care Retirement Communities (CCRCs). Following a two-year research and review process, a task force led by LeadingAge and Mather LifeWays, identified a new name for CCRCs that would resonate with the boomer target audience. The new name better reflects the communities and their residents—individuals who are active, engaged and focused on the future.

Living options available at Life Plan Communities may include independent living, assisted living and skilled nursing services. These different levels of care are all offered on a single campus. Residents have the option to have all their current or future healthcare needs met without ever leaving campus.

Life Plan Communities afford residents endless opportunities to remain active and involved. These communities generally appeal to young, healthy older adults. Amenities vary widely but often include swimming pools, fitness centers, gardening areas, and golf courses or putting greens. Additionally, residents have access to hundreds of clubs and activities—from art classes to yoga classes and from drama clubs to walking groups. Residents are also very involved in the operation and management of Life Plan Communities through resident boards or councils.

Finally, Life Plan Communities are generally integrated into the larger community. With active residents, these communities can focus on giving back and acting as a socially responsible neighbor.

Life Plan Communities give older adults the freedom and security to live active, healthy lives. They are the perfect option for individuals who want to plan ahead for future care needs, while focusing on enjoying every day.

Source: lifeplancommunity.org

Understand Entrance Fees - Knowing the options when paying for life plan communities

Most life plan communities require payment of a one-time fee, usually called the entrance fee, before moving to the community. The entrance fee amount often depends on the level of care at the time of entry, type of housing chosen (with larger units requiring a larger fee) and agreement type. The entrance fee allows the life plan community to offer lower monthly fees and provide for the future needs of residents. State regulations can impact the terms of the entrance fee and in some states, refunds are called rebates. Entrance fees are typically structured in one of three ways:

Declining scale refunds, also known as amortizing entrance fees, specify a period of time in which the entrance fee will be refundable to the resident on a declining basis. For example, if an entrance fee under this arrangement declines at the rate of 1 percent each month, after 6 months 94 percent of the entrance fee is refundable.

Partially refundable entrance fees guarantee a specific percentage of the refund that will be returned within a certain period of time regardless of the term of residency. For example, 50 percent of the entrance fee may be refundable upon termination of the contract or to the estate upon the resident’s death.

Full refunds offer just that, a full refund of the entrance fee. A fixed charge may be deducted before the refund is made, and the agreement generally states how long the refund is valid and under what conditions a refund is due. Entrance fees that offer full refunds are typically more expensive than those without refunds or those that are partially refundable or refundable on a declining basis.

Understanding Contracts

You want to move to a senior living community, but that’s just the first of many decisions you’ll need to make. No matter which community you move to, you’ll have to sign a contract that stipulates the services you’ll receive and what you’ll pay—now and down the road.

This guide can help you navigate the different contracts you may encounter as you embark on your search for a new home. Life plan communities, also known as continuing care retirement communities (CCRCs), offer multiple levels of care all on one campus. This setting is generally attractive to seniors who like to plan ahead. Life Plan Communities are most useful for seniors who can come in at the independent living level and move through higher levels of care as needed over time.

1. Type A (Life Care Agreements).According to the Commission on Accreditation of Rehabilitation Facilities, Type A contracts include overall housing, residential services (amenities) and unlimited health-related services. Type A contracts provide a sense of stability, as future costs are much more predictable regardless of any changes in needed services or care. Residents pay a much larger entrance fee compared to other contract types, but the monthly fee is flat through all levels of care.

2. Type B (Modified Agreements). As with Type A, Type B contracts include housing and residential services. Unlike Type A, Type B does not cover all future health care needs but does offer discounted or waived rates for those services.

While Type B contracts have a lower entrance fee than Type A, should an increase in care become necessary, it would be the resident’s responsibility to cover costs.

3. Type C (Fee-For-Service Agreements). Like both A and B, Type C contracts cover housing, residential services and health care. “Basically, it’s pay as you go,” says Mark Herrera, vice president of skilled nursing administration and risk management at be.group. Residents pay a smaller entrance fee in the beginning. Then, if you don’t need to use higher levels of care, there is no additional cost to you beyond your monthly service fee for using amenities like transportation or activities. While Type C contracts will save you on up-front costs, the resident risks the potential for large costs down the road if there is a sudden need for care.

Before Signing a Contract

1. Consult a financial adviser. Joining a senior living community is a serious investment. Spend time with your trusted financial adviser. “Your biggest pitfall is not understanding how health care, especially Medicare, works in our country,” says Daniel S. Ogus, executive vice president and chief operating officer at be.group. “How much money do you have and how much will you need? Understand what benefits you’re getting from Medicare as well as your retirement packages.”

2. Research the organization and management. The financial stability of the community as well as the continuity of management are two essential factors to vet thoroughly. 

3. Understand services covered.Asking about guaranteed services will alleviate many of those “what if ” questions: What if you get dementia? What if you become debilitated? Ask management specific questions about what’s covered in your contract beyond care services.

4. Find out how refunds work. Signing a Life Plan Community contract is a big decision—so what if you change your mind?

5. Ask about a benevolence program. Many nonprofit Life Plan Communities offer benevolence programs if a resident exhausts his or her financial resources.

6. Make sure your voice will be heard in the future. Some communities have their own associations, and residents have the right to be represented on boards. “It’s collaborative management,” says Herrera. “Many communities are managed with a lot of advice from residents.”

7. Determine what role your family will play. “We can’t share information with children if the resident doesn’t give us permission to do so,” says Ogus. “If a resident has a condition change, we hope he or she will allow us to share with one of their adult children.” Make sure your family understands the financial commitment and how your contract works.