The Critical Role of Your CCRC Contract Type
Your Continuing Care Retirement Community (CCRC) contract is the single most important document determining your financial security should your assets deplete. The protections afforded to residents who outlive their resources vary significantly based on whether you have a Type A (Lifecare), Type B (Modified), or Type C (Fee-for-Service) agreement.
Understanding Lifecare (Type A) Contracts
This is the most comprehensive type of contract and offers the highest degree of financial security. For a higher initial entry fee and monthly costs, a Type A contract promises unlimited and comprehensive care for your lifetime, often with little to no increase in the monthly fee as you transition from independent living to assisted living or skilled nursing. If you run out of money while living in a CCRC with a Type A contract, the community's benevolent fund or financial assistance program typically covers your costs, as long as you were in good standing and did not intentionally deplete your assets.
Modified (Type B) Contracts
Type B contracts offer a middle ground, featuring a lower entry fee and lower monthly fees than Type A. In exchange, they provide a limited number of subsidized days of care at higher levels (e.g., assisted living or skilled nursing). After this limited period, you are responsible for paying a daily rate for care, which may be at a discounted or market rate. If your funds run out, your access to subsidized care will have already been used, and you may face significant financial strain covering the cost of extra services. Your ability to remain in the CCRC would then depend on the community’s financial assistance policies.
Fee-for-Service (Type C) Contracts
This contract type has the lowest entry and monthly fees. It guarantees residents a place in the community but requires them to pay the full market rate for any healthcare services they need. This means that if you require assisted living or skilled nursing care, you will pay the going rate for those services at that time. If you run out of money with a Type C contract, you may be asked to leave if you can no longer pay for the services needed, as there is no guarantee of lifetime care at a subsidized rate.
The Lifeline of Financial Assistance
Even if your contract does not guarantee care if your funds are exhausted, many CCRCs have provisions to help residents in need. These are particularly common in not-for-profit communities.
Benevolence Funds at Not-for-Profit CCRCs
Many non-profit CCRCs operate with a charitable mission and have established benevolence funds to assist long-time residents who have depleted their resources through no fault of their own. These funds are supported by donations and are designed to ensure that residents are not forced to leave the community if they simply outlive their finances. However, assistance is often conditional and may require a full financial review.
Using Public Benefits: Medicaid and Veterans' Assistance
In some cases, a resident who runs out of money may become eligible for government assistance programs like Medicaid. For this to be a viable option, the CCRC must have Medicaid-certified beds. Not all CCRCs accept Medicaid, and if they do, the resident may need to transfer to a specific unit that is certified to receive Medicaid payments. Veterans and their spouses may also be eligible for benefits such as the Aid and Attendance Pension Program, which can provide additional monthly income to help cover care costs.
Navigating the Financial Hardship Process
The process for a CCRC resident facing financial hardship typically involves several steps:
- Early Communication: The resident or their family should inform the CCRC’s administration of their financial concerns as early as possible. Proactive communication is always better than reactive.
- Financial Assessment: The CCRC will conduct a thorough review of the resident's financial situation, including assets and income, to determine their eligibility for assistance.
- Reviewing the Contract: Both the resident and the CCRC will review the contract to determine what provisions, if any, exist for a financial shortfall.
- Exploring Options: The CCRC may help facilitate the application for public benefits, provide access to a benevolent fund, or suggest alternative arrangements, such as moving to a smaller unit or a different level of care within the community.
CCRC Financial Contract Comparison
| Feature | Type A (Lifecare) | Type B (Modified) | Type C (Fee-for-Service) |
|---|---|---|---|
| Financial Protection | Highest. Care guaranteed for life, regardless of cost. | Moderate. Subsidized care for a limited period. | Lowest. Pay market rates as you go. |
| Entry Fee | Highest | Moderate | Lowest |
| Monthly Fees | Highest, but stable as care needs increase. | Lower than Type A, but increases for care. | Lowest, but increases significantly for care. |
| Options if Funds Deplete | Covers costs through benevolence fund or financial assistance (if in good standing). | Possible assistance, but likely higher out-of-pocket costs after subsidized period. | May face relocation if unable to pay for higher care levels. |
| Best For | Those seeking maximum financial predictability and security. | Those who want a balance of lower initial costs and some predictable care. | Those who prefer lower initial costs and are confident in their ability to cover future healthcare needs. |
How to Prepare and Avoid Financial Depletion
- Read Your Contract Carefully: Before signing, have an attorney or a financial advisor with CCRC experience review the contract, paying special attention to the financial hardship clause. Don’t make assumptions about lifetime care.
- Consult a Financial Advisor: A financial planner can help you create a long-term budget, project inflation, and assess if a CCRC is financially viable for your entire life.
- Consider Long-Term Care Insurance: A comprehensive long-term care insurance policy can provide a financial safety net to cover care costs if your personal funds run low.
- Avoid Asset Dissipation: Understand that gifting or transferring assets to family members to qualify for financial assistance can be viewed as asset dissipation by the CCRC and may disqualify you from receiving aid.
- Maintain Financial Transparency: Keep detailed records of your financial assets and income. Honest and early communication with the CCRC is your best strategy.
- Plan for Inflation: Factor potential increases in monthly fees into your long-term financial model.
- Understand State Regulations: Research your state's CCRC regulations. Some states offer more protections for residents than others.
Conclusion: Your CCRC Financial Safety Net
While the prospect of running out of money is daunting, the vast majority of residents in reputable CCRCs, especially those with Type A contracts, are not simply evicted. The financial safety net depends on a combination of your contract type, the CCRC's policies (particularly if it's non-profit), and proactive financial planning on your part. By thoroughly researching your options, understanding your contract's specifics, and planning ahead, you can secure the peace of mind that your care needs will be met for the duration of your life. For more information on contract types and financial safeguards, it is wise to consult authoritative sources like the NC DOI CCRC Reference Guide.
