As you research different retirement community types, you’ll start to notice that there are different contract options available to you. Communities that offer some form of continuing care, such as a life plan community (also known as a continuing care retirement community or CCRC), might offer several types of contracts for residents.
Two of the more common contract types you’ll likely come across are Lifecare and fee-for-service. Understanding the difference between the two will help you choose the right one for your needs.
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Related: Not-For-Profit vs. For-Profit Retirement Communities
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What Does Fee-For-Service Mean?
According to MyLifeSite, the fee-for-service contract model “typically requires the lowest monthly fees and possibly the lowest entry fees compared to the other types” of life plan or CCRC contacts.
But let’s take a step back for a moment: you’ll notice that that definition mentioned both monthly fees and entry fees. That’s because those fees are standard in most life plan communities or CCRCs.
As part of your contract at a life plan community, you’ll pay an entrance fee that may partly refundable to the resident in the event that they leave the community or refundable to the estate. This depends on your contract.
You’ll also pay monthly fees. The monthly fees are also dependent on your contract type and cover things such as services and amenities.
In terms of fee-for-service contracts, monthly fees may cover all residential services and amenities, but they may not, depending on your contract. It’s always a good idea to ask what all your contract will cover so you have that information going forward.
Additionally, while this contract type can offer a lower entrance fee and monthly fee than other contract types, it’s very likely that the monthly fee will increase in the years to come. If a resident needs assisted living or skilled nursing services in the future, they will pay the market rate for those services and their monthly fees will likely increase as a result.
So, to sum up, the upside of a fee-for-service contract is that in all likelihood, it will initially have lower fee amounts than other contract types. However, the downside is that you won’t be able to predict and plan for future care costs, which are very likely to keep rising in order to keep pace with the market rate.
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Related: 5 Questions to Ask When Considering a Life Plan Community
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What Is Lifecare?
Lifecare provides active independent living with the promise of future care through assisted living and skilled nursing services.
It’s possible that the monthly fees and entrance fee for a Lifecare contract would be higher than those of a fee-for-service contract. However, the benefit of Lifecare is that should the resident ever need the higher levels of care, they would have access to those services at little or no increase in monthly fees.
As this MyLifeSite resource explains, “In essence, a resident of a CCRC with a lifecare contract pre-pays for some portion of health-related services that may be needed in the future. This ensures more predictable, long-term expenses regardless of healthcare needs in the future.”
It’s important to note that there are subtypes of Lifecare contracts. For example, Kendal on Hudson offers both full and modified Lifecare contracts. You can learn more about the different contract types by downloading our brochure. Essentially, a modified contract is a good option for those with long-term care insurance, as it requires the resident to pay a portion of any assisted living or skilled nursing care costs.
In summary, a Lifecare contract may initially have higher monthly or entrance fees than a fee-for-service contract, but it offers stable, predictable fees and full access to services.
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Up Next: When Should I Move to a Life Plan Community?
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Learn More About Lifecare at Kendal on Hudson
Lifecare communities offer a full continuum of care with stable monthly fees. For more on what Lifecare is, what services and amenities are included, and monthly fee examples, download our Lifecare booklet.
