The burgeoning market for senior care has introduced a host of new concepts and terms that are easily confused. Many people believe, for example, that the life care and continuing care communities are the same, and they use these terms interchangeably. However, vital care is actually a subset of ongoing care. While the offers may appear similar at first glance, don’t be fooled. Let’s take a look at the differences between the two, starting with Continuing Care Retirement Communities (CCRC).
CCRC vs. Life Care Communities
CCRCs offer contractual arrangements to individuals aged sixty and over, providing them with a range of services, usually on the same campus. These services include independent living, assisted living, skilled nursing, and sometimes memory care. Although all CCRCs offer ongoing care, some rely on contracts with other care providers to manage the highest levels of care, which may be located off campus. This means that residents moving to independent or assisted living levels would have access to higher levels of care as their needs advance, but may have to move off campus to access those services. Most contracts require the payment of an entry fee (sometimes called a “purchase” fee) and monthly fees. Some contracts include the purchase of real estate (that is, the resident’s apartment within the community), which can be testated or transferred to an heir like any other real estate purchase. However, not all contracts involve the purchase of real estate. Under these terms, seniors would become residents of the community, but would not own any property under the contract. Entry fees can range from $ 10,000 to $ 500,000 +.
Life-care communities provide the same ongoing care to a life-long resident, but the biggest difference is this: residents who cannot pay their monthly care fees will be subsidized by the community, with the same access to care. services and without interruption in care or change in priority status. In other words, residents are guaranteed the same quality of care and access to care from day one to the end of their life, regardless of their personal financial situation. Additionally, most life care communities offer all health care services on the same campus. The idea is that, after qualifying through a financial and health application process, residents will never have to move again, except between levels of care as needed. So, for example, a resident may be required to move from assisted living to skilled nursing as their care needs progress, but the new place of residence will be on the same campus. However, certain states allow life care communities to provide skilled nursing services off campus as long as they are under the ownership and supervision of the life care provider, and not through contract. There is another significant difference. In a lifetime care community, residents do not own real estate under their lifetime care contract. After the death of a resident, the apartment (or room) they occupied returns to the community.
Because there is no federal agency that governs CCRCs and life care communities, the terminology and requirements vary from state to state. However, the easiest way to distinguish between a life care community and a CCRC is by the type of contract: type A is considered life care; Types B and C are considered continuing care.
The types of contract: A, B and C
In general, there are three types of continuing care contracts: Type A (Full or Extended Life Care), Type B (Modified or Continuous Care), and Type C (Fee-for-Service). Each type of contract involves a different degree of risk for the resident and the community. The highest level of risk is assumed by communities with a Type A contract and the lowest with Type C. The reverse is true for residents, where Type A is the lowest risk and Type C is the highest. Each type of contract has different fee structures, which correspond to the risk levels assumed by either party. Some continuing care communities offer only one type of contract, so contact the community you are interested in to see which one it offers. Here is an overview of how each contract operates:
Type A: Extended or lifetime care contract
With this type of deal, consumers take the least amount of risk, but pay the highest price. A Type A contract provides housing, services and amenities, and unlimited access to long-term nursing care at little or no additional cost, apart from periodic inflation spikes. The higher initial fee is based on the assumption that these residents may require, and use, higher levels of care as their needs develop over time. This can add up to substantial savings over a resident’s life, considering that Medicare does not cover custodial nursing care, which currently costs more than $ 250 a day, for a private room in a nursing home. Additionally, the prepayment of future health care costs qualifies these residents for significant tax benefits (the IRS medical deduction). Generally, residents must maintain a minimum level of Medicare coinsurance.
Who it’s good for: People who want to make sure all of their health care needs are covered for the rest of their life.
Type B: Continuing or modified care contract
A Type B contract also provides accommodation, services and amenities, but access to nursing services and long-term medical care is restricted to a specific number of days. After that, the resident is responsible for the additional care costs incurred. Some contracts allow residents to pay for additional care at a discounted rate once they have used the care included in their contract. As with a Type A contract, residents are eligible for the IRS medical deduction.
Who it’s good for: People who can afford the costs of care not covered by their contract, and those who don’t expect their health care needs to increase significantly over time.
Type C: Fee-for-service contract
With a Type C contract, access to health care is guaranteed, but residents must pay the full cost of the services they use. Under this type of agreement, residents receive housing, services and amenities as defined in the contract. Some communities do not charge an entry fee for Type C contracts, instead charging only a monthly fee. However, other communities charge an entrance fee, and the funds subsidize a resident’s assisted living or skilled nursing care. If the cost of care exceeds the funds obtained from the entrance fee, the resident will be charged the full cost of the services used. This can happen if a resident requires long-term skilled nursing care. For those who require higher levels of medical care in the future, the cost can be extremely high. At a daily rate of $ 250, nursing home care costs rise rapidly, creating a significant financial burden for residents without long-term care insurance or significant financial resources. Residents do not qualify for the IRS medical deduction under a Type C contract.
Who is it good for? People who are willing to take the full risk of health care costs.
Benefits of continuing care
Ongoing care gives residents convenient access to most of the services they need, all in one place. With the exception of a Type C contract, the cost of those services is included in the rates you pay under your contract. Although health care forms the basis of the contract, it is certainly not just about health care. Let’s take a look at what’s included in a typical continuing care arrangement:
* Access to an on-site doctor by appointment, five days a week.
* Home visits during illness to assess condition.
* Delivery of food during illness.
* Daily van service to an off-campus hospital.
* The option to retain services under a separate medical plan, with certain provisions.
* Three meals a day, weekly cleaning and bed linen and towels washed.
* Access to banking services, recreational outings and numerous on-site activities.
Although CCRCs and life care communities are highly regulated in some states, there is no federal agency that oversees these types of retirement communities. However, there is a system of checks and balances to protect the consumer. Is that how it works. Life care providers are required to submit audited financial statements and reserve reports, generally to the state Department of Social Services, annually. Continuing care contract statutes call for various financial and reserve requirements to help ensure that providers have sufficient financial resources available to meet future obligations to residents. This is so that residents are protected from any financial hardship that may affect the life care provider. Suppliers must recalculate reserves each year. If the Department of Social Services determines that a provider is financially precarious, it will exercise its legal authority to require corrective action to be taken.