Understanding Senior Living
Community Housing Contracts
Learn how to choose the right CCRC or other
contract and avoid common pitfalls
UNDERSTANDING SENIOR LIVING
COMMUNITY HOUSING CONTRACTS
You want to move to a senior living community, but that’s just the first of
many decisions you’ll need to make. From resort-style communities on the
beach to independent apartments, location preference is only the tip of the
iceberg when it comes to choosing your ideal senior lifestyle. Whether you’re
looking to dive into senior living for the long haul or test the waters with a
rental, banking on continued good health or want to ensure care as you age,
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.
CCRC CONTRACTS
Continuing care retirement communities offer multiple levels of care all on one
campus. This setting is generally attractive to seniors who like to plan ahead.
CCRCs 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.
“The CCRC is a promise of future care, inclusive of the various levels,”
says Marc Herrera, vice president of skilled nursing administration and risk
management at be.group. “All other types of senior living are month-tomonth arrangements.”
Most CCRCs are nonprofit organizations with business models surrounding
a mission of senior care and service, says Daniel S. Ogus, executive vice
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CCRC CONTRACTS ARE
MORE COMPLEX THAN
OTHER TYPES OF SENIOR
LIVING AGREEMENTS
BECAUSE THEY OFFER
UNDERSTANDING SENIOR LIVING
COMMUNITY HOUSING CONTRACTS
MORE SERVICES.
president and chief operating officer at be.group. All levels of care in a
CCRC are usually provided by the same management. Otherwise, if you
move into a community that offers only one level of care (such as assisted
living) and then need a higher level of care (like skilled nursing), you
will likely need to move to a different community managed by a separate
corporation with a whole new set of requirements and costs.
CCRC contracts are more complex than other types of senior living
agreements because they offer more services. There are three common types
of CCRC agreements that typically secure long-term living accommodations,
services and health care for residents.
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.
“You pay an entrance fee, then should you eventually need assisted living,
your monthly fee will stay the same,” says Herrera.
However, while the level of security provided by this contract can be
an advantage, the CARF cautions that there is a possibility that healthy
residents could end up paying in advance for services they may never use.
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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. “For example, if you fall and break your hip, you’d get
30 days free in the health center,” says Herrera. “But after that, you’ll start
paying a fee for each service as you would at the doctor’s office.”
While Type B contracts have a lower entrance fee than Type A, the CARF
cautions that, should an increase in care become necessary, it would be the
resident’s responsibility to cover costs.
UNDERSTANDING SENIOR LIVING
COMMUNITY HOUSING CONTRACTS
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 Herrera. 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. The
CARF states that Type C contracts are ideal for healthy seniors who do not
foresee any need for 24-hour skilled nursing care.
CONTRACTS BEYOND CCRCS
If you are considering a move to a senior living community that offers only one
or a couple of levels of care but is not a full CCRC, or if you are considering a
move to a CCRC but aren’t sure about the long-term commitment, there are
other contract options. The following are the five most common.
1. Rental agreements—A rental agreement is a month-to-month residential
and service contract and is not considered a continuing care contract. “If
someone isn’t sure about moving into a CCRC and he or she wants some
flexibility, a rental agreement allows them to try it out for a few months,”
says Herrera.
Rental agreements require residents to pay a higher monthly cost and fee-forservice rates on any health care needs. Since rental agreements provide much
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UNDERSTANDING SENIOR LIVING
COMMUNITY HOUSING CONTRACTS
more freedom, residents are able to convert to a CCRC contract or cancel the
agreement at any time. But with freedom comes risk, as unlike Types A, B and
C, there is no promise of future care within a rental agreement.
2. Age-restricted communities—Also known as “active adult communities,”
this option is restricted to residents who are at least 55 years old, and does not
provide health-related support or increased care. Age-restricted communities
offer for-sale, single-family homes in the form of condos, mobile homes
and townhouses. Typically, rental properties are not an option, and many
communities include recreation amenities such as golf courses and gyms. Keep
in mind that these additional perks are often included in a monthly homeowners
association fee. They do not, however, include meal service, cleaning or other
amenities generally included in independent living communities.
3. Independent living—Independent living contracts cover housing in an
independent living community. Typically, residents pay a rental rate or monthly
fee, and the community may not provide any supportive services. According to
the Assisted Living Federation of America, this option is best for active seniors
who do not need assistance and is often the most affordable.
That said, it’s ideal for independent living contracts to include some
link to services (such as assistance with transportation or medication
management)—otherwise the community will not be able to accommodate a
senior who wants to remain in one place as care needs arise, warns Herrera.
If they cannot provide future care for someone who becomes frail, Herrera
says it’s important that the community set strict rules about residency when
a senior can no longer be truly independent because it can become unsafe for
the resident to remain there without help. “In these settings, the person who
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REGARDLESS OF THE ENVIRONMENT YOU CHOOSE, MOVING
TO A SENIOR LIVING COMMUNITY IS A BIG DECISION THAT
REQUIRES A LOT OF THOUGHT AND EVEN MORE RESEARCH.
UNDERSTANDING SENIOR LIVING
COMMUNITY HOUSING CONTRACTS
needs services is often left with no assistance in accessing local long-term
care supportive services like home care and home health,” says Herrera.
4. Assisted living—Assisted living communities provide housing, support,
amenities and assistance with activities of daily living (such as dressing,
bathing or managing medication). Such communities do not generally
charge an entrance fee, but often charge a community fee of about one
month’s rent. Assistance is typically covered by a monthly fee. Medicare does
not cover assisted living services, and most facilities charge market rates.
However, a little research will help you find some options that participate
in Medicaid waiver programs. “The issue with care-related communities
(assisted living and skilled nursing) is always about quality and staffing,” says
Herrera. Staff longevity is important, so that staff gets to know you or your
loved one, and can provide care accordingly.
5. Skilled nursing—Skilled nursing communities (often called nursing homes)
provide 24-hour care for people with chronic conditions or those who have
short-term rehabilitation needs. Fees cover all services, from custodial care—
like helping a resident bathe, eat and getting in and out of bed—to laundry,
medical care and community maintenance. Medicare does not generally cover
long-term nursing home stays, but some insurance companies will allow you to
use your life insurance to cover long-term care. Nursing home contracts vary
state by state, but all communities must adhere to the federal Nursing Home
Patient’s Bill of Rights, which protects residents. “Always do site visits, look
for management stability and consistent good survey outcomes,” says Herrera.
“Hospital case management and social workers can help with this.”
STEPS BEFORE YOU SIGN
Regardless of the environment you choose, moving to a senior living
community is a big decision that requires a lot of thought and even more
research. Here are some important steps to take before signing a contract.
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UNDERSTANDING SENIOR LIVING
COMMUNITY HOUSING CONTRACTS
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 Ogus. “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. Is the management able to make improvements
regularly? Will you be working with the same staff regularly, or is there a
high turnover rate? “If you’re going to live somewhere for 30 years, you need
to know its history,” Herrera says.
Ogus suggests reading online reviews and visiting communities to talk directly
to residents. Additionally, every community that receives Medicare subsidies
is visited and reviewed once a year unannounced, and those results are public
knowledge on the federal website. “Don’t just look at one year of bad results,
look at them year over year,” says Ogus. “See if there have been legal issues.
Check their background like anyone you would do business with.”
3. Understand which services are 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. What types of wellness
and preventive care services are available in the community? Understand how
they charge for specialized programming and activities.
4. Find out how refunds work. Signing a CCRC contract is a big
decision—so what if you change your mind? “Understand how the refund
works by asking questions prior to signing the agreement,” Herrera says.
5. Ask about a benevolence program. Many nonprofit CCRCs offer
benevolence programs if a resident exhausts his or her financial resources.
“Say someone has lived in the community for 15–20 years and now she
cannot afford to pay at that higher level—this program subsidizes her as she
continues to live at the same level,” says Herrera.
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UNDERSTANDING SENIOR LIVING
COMMUNITY HOUSING CONTRACTS
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 so they know what
will happen in the event of an emergency.
8. Explore, visit, ask questions, repeat. “We want [potential residents] to
make the right decision,” says Ogus. “We want them to choose us, but we’d
rather them not choose us if it’s not the right decision for them. An unhappy
resident can spoil it for the rest of the community. It should be a lifestyle
decision, not a sentence.”
This guide is brought to you by be.group. As one of California’s largest nonprofit providers of
senior living communities, be.group is dedicated to helping residents and clients discover new ways
to embrace life’s possibilities and new options for exploring their potential. Our vision begins and
ends with the people we serve. We’re here to help older adults be who they want to be: themselves.
Learn more about be.group communities at thebegroup.org. Contact us at (818) 247-0420.
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