What Is a Life Care Contract?September 2, 2020
Life Care is a long-term care contract option available at some Life Plan Communities. These two terms are interconnected — which can sometimes lead to confusion. A Life Plan Community (also known as a continuing care retirement community or CCRC) is a senior living community that offers independent living plus a continuum of care, so residents have access to higher levels of specialized support as their health needs change.
A Life Care contract allows residents to progress through the available levels of care at a Life Plan Community with little change to their monthly fee. Life Care residents have priority access to senior health care on-site, so once they move into their apartment home, they have the peace of mind of having a smart plan for their health that allows them to stay on the campus they love.
Who qualifies for a Life Care contract?
There are financial and health-related requirements to qualify for Life Care. The resident must demonstrate they have the funds to pay the entrance fee as well as the recurring monthly fee. Additionally, a doctor will perform a series of examinations to determine if the resident can live comfortably in independent living. If a senior has the necessary resources and is healthy enough to live independently, they’re a great candidate for a Life Care contract.
Why does Life Care make financial sense?
Life Care contracts require an entrance fee when a senior first moves into the community, which leads some people to think it’s more expensive than a rental contract. But in the long-term, Life Care protects you from the volatility of the health care market. Much of the long-term care available at the community will be covered by the one-time entrance fee and the monthly fee, which changes only minimally over time.
Because a portion of the entrance fee and the monthly fee is set aside for medical care, both fees are partially tax-deductible in Arizona. Over time, these deductions can add up to significant savings.
At a nonprofit community like Sierra Winds, there are additional financial safety nets for Life Care residents. The Sierra Winds Charitable Foundation provides confidential financial assistance toward the services of Life Care to residents who outlive their resources through no fault of their own.
What are the Life Care options at Sierra Winds?
To serve as many residents as possible, we offer two options for Type A Life Care contracts. One is our Return-of-Capital® Plan, which offers residents smart asset protection. This contract requires a one-time entrance fee, 80% of which will be refunded to you or your estate once you no longer live at Sierra Winds. The second Life Care contract option is a more traditional contract for those who prefer a smaller entrance fee. The smaller entrance fee will amortize over time until eventually there will be no refund.
Under both the Life Care contract options, the resident will have access to a continuum of care with little change to the monthly fee. One difference is that the Return-of-Capital Plan covers a private room in skilled nursing, while the traditional contract covers only semiprivate accommodation.
For those who can’t or don’t want to invest in Life Care, Sierra Winds also offers the option to rent your apartment home. Seniors with a rental contract will have access to all the benefits of community living, but won’t have the security of priority access to care.
Life Care and you
Choosing a Life Care contract over a rental contract provides a unique peace of mind in retirement. Beyond the connection and vitality of community living, Life Care residents also enjoy the comfort of knowing they have a plan if their health needs change. This type of contract outlines the answers to many of life’s what-ifs.