Part 6: Different Pricing Models For LTCC's
Senior care communities come in a variety of different shapes, sizes, styles, and pricing models that can be broken down into two main types - rental and entry fee. Within each of those are a variety of contracts, price points, plans, and amenities. There are significant differences between different regions of the country with some areas being far more expensive than others. With our experience being in the Mid-Atlantic region of DE-MD-PA, that is where we will draw our information from.
Financially, rental communities operate very much like any other rental property. Most communities require a “Community Fee” when you first move in (names may vary). The fee, normally non-refundable, could be anything from $0 to a month’s rent & care or even more. You are typically signing a month to month lease and can leave at any time with 30 days notice. LTCC pricing varies widely and within each community, the monthly cost can vary based on care and assistance needs. These are critically important questions to ask and understand as you go through you information gathering process. What happens if (when) your care needs change is another important question.
While it is impossible to provide specific monthly pricing, the ranges listed here are accurate in our region. Prices in your area may well vary.
Independent Living Rental Communities
- $2500 (studio) up to $6500 (2 BR apartment)
- 2nd person fee: $500 - $1500
- A la carte services (laundry, med management) may be available for small additional fees
- $3500 for a studio up to $7500 (2 BR apartment)
- 2nd person fee: $700 - $2000.
- Level of Care and Medication Management charges can add $10 to $80 per day
- A couple with high care needs can be over $10k
- $4500 (shared studio) to $9000 for a private studio
- Care needs & med management are often, but not always, included in the price
Entrance Fee Communities
CCRC's and LPC's
Continuing Care Retirement Communities, or CCRC’s, provide the ultimate aging in place model. On one campus, you will find IL, AL, MC, and SNF but you must enter as independent - they usually will not accept someone that immediately needs higher care levels unless there is a spouse who is independent and is either capable of being the caregiver or is willing to bring in caregiver help. If there is any question, look into it. Each individual situation will be assessed by the community and they will either accept you or they will not.
You may have heard the term 'Life Plan' Community over the past few years. That was a focus group chosen name to replace CCRC but there is no difference in how the communities operate.
Entrance fee communities have much larger initial fees than rental communities, normally hundreds of thousands of dollars. Two factors mitigate that large outlay of an outlay: 1) you may get some portion of that back (how much varies) when you vacate, and; 2) your monthly fee will be lower - sometimes much lower - than rental communities.
As you might imagine, a big draw to the CCRC model is that you are guaranteed the level of care you need to stay in the community; to age in place. However, the monthly cost does escalate with your care needs but it will remain lower than a rental community cost for the same level of care.
'Life Plan' vs 'Life Care' Community
These terms, obviously similar and easily confused, actually refer to the different contracts communities offer. While costs in a CCRC/LPC increase with your care needs, your costs in a Life Care Community (LCC) do not - they are fixed from Day 1.
What's the catch, you may ask? Good question. The reason for this is simple: your monthly cost will be higher from the start, perhaps much higher. You are essentially pre-paying for your future care. Is it a good deal? Another good question. It is, in effect, an insurance policy on your future health care needs that allows you to calculate lifetime costs more easily since the monthly costs are fixed. If you end up in AL, MC or the SNF for an extended period, the cost of the Life Care Community will be much lower than the escalating cost of those care levels in a CCRC. Conversely, if you stay independent for a long time, perhaps never even entering AL or the SNF, the CCRC (LPN) will be much lower.
Entry fees are often at least partially refundable when you leave the community, including as part of your estate should you pass away while a resident. The residual usually drops (depreciates) at a set rate over a fixed period of time (i.e. 0.5% or 1% per month), leaving a guaranteed minimum residual anywhere from 0% and 90%. There are a virtually limitless number of financial arrangements and many communities offer choices of different plans (i.e. pay a higher entry fee and be guaranteed a higher residual). These are very important questions to ask.
Rental Fee vs Entry Fee - Which Is Better?
This answer - as you may have guessed - is neither. The different pricing models are designed to fit the needs of individual potential residents so while rental model works better for some, the entrance fee model will work better for others. Contrary to what you might think, entrance fee communities are not just for the wealthy. In fact, they often prove to be a great option even for someone who has been middle class their whole life but owns a home and has some savings.
Running long term cost projections is the only way to truly compare the costs. That analysis should also factor in other subjective “what if’s” so different scenarios should be envisioned. It may also involve consultation with a financial planner who can do detailed projections. This is a hugely important decision - take the time to do your homework and make sure it gets done right.
Next: How LTCCs can be paid for.