Will Your Long-Term Care Insurance Cover Continuing Care Retirement Communities?

By LRG Wealth Advisors on August 8, 2017

Clients have asked us about continuing care retirement communities (CCRCs) and how they fit in with long term care insurance.  The answer largely depends on how the CCRC bills for its services.

Broadly speaking CCRCs have three main payment types:

• Type A contracts generally include unlimited assisted living and health services with little to no extra fees. Type A plans are the priciest of the options and can be thought of as a long-term care insurance policy unto itself.
• Type B contracts provide similar services to Type A except that limited health services are included in the initial monthly fee. Residents are charged for additional services, either at discounted or market rates.
• Type C, also known as fee-for-service contracts, have the lowest initial enrollment fee and are similar to type B in that additional services are billed to residents, though in this case residents are charged at market rates. As an example, when a resident moves from independent living to assisted living or from assisted living to skilled nursing, the additional cost will be billed to the resident.

If you will be moving into a CCRC with type B or C contracts, your long-term care insurance policy can be used to pay the assisted living and skilled nursing care services. The key is that the additional services must be separately billed and spelled out. Long term care insurance does not pay the set monthly fee, which is why type A contracts are problematic for LTC insurance.

For those considering a CCRC with type A contract, the answer is a bit more nuanced.  For those who already have a long term care insurance policy, you might want to hold on to it until you enter the CCRC.  It will keep your options open as you research senior living centers; serve as your back up plan in case you do not move into a CCRC in time; and provide temporary care should you need it before entering a CCRC.  After you are comfortably settled in your new home and feel confident that you will be staying, you can consider discontinuing your LTC insurance policy.

For those individuals that do not currently have a long term care insurance policy and plan on moving into a type A CCRC, timing will be important. Individuals must be capable of independent living to apply. Applicant requirements typically include a medical exam; cognitive test; interviews by CCRC staff; and a health assessment by one’s doctor.

In the case of all CCRCs it is imperative to research the financial health of the facility. Besides fully understanding the financial health and fee structure, other suggested areas to understand are billing/refund policies and when they apply; policies regarding when a resident is required to move to the next level of care; policy for delivering skilled nursing care should the CCRC’s facilities be at maximum occupancy already. This list could go on, but this should get you started!

For more information on researching the financial health of CCRC facilities as well as comparing traditional long term care insurance to hybrid LTC policies, check back with us.  We will address those topics in future blog posts.