The Differences Between Life Plan Communities and Rental Communities
At first glance, a rental community and a Life Plan Community — also known as a continuing care retirement community (CCRC) — look alike. Typically, they’ll both have a bistro and a more formal dining room, a lounge, library, fitness center, art studio, salon, and auditorium, as well as services such as scheduled transportation and social, cultural, and recreational activities.
Independent living options usually include one- and two-bedroom apartment homes, and some communities also offer duplexes and single-family homes. But when you start looking at higher levels of living that offer specialized care services, such as assisted living or skilled nursing, a Life Plan Community and a rental communities may look very different indeed.
Life Plan Communities: Peace of mind with a full continuum of care on-site.
Life Plan Communities are designed for seniors to move to the community while they’re still able to live independently. However, if their health needs change, residents can transition to a higher level of living without having to move off campus. Unlike many rental retirement communities, Life Plan Communities almost always offer a full continuum of care on-site, ranging from independent living to assisted living to rehabilitation services and 24-hour skilled nursing care. Some Life Plan Communities also offer memory care.
The key distinguishing feature of a Life Plan Community is not just that it offers a full continuum of care, but that it does so on a contractual basis. Contract specifications can vary from one Life Plan Community to another, but they all stipulate that residents have priority access to higher levels of care — often at discounted rates.
The A, B, Cs of Life Plan Community contracts.
There are three main types of contracts or residency agreements offered by CCRCs: Type A, Type B and Type C.
Type A, LifeCare®: Promises to care for residents for the rest of their lives without significantly increasing their monthly fees. If the need arises for a higher level of care, the resident may transfer to the appropriate level of care at a predetermined, substantially discounted monthly rate for as long as care is needed. (North Oaks offers a Type A LifeCare contract.)
Type B, Modified Plan: Offers priority access to higher levels of living at: 1) a minimally discounted rate, or 2) for a limited number of free days, with additional care at per diem market rates.
Type C, Fee-for-Service: Offers priority access to higher levels of care at fee-for-service market rates. Essentially, you begin a separate contract for assisted living, memory care or skilled nursing.
Rental communities: No upfront investment but no guarantee care will be provided.
Unlike a Life Plan Community, there’s no large, upfront entrance fee required at a rental community. There may be a small, one-time community fee, but other than that, you simply pay a monthly service fee for the cost of living in the community.
The downside of a rental retirement community is that you’ll be charged the market rate for health services. However, you’ll pay only for the health services you use. And some of the cost could be covered by a long-term care insurance policy.
Health services at rental communities vary. Some offer assisted living and memory care in addition to independent living. Others, such as stand-alone independent living rental communities, have partnerships with care agencies residents can take advantage of.
So which is the better option: Life Plan Community or rental community?
There’s no right or wrong answer. With hefty entrance fees, a Life Plan Community may appear expensive at first. But if you or a spouse needs long-term care for a number of years, a LifeCare contract can easily save you thousands of dollars per month. Not to mention the value of knowing you or a loved one will be cared for in familiar surroundings from people you know and trust.
On the other hand, there are good reasons for considering a rental community. There’s no large entrance fee required, and you pay only for the health services you use. That’s assuming, of course, that health services are available when you need them.
Compare the pros and cons:
|Life Plan Community||Rental Community|
|Large upfront entrance fee
($320,000 on average but can cost up to $1 million in some places)
|Small, one-time community fee ($2,500 on average)|
|A portion of the entrance fee may be refundable.||N/A|
|Health services are usually discounted.||Health services, if available, are charged at market rate.|
|Levels of living generally include independent living, assisted living, memory care and skilled nursing||Levels of living vary but may include independent living, assisted living and memory care|
|Must meet medical and financial eligibility criteria for residency||N/A|
|Less flexibility if you decide to move because your entrance fee won’t be refunded until your residence is resold||Not bound to a long-term commitment if you decide to move|
|Most operate as not-for-profit organizations||Usually operate as for-profit entities|
Learn more about the benefits of LifeCare.
If you’re considering a move to a senior living community, it’s important to understand your options. That’s where we can help. If you have questions or want to schedule an appointment, please contact us. We’ll get back to you as soon as possible.
In the meantime, take a look at our independent living floor plans. Then picture yourself enjoying life at North Oaks, confident you’ll be in the best of hands at Pikesville’s only Life Plan Community.