With so many options in the senior living market, choosing the right fit for yourself or a loved one can be a daunting task. There are countless variables to weigh, and deciding where you’ll spend your retirement years often comes down to choosing the place that feels most like home.
Two common options for senior living communities are rental and Life Plan (which you may also hear referred to as continuing care retirement communities or CCRCs). While each can serve its purpose for a specific set of circumstances, the two are distinct in many ways.
Understanding what each type of community offers, including how they’re similar and different, will provide some essential foundational knowledge. Details such as a community’s profit status can help you begin narrowing your search so you can find the perfect fit.
Senior Rental Communities
Designed for seniors who are fully self-sufficient, rental communities offer greater financial flexibility and tend to be a more immediate, short-term solution. As a resident, you can expect your monthly fee to cover a residence, usually a private apartment, with rates determined by location and the level of care you need.
Often, basic services such as exterior maintenance and lawn care are included. Additional services such as meals and housekeeping may be available at an additional cost, and sometimes basic personal care may be offered on a contract basis by a third party. Any care you do receive will be at current market rates.
There are no entrance fees (aside from deposit requirements typical of any residential lease). You won’t be expected to sign a long-term contract. However, it’s worth noting that a lack of contract works both ways; if you experience unexpected financial hardship or need care beyond what the community can provide, you’ll likely have to leave.
Life Plan Communities
Generally, a Life Plan community is a better choice for someone who is planning for the future and anticipates the probability of changing health care needs over time. Often, residents move into Life Plan communities as independent, active seniors so they can begin taking advantage of the lifestyle and amenities right away.
Monthly fees cover a private residence and typically also cover an array of services and amenities, including maintenance and repairs (indoors and outdoors), housekeeping, daily meals, social and recreational activities, local transportation, 24-hour security, utilities, phone and internet. Since all this is included in the monthly fee, you have a single predictable monthly payment that makes budgeting simple.
One of the biggest draws of Life Plan communities is the peace of mind they provide. You can’t predict the future, but you can be confident that if you get sick or hurt, you’ll have access to higher levels of care within the community. That means you won’t have to add the stress of a move to your treatment and recovery.
Rates vary within a Life Plan community based on the floor plan you choose, the location of your residence and the type of contract you choose. You can expect to pay an upfront entrance fee (which may be refunded, in part, to your estate or used to pay against future health care costs). Unlike a rental, a portion of your entrance fee and monthly fee may be tax deductible because they include pre-paid health care expenses.
Profit Status Matters, Too
Another, often overlooked, aspect of a senior living community’s financial structure is its profit status. Despite all of their differences, both rental communities and Life Plan communities can operate as either for-profit or nonprofit. It’s an important question to ask, because the answer has implications for your retirement lifestyle in several ways:
Quality of Care: Nonprofit communities tend to focus less on financial goals and more on delivering quality care to existing residents.
Reinvestment: In a nonprofit community, residents are the stakeholders and profits go directly back into the community for maintenance and enhancements rather than in shareholder pockets.
Financial Grace: If you stumble on hard times or exceed your savings, a nonprofit community is more likely to help you find assistance and remain in the community through a foundation or philanthropic fund.