Many prospective residents ask whether they should keep their long-term care insurance after moving into a continuing care retirement community (CCRC). The best answer depends on the type of residency contract the community offers and your individual needs. Below is a clear explanation of common contract types and how they interact with long-term care insurance so you can make an informed decision.
CCRC Contract Types
CCRCs generally offer three contract types. About one-third use a fee-for-service contract (often called Type C). With this arrangement, you pay a standard independent-living monthly fee, and if you later move to assisted living or skilled nursing within the community, your monthly charge increases to reflect current market rates for that level of care.
Nearly half of CCRCs use a lifecare contract (Type A). Lifecare requires a higher monthly fee during independent living compared with fee-for-service contracts, but the key benefit is that costs for assisted living or skilled nursing are not added to your monthly bill when you begin receiving those services. In effect, lifecare shifts some cost forward: you pay more while healthy to protect against potentially high long-term care expenses later. This indefinite coverage is supported by the financial stability of the community rather than an insurance company.
About 20 percent of communities offer a modified contract (Type B), which blends features of the previous two. A modified contract may add the cost of care to the monthly fee, but typically at a reduced rate. Other variations allow a certain number of covered days in the healthcare center before additional charges begin.
How long-term care insurance fits with CCRCs
Long-term care insurance works naturally with fee-for-service contracts and often with modified contracts. Under those arrangements you usually pay a lower independent-living fee and can rely on your insurance to offset the higher costs if you begin receiving care within the community.
With a lifecare contract the situation is less straightforward. On the surface, keeping long-term care insurance might look like double payment: you pay higher monthly fees for lifecare and also maintain an insurance premium. However, insurance can still be useful. In some cases a policy can cover part of the costs that the community charges, which could result in a lower net monthly outlay after care begins than you paid during independent living. The extent of that benefit depends on how the community handles billing and what the insurance policy covers.
Research before deciding
Before making a final decision, speak with your insurance agent or insurer to understand claim requirements and coverage specifics. Equally important is a discussion with the community’s finance or billing staff. Ask how they have processed claims from other residents, whether they will submit monthly fees to insurers for reimbursement, and if there are limits on the percentage they will bill an insurance company.
There are additional reasons to consider retaining long-term care insurance even in a lifecare community. If you ever choose to hire in-home caregivers while still living independently, long-term care insurance may help cover those expenses. Also, if you later move out of the CCRC and do not join another community with comparable protection, keeping insurance can preserve coverage that would otherwise be lost.
If you move into a lifecare community but want to reduce duplicate payments, contact your insurance company about modifying your policy. Reducing benefits or adjusting elimination periods can lower premiums while maintaining some protection. That compromise often gives you continued coverage without fully doubling up on costs.
Ultimately, the right choice depends on your financial situation, health outlook, and the specific terms of both your CCRC contract and your insurance policy. Careful research and conversations with both the community and your insurer will help you choose the most cost-effective and secure path.