When comparing rental retirement communities and life plan communities (also known as CCRCs or continuing care retirement communities), there are several important differences to keep in mind. At first glance the two types of communities can look similar, but key distinctions affect finances, services and long-term planning.
This article explains the main differences between rental retirement communities and life plan communities so you can better understand which option may suit your needs.
Senior living rental retirement communities
Rental retirement communities are typically apartment-style developments designed for older adults who live independently or with minimal daily assistance. These communities focus on independent living and generally do not provide on-site skilled nursing care as a core offering.
Most rental communities do provide some level of support. Historically this has included in-apartment assistance from third-party caregivers for tasks like personal care, medication reminders or light housekeeping. Increasingly, rental communities add separate assisted living or memory care wings, but many stop short of offering a full on-site healthcare center for skilled nursing or rehabilitation.
A primary feature of rental communities is the lack of a long-term financial commitment: residents rent month-to-month or under short-term leases. If a resident chooses to leave, they can typically do so without a large financial penalty. Equally, the community can require a resident to move out if the resident’s needs exceed the community’s capacity to provide safe care or if the resident fails to meet financial obligations.
When additional care is needed, residents usually pay market rates for those services. If a rental community cannot provide the necessary level of care, the resident may need to relocate to a different facility that can. Rental residents generally do not receive contractual priority or guaranteed access to higher levels of care provided by the community.
Life plan communities
Life plan communities, commonly called CCRCs, also offer independent living apartments and often provide a broader variety of housing options, including cottages, villas or townhomes. This variety gives prospective residents more choices in floor plans and living space.
Compared with rental communities, life plan communities usually provide a wider range of services and amenities, and many are positioned at the higher end of the market—although a small number operate as affordable housing. A defining characteristic of most life plan communities is an on-site continuum of care that spans independent living, assisted living, memory care, rehabilitation and 24-hour skilled nursing services. In some rare instances, some services may be offered off-campus, but the community still guarantees access as part of the agreement.
The most important distinction is contractual: life plan communities typically provide residents with a continuing care contract that guarantees priority access to higher levels of care for an extended period—often for life. These contracts outline what residents will pay for different levels of care and may offer discounted rates compared with market prices. Some contracts also include protections if a resident exhausts their financial resources through no fault of their own.
Most life plan communities require an entry fee, which can be substantial. Entry fees serve two main purposes:
- They help keep monthly fees lower by covering part of the community’s operating and capital costs, which allows the community to offer extensive services and amenities without charging excessively high monthly rates.
- Portions of entry fees are often placed into reserves that help cover future care costs for residents, depending on the type of continuing care contract in place.
Non-profit versus for-profit communities
Another difference to note is ownership and mission. Roughly 80 percent of life plan communities operate as not-for-profit organizations, which contributes to their willingness to offer financial support when residents deplete assets. Life plan communities may be independent non-profit entities or part of larger non-profit systems. Rental retirement communities are more commonly run as for-profit enterprises and are frequently part of corporate ownership structures.
Average age of entry
Entry age tends to vary between the two community types. On average, residents move into rental retirement communities at a slightly older age than those who enter life plan communities. Because rental options are month-to-month and often provide limited personal support, people may wait until they need assistance before moving in.
Life plan community residents often move in earlier. Many life plan communities require a health assessment as part of the application to qualify for a continuing care contract, so new residents generally need to be healthy enough to meet those requirements. In addition, people who pay an entry fee typically prefer to move in while they can enjoy many years of independent living, take advantage of wellness programs, build social connections and participate in community activities—so they often make the move at a younger retirement age.
Which is right for you?
There are meaningful differences between rental retirement communities and life plan communities in terms of cost structure, services, contractual protections and age of entry. If you are evaluating these options, research specific communities, compare contract terms and consider your health, financial situation and long-range preferences. Understanding the distinctions will help you choose the type of community that best fits your needs and priorities.
Note: When evaluating any community, review service offerings, contract details, refund policies and the availability of on-site care so you know what to expect now and in the years ahead.