Choosing a Life Plan Community: Understanding the Benefits of Entry Fees

Sep 16, 2022 | Moving to Senior Living

Life Plan Communities are a type of senior living that provide a variety of living choices for older adults, all on one campus. They offer amenities and healthy lifestyle perks to seniors with access to higher levels of care should they be required. 

Moving into a Life Plan Community like Park Place of Elmhurst is made possible by a one-time payment of an entry fee plus a monthly fee, which helps protect your assets and gives you access to all levels of care at a discounted and predictable rate. This puts you in a position to take full advantage of a Life Care contract. 

Read on to learn more about the benefits of entry fees.

Understanding the Benefits of Entry Fees

Entry fees are what separate Life Plan Communities (offering priority or exclusive access to multiple levels of care on one campus) from other senior living arrangements like stand-alone, rental independent living, assisted living, or memory support communities. These entry fees also give you access to everything the community provides. They feature varying degrees of refundability, often depending on the contract type. Note that some states might refer to entry fees as rebates due to regulations. 

Along with access to assisted living, memory support (aka memory care), skilled nursing, and rehabilitation, should these services be required, residents gain so much more. The entry fee for a Type A contract, like the one Park Place of Elmhurst offers, means predictable rates for care services (when compared to other contract types), generous refundability agreements, and the confidence that you’ve secured a home for life.

Common Approaches to Entry Fees at Life Plan Communities

There are three common ways to structure entry fee refunds at senior living communities: 

    1. Known also as amortizing entry fees, declining scale refunds allow residents to receive their entry fee back on a declining basis over time. Residents select this option if they want to put down a lower entry fee at closing and keep their assets in investments over time.
    1. Regardless of how long the residency lasts, partially refundable entry fees guarantee a specific percentage of the refund within that time frame. The percentage varies by community and contract. These refund amounts can range from 50-90% of the initial entrance fee. Residents select this option for the security of knowing exactly what will be left to their estate.
    1. Then there are full refunds. In this case, the agreement will specify under what conditions a refund can be paid out and how a fixed charge may be deducted before the refund is made.

Understanding Senior Living Contracts

There are three types of contracts with entry fees: nine each with their own set of benefits.

These include:

Type A (Life Care)

Type A Life Care contracts are perfect for independent seniors who’d like to secure their forever home and gain priority access to high-quality care at predictable rates for the rest of their life. Like all Life Plan Community contracts, a Type A contract requires an entry fee and a monthly fee.

While these fees may begin at a higher rate than with the other two contract options listed below, the monthly fee remains relatively predictable throughout residency at the community, regardless of the level of care needed – a tremendous value compared to paying for care at market rates, which can be more than double the monthly fee. Financial predictability and peace of mind (for seniors and their families) are advantages of Type A contracts for residents who want to protect their estate from the ever-rising cost of long-term care.

Type B (Modified)

Type B contracts are attractive to residents who want to save money in the short term but still want some financial protection in the event they need higher levels of care.

Under a Type B contract, the entrance fee and monthly fee are lower than with a Type A Life Care contract. But instead of having unlimited access to a continuum of care with one stable monthly fee, care is provided for as long as needed at a below-market cost- typically, a 10% discount off market rates.

Type C (Fee-for-Service)

Type C is also known as a fee-for-service contract. These agreements often have lower entrance fees and monthly fees than the other two types of contracts. However, accessing any level of care available at the community will increase a resident’s monthly payment to the full market rate at the time care is provided.

People who do not want to pay up front for services they may never need often find this type of contract appealing.

Live Every Day Your Way at Park Place of Elmhurst

Park Place of Elmhurst offers a full continuum of health care services and amenities. Contact us today to learn more or schedule a tour.