A continuing care retirement community is a single campus that offers independent living, assisted living and skilled nursing care under one contract, so a resident can move between levels of care without moving to a new organization. Many now market themselves as life plan communities, a term the sector adopted in the mid-2010s, but the model is the same.
That is the definition, and it takes one sentence. What it changes about a household is substantial: how future care costs behave, what has to be true to get in, where the family’s capital sits, and which risks transfer to the community and which stay with you.
The rest of this page is about those consequences, because they are where families make or lose money. Pine Lake Legacy provides education and a free policy review only; nothing here is legal, tax or financial advice.
In This Article
- It Changes an Open-Ended Risk Into a Priced One
- It Changes Where a Large Share of Your Capital Sits
- It Changes What You Must Prove Before You Are Accepted
- It Changes the Tax and Benefits Picture
- Terms It Gets Confused With
- What This Means for an In-Force Life Insurance Policy
- Frequently Asked Questions
It Changes an Open-Ended Risk Into a Priced One
The core financial function of these communities is risk transfer. A household living at home faces an unknown future: it might need no paid care, or it might need several years of nursing care at a cost that consumes most of an estate.
The contract type determines how much of that uncertainty the community absorbs. Type A, often called life care or extensive, includes higher levels of care at little or no increase in the monthly fee, which transfers most of the long-term care risk to the community. Type B, modified, includes a defined amount of higher-level care, often a set number of days, after which the resident pays a discounted rate. Type C, fee-for-service, guarantees access to care on campus but the resident pays market rates for it, so almost all the financial risk stays with the household. Rental and equity models exist as well.
The trade is priced. Type A contracts carry the highest entrance fees and monthly fees because the community is bearing the risk, and it is effectively selling a long-term care benefit alongside housing. Comparing a Type A monthly fee against a Type C monthly fee without accounting for that is the most common error families make in the comparison. See what a Type A contract covers.
It Changes Where a Large Share of Your Capital Sits
Most of these communities require an entrance fee paid on move-in, and as of 2026 those commonly range from around $100,000 to well past $600,000 depending on the region, the unit and the refund structure, with monthly service fees frequently in the range of $3,000 to $6,000 or more. Confirm actual figures with the specific community, since the variation between markets is enormous.
That capital typically becomes a contractual claim against the community rather than an asset you hold. How much comes back, and when, is set by the refund provision, and refunds are often conditioned on the unit being reoccupied. Our page on how entrance fee refunds actually work covers the arithmetic and the reoccupancy condition in detail, and it is worth reading before signing anything.
Two consequences follow. The household’s liquidity changes shape: a house that could be sold becomes a refund claim that may take time to collect. And the community’s own financial health becomes your concern in a way a landlord’s never was. Ask for three years of audited financial statements, days cash on hand, and occupancy trends, and ask your state regulator for the annual disclosure filing and any complaint history. Most states regulate these communities, usually through the insurance department or an aging services agency.
It Changes What You Must Prove Before You Are Accepted
This is the consequence that catches families completely off guard, and it is a timing problem rather than a money problem.
Entry generally requires passing both a health screen and a financial screen. The health screen usually requires the applicant to be capable of independent living at move-in. That means the model is not available as a solution once a parent already needs assisted living. Families who wait until a crisis discover the door has closed, and there is no appeal to it.
The financial screen typically asks for assets and income comfortably above the entrance and monthly fees, with communities commonly looking for a multiple rather than a bare match, since they are underwriting your ability to keep paying for decades. Expect to disclose full financial statements.
There may also be a waiting list for a specific unit type, sometimes years long, with a refundable deposit to hold a place. Ask three questions: what is the current wait for the unit type we want, what is the deposit and is it refundable, and does a place on the list expire if we decline an offered unit.
The practical instruction is to investigate well before it is needed. This is the rare long-term care decision where acting several years early is not over-planning.
| Contract type | Higher levels of care | Who carries the cost risk | Relative fees |
|---|---|---|---|
| Type A, life care or extensive | Included at little or no fee increase | The community | Highest entrance and monthly fees |
| Type B, modified | A defined amount included, then discounted rates | Shared | Moderate |
| Type C, fee-for-service | Access guaranteed, paid at market rates | The resident | Lowest entrance fee, highest care exposure |
| Rental or month-to-month | Varies | The resident | No entrance fee, higher monthly cost |
It Changes the Tax and Benefits Picture
Two effects are worth raising with your own advisors.
A portion of both the entrance fee and the ongoing monthly fee allocable to future medical care may be deductible as a medical expense under the Internal Revenue Code’s medical expense provisions, subject to the usual thresholds and to itemizing. Communities typically issue an annual statement stating the medical percentage, often somewhere in the 30% to 40% range. That statement is the community’s own calculation and not a ruling; confirm the treatment with your CPA before relying on it. Where a refundable entrance fee is large, ask specifically about whether below-market loan rules apply to the refundable portion.
On the benefits side, most of these communities operate as private pay. Some hold a limited number of beds certified for Medicaid in the health center, and many not-for-profit communities maintain a benevolence or resident assistance fund for residents who exhaust their assets through no fault of their own. Neither is a guarantee. Ask in writing what happens if a resident outlives their money, and ask whether the community has ever asked a resident to leave for that reason.
Also ask how an entrance fee refund would be treated if a resident later applied for Medicaid, since a refund receivable can be a countable resource. That is a question for an elder law attorney and the state Medicaid agency.
Terms It Gets Confused With
An assisted living facility. One level of care, licensed by the state, usually month-to-month with no entrance fee. No continuum and no risk transfer. See how assisted living level of care fees work.
An independent living or active adult community. Housing and amenities with no promise of care. Some are excellent and are simply not the same product.
A nursing home. Skilled nursing only, and federally regulated under a separate set of participation requirements.
A long-term care insurance policy. Pays cash or reimburses costs wherever care is received and does not tie you to a campus. A Type A contract and a long-term care policy solve overlapping problems, which is why households holding both should look carefully at whether they are paying twice.
Custodial care and respite care. Descriptions of services rather than of a housing model. See what custodial care means.
What This Means for an In-Force Life Insurance Policy
Two honest observations, in the order they matter.
First, a Type A contract materially reduces the household’s exposure to long-term care costs, which is one of the main reasons people keep a large permanent policy in place late in life. If that risk has been transferred to the community, the reason for the policy has weakened, and the household should at least ask whether the premium is still the best use of the money. That is a question, not a conclusion.
Second, families sometimes look at a policy as a way to fund an entrance fee. That can make sense, but it should come after the ordinary sources, primarily home sale proceeds, and only when nobody depends on the death benefit. Note also that a refundable entrance fee itself becomes an estate asset, which partly does the job a death benefit was meant to do, but only if the refund is actually collectible on a reasonable timetable.
Be clear about when selling is the wrong answer. A surviving spouse who will need the benefit. A small face amount that will attract no meaningful offer. An insured who is healthy for their age. A term policy with no conversion right, which generally has no market value at all. In those cases keeping the policy is the right answer, and we will say so.
Pine Lake Legacy reviews policy cover pages at no cost and with no obligation at (732) 978-9575. Have a contract of this size reviewed by your own elder law attorney, take the tax questions to your CPA, and use your State Health Insurance Assistance Program for coverage questions.
Frequently Asked Questions
Can my parent move in if they already need assisted living?
Usually not. Most communities require the applicant to be capable of independent living at move-in, which is why this is a decision to investigate years before it is needed rather than during a crisis. Some communities offer direct admission to assisted living on a different contract, so ask, but do not assume it is available.
What is the difference between a Type A and a Type C contract?
A Type A contract includes higher levels of care at little or no increase in the monthly fee, transferring most of the long-term care cost risk to the community. A Type C contract guarantees access to care on campus but the resident pays market rates for it, leaving nearly all the financial risk with the household.
What happens if a resident runs out of money?
It depends entirely on the community. Some not-for-profit communities maintain a benevolence or resident assistance fund, and some hold Medicaid-certified beds in the health center. Neither is guaranteed. Ask in writing what the policy is and whether the community has ever asked a resident to leave for financial reasons.
Is a CCRC a substitute for long-term care insurance?
A Type A contract overlaps heavily with what a long-term care policy does, which is why households holding both should look at whether they are paying twice for the same protection. A Type C contract does not substitute for coverage at all. Review both contracts side by side with an advisor before dropping anything.
How do I check whether a community is financially sound?
Request three years of audited financial statements and read the auditor’s opinion first. Look at days cash on hand, debt service coverage and occupancy trends. Then ask your state regulator, usually the insurance department or an aging services agency, for the annual disclosure filing and any complaint history on that community.
Should I sell a life insurance policy to pay an entrance fee?
Only after the ordinary sources are exhausted and only when nobody depends on the death benefit. If a surviving spouse needs the coverage, if the face amount is small, or if the insured is healthy for their age, the answer is generally no. A free policy review will tell you whether the question is even worth pursuing.
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Related Reading
- What Is A Ccrc Entrance Fee Refund
- What Is A Type A Ccrc Contract
- Moving To A Ccrc
- What Is An Assisted Living Level Of Care Fee
- What Is Custodial Care
- Sell Policy Fund Retirement
- Retirement Income Gap
- Keeping The Policy Is The Right Answer
Pine Lake Legacy does not purchase life insurance policies and does not provide legal, tax, or investment advice. Information provided is for educational purposes only. Eligibility for any option, including life settlements, is not guaranteed and depends on individual circumstances, policy terms, underwriting, and market conditions. Consult independent legal, tax, or financial professionals before making decisions regarding a life insurance policy.