What is a life care contract?

A life care contract (Type A) is an agreement with a Continuing Care Retirement Community (CCRC) where you pay a large entry fee ($250,000-$600,000+) and monthly fees. In return, the community guarantees you access to all levels of care — independent living, assisted living, memory care, and skilled nursing — for life, with little or no increase in monthly fees when your care level changes. You're essentially prepaying for future long-term care through the entry fee.

What's the difference between Type A, B, C, and D CCRC contracts?

Type A (Life Care) has the highest entry fee but your monthly fee stays roughly the same regardless of care level — you're prepaying for care. Type B (Modified) has a moderate entry fee and includes a set number of care days (30-90/year) at no extra cost before daily rates apply. Type C (Fee-for-Service) has the lowest entry fee but you pay full market rate for any care above independent living. Type D (Rental) has no entry fee — you pay month-to-month at market rates for everything.

Can you get your entry fee back from a CCRC?

It depends on the refund option you chose. A 90% refundable contract returns 90% of your entry fee when you leave or pass away (but costs more upfront). A 50% refundable contract returns half. A declining balance contract refunds less each month until it reaches zero (typically 24-50 months). A fully amortizing contract returns nothing after the amortization period. The refund option significantly affects your entry fee — a 90% refundable contract may cost 30-50% more than a non-refundable one.

Life Care Contracts: Types A, B, C & D Explained (2026)

The contract you sign with a CCRC is the most important financial document of your later years — it determines whether you’ll pay $3,500/month or $12,000/month for nursing care, whether your $300,000 entry fee comes back to your estate, and what happens if you run out of money. Yet most people spend more time choosing a car than understanding their CCRC contract.

Quick answer: CCRC contracts come in 4 types. Type A (Life Care) = highest entry fee + care costs barely change = best protection. Type B (Modified) = moderate entry fee + some free care days before market rates. Type C (Fee-for-Service) = lowest entry fee + full market rate for all care. Type D (Rental) = no entry fee + highest ongoing costs. Choose Type A if you can afford it and want cost certainty. Choose Type C if you’re healthy with LTC insurance. Always get an elder law attorney to review before signing.

The Four Contract Types at a Glance

Feature	Type A (Life Care)	Type B (Modified)	Type C (Fee-for-Service)	Type D (Rental)
Entry fee	$250K–$600K+	$150K–$400K	$75K–$250K	$0
Monthly fee (independent)	$3,000–$5,000	$2,500–$4,000	$2,000–$3,500	$2,000–$4,000
Care cost increase	None or minimal	Discounted for set days, then market rate	Full market rate	Full market rate
Financial risk to you	Low	Medium	High	Highest
Best for	Risk-averse, family history of long care	Balance of protection and cost	Healthy, have LTC insurance	Trial stay, can’t afford entry fee

Type A — Life Care (Extensive) Contract

How It Works

Component	Details
Entry fee	$250,000–$600,000+ (varies by unit size, location, refund option)
Monthly fee	$3,000–$5,000 (independent living)
When care increases	Monthly fee stays the same or increases by a small predetermined amount ($200–$500)
What you’re prepaying	Future assisted living, memory care, and nursing home costs through your entry fee
Care guarantee	Unlimited access to all care levels for life

Type A Cost Example

Care Level	Monthly Payment	Market Rate Equivalent	You Save
Independent living	$3,800	$3,800	$0
Assisted living	$4,200	$5,800	$1,600/month
Memory care	$4,200	$7,500	$3,300/month
Skilled nursing	$4,500	$10,500	$6,000/month

Type A 10-Year Scenario

Phase	Duration	Monthly Cost	Total
Entry fee	—	—	$350,000
Independent living	6 years	$3,800	$273,600
Assisted living	2 years	$4,200	$100,800
Nursing care	2 years	$4,500	$108,000
Total cost	10 years	—	$832,400
Market rate equivalent	10 years	—	$1,045,200
Net savings	—	—	$212,800

Who Should Choose Type A

Good Fit	Why
Family history of dementia/Alzheimer’s	Long care trajectory = massive savings
Risk-averse personality	Costs are predictable for life
High net worth ($1M+ liquid)	Can afford entry fee without strain
Both spouses moving in	Second person care guarantee is valuable
Want to protect estate	Known cost = easier estate planning

Type B — Modified Contract

How It Works

Component	Details
Entry fee	$150,000–$400,000
Monthly fee	$2,500–$4,000 (independent living)
Included care days	30, 60, or 90 days per year at no additional cost
After included days	Discounted rate (10–20% below market) or full market rate
Nursing care specifically	May include lifetime days (e.g., 365 cumulative days)

Type B Cost Example (60 Included Days/Year)

Scenario	First 60 Days	Remaining Days	Annual Cost Impact
Need 30 days assisted living	$0 additional	N/A	Covered by included days
Need 120 days assisted living	$0 for 60 days	$5,800/mo × 2 months = $11,600	$11,600 extra
Full year nursing care	$0 for 60 days	$10,500/mo × 10 months = $105,000	$105,000 extra

Type B 10-Year Scenario

Phase	Duration	Monthly Cost	Total
Entry fee	—	—	$250,000
Independent living	6 years	$3,200	$230,400
Assisted living	2 years	$4,800 average (after included days)	$115,200
Nursing care	2 years	$8,500 average	$204,000
Total cost	10 years	—	$799,600

Who Should Choose Type B

Good Fit	Why
Moderate net worth ($500K–$1M liquid)	Lower entry fee than Type A
Somewhat healthy with moderate risk	Some protection without full premium
Have some LTC insurance	Insurance covers costs after included days
Want compromise protection	Partial coverage better than none

Type C — Fee-for-Service Contract

How It Works

Component	Details
Entry fee	$75,000–$250,000
Monthly fee	$2,000–$3,500 (independent living)
When care increases	Full market rate for assisted living, memory care, nursing
What you’re buying	Priority access to care + community membership, not care coverage
Insurance needed	Strongly recommended — LTC insurance or self-funding

Type C Cost Example

Care Level	Monthly Payment	Same as Stand-Alone Facility?
Independent living	$2,800	N/A (CCRC setting)
Assisted living	$5,800	About the same
Memory care	$7,500	About the same
Skilled nursing	$10,500	About the same

Type C 10-Year Scenario

Phase	Duration	Monthly Cost	Total
Entry fee	—	—	$150,000
Independent living	6 years	$2,800	$201,600
Assisted living	2 years	$5,800	$139,200
Nursing care	2 years	$10,500	$252,000
Total cost	10 years	—	$742,800

Who Should Choose Type C

Good Fit	Why
Very healthy, low family care history	Less likely to need expensive care
Have long-term care insurance	Policy covers care cost increases
Self-funding capability ($1.5M+)	Can absorb market-rate care
Want lowest entry barrier	Preserve more liquid assets

Type D — Rental/Month-to-Month

How It Works

Component	Details
Entry fee	$0 (sometimes a small community fee of $1,000–$5,000)
Monthly fee	$2,000–$4,000 (independent living)
When care increases	Full market rate
Commitment	Month-to-month lease
Risk	Highest — no cost lock-in, no guaranteed care access

Who Should Choose Type D

Good Fit	Why
Want to try CCRC before committing	No large upfront cost
Cannot afford entry fee	Entry barrier eliminated
Recently widowed/relocated	Testing new community
Very high net worth	Can self-insure all care with no concern
Short-term need	May not stay long-term

Side-by-Side 10-Year Cost Comparison

Scenario: 6 Years Independent → 2 Years Assisted Living → 2 Years Nursing

Cost Component	Type A	Type B	Type C	Type D
Entry fee	$350,000	$250,000	$150,000	$0
Independent (6 yrs)	$273,600	$230,400	$201,600	$216,000
Assisted living (2 yrs)	$100,800	$115,200	$139,200	$139,200
Nursing (2 yrs)	$108,000	$204,000	$252,000	$252,000
Total	$832,400	$799,600	$742,800	$607,200

Scenario: 5 Years Independent → 1 Year Assisted Living → 4 Years Nursing (Long Care)

Cost Component	Type A	Type B	Type C	Type D
Entry fee	$350,000	$250,000	$150,000	$0
Independent (5 yrs)	$228,000	$192,000	$168,000	$180,000
Assisted living (1 yr)	$50,400	$57,600	$69,600	$69,600
Nursing (4 yrs)	$216,000	$408,000	$504,000	$504,000
Total	$844,400	$907,600	$891,600	$753,600
Type A savings	—	$63,200	$47,200	Lost entry fee offset

Type A becomes increasingly advantageous the longer you need higher-level care.

Entry Fee Refund Options

Refund Comparison for $350,000 Entry Fee

Refund Type	Entry Fee	Leave at Year 2	Leave at Year 5	To Estate at Death
90% refundable	$450,000	$405,000	$405,000	$405,000
50% refundable	$385,000	$192,500	$192,500	$192,500
Declining (4%/month)	$350,000	$140,000	$0	$0
0% amortizing (48 months)	$325,000	$162,500	$0	$0

Choosing a Refund Option

Priority	Best Refund Option	Trade-Off
Protect heirs’ inheritance	90% refundable	Pay 25–40% more upfront
Balance protection and cost	50% refundable	Mid-range premium
Lowest possible entry fee	0% amortizing	Nothing returned to estate
Plan to stay forever	Declining balance	Lowest cost if you stay 5+ years

Critical Contract Provisions

What Happens If You Run Out of Money

Provision	What It Means
Benevolent fund	Community maintains a fund to subsidize residents who’ve exhausted assets (most nonprofit CCRCs have this)
Financial hardship policy	Written policy on what happens — may allow you to stay at reduced rate
No guarantee clause	Some contracts allow transfer or discharge if you can’t pay — red flag
Medicaid acceptance	Some CCRCs accept Medicaid for nursing level; most do not for independent/assisted

What Happens to a Surviving Spouse

Provision	What to Verify
Unit retention	Surviving spouse keeps the same unit at same rate
Second person fee removed	Monthly fee decreases when one spouse passes
Entry fee refund	Does a refund trigger upon first death? (Usually not until both leave)
Care guarantee	Surviving spouse still guaranteed access to all care levels

Fee Increase Provisions

What to Check	healthy Range
Annual increase cap	3–5% is typical; no cap is risky
10-year increase history	Ask for actual historical increases
What drives increases	Operating costs, healthcare costs, capital improvements
Board approval required	Yes — increases should require governance approval
Notice period	30–60 days notice before increase

Common Contract Red Flags

Red Flag	Why It’s Dangerous
No benevolent fund or hardship policy	You could be asked to leave if assets run out
Unlimited fee increase authority	No cap means unpredictable costs
Vague transfer/discharge language	Community has too much discretion to move you
Entry fee used for operations	Should be in reserve, not funding daily operations
Low occupancy (<85%)	Financial instability
No audited financial statements available	Lack of transparency
Arbitration clause with no carve-outs	Limits your legal recourse
No rescission period	Most states require 7–30 days to cancel after signing

Bottom Line

Your CCRC contract is a six-figure financial commitment that determines your care costs for life. Type A (Life Care) provides the most protection — your monthly fee barely changes regardless of care level — making it ideal for people with family history of long-term care needs and $1M+ in liquid assets. Type C (Fee-for-Service) works if you’re healthy with LTC insurance. Whatever type you choose: verify the community’s audited financials (90%+ occupancy, adequate reserves), choose a refund option that matches your estate goals, and never sign without an elder law attorney review ($1,500–$3,000 for contract review vs. $300,000+ at risk).