The Menu of Cost Plans in Assisted Living

By Carol Levine

Copyright © 2014 AARP. All rights reserved.

Stand-alone assisted living facilities typically have a selection of care plans that are based on the type of services included. While the cheapest option may be attractive for many, the additional costs, particularly for added personal care, can become burdensome.

Be realistic about what you or your parent may need. Keep in mind that additional services may be added when needed rather than being included upon entry to the facility.

Ask for cost of long term care plans

If the assisted-living facility is part of a continuing-care retirement community, which provides a wide range of living arrangements on one campus, then services and costs will probably be tiered. Generally they fall into the following three categories. (A fourth model, which is essentially a rental agreement, may also be available.)

  • Type A, extensive or life-care contracts: This service plan provides housing, residential services, and amenities, including unlimited use of healthcare services, at little or no increase in monthly fees as a resident moves from independent living to assisted living to nursing-home care. The tradeoff is usually a higher entry fee.

  • Type B, modified contracts: Often with lower monthly fees than Type A contracts, these plans include the same basic services, but only some healthcare services are included in the monthly fee. The resident pays for additional services beyond a minimum, perhaps at a discounted rate.

  • Type C, fee-for-service or à la carte contracts: These include the same basic services as Type A and B contracts but require residents to pay for all health-related services on an as-needed basis. These contracts may have lower entry and monthly fees for the independent living portion of the stay, but there is a risk of higher nursing-home expenses.

Check the facility’s financial history

Whether the assisted-living facility is a non-profit or a for-profit organization, find out about its financial history and stability, planned improvements or needed maintenance to the physical plant, possible mergers with other organizations, or other economic factors that might affect your decision.

Some assisted-living chains have gone into bankruptcy as a result of inadequate capital investment and ongoing financing.

The more you pay as an entry fee, the more likely it is that monthly charges will not increase. And of course the reverse is also true.

Which plan to choose depends partly on your current and foreseeable needs but also on your emotional and financial tolerance for risk. With Type A and Type C contracts you get the same apartment and same basic services but the difference will show up if — more likely, when — you need more assistance.

To get some idea how these options vary, this table shows the range of fees by contract type for a selected group of continuing-care retirement communities.

Range of Fees by Contract Type
A: Life Care B: Modified C: Fee for Service D: Rental
Entry fee/ Security deposit $160,000–600,000 $80,000–750,000 $100,000–500,000 $1,800–30,000
Independent living monthly fee $2,500–5,400 $1,500–2,500 $1,300–4,300 $900–2,700
Assisted living monthly fee $2,500–5,400 $1,500–2,500 $3,700–5,800 $4,700–6,500
Nursing care monthly fee $2,500–5,400 $1,500–2,500 $8,100–10,000 $8,100–10,700

Table source: U.S. Government Accountability Office, “Older Americans: Continuing Care Retirement Communities Can Provide Benefits, but Not Without Some Risk” (June 2010).

Part of the entry fee may be reimbursed after you leave or die. This may vary by type of contract. Make sure it’s spelled out in the contract.