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What is the Difference Between A Life Care Contract and Fee-For-Service Contract?

Nov 17, 2022

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What are the benefits of a Life Care Contract?

As you head into retirement, planning for long-term care can give you the peace of mind needed to enjoy each day without worry. More than two-thirds of adults age 65 or older will spend some time in a long-term care facility, and even with insurance and Medicare, those costs can often lead to unplanned financial hardships. With Life Care contracts, you are in the driver’s seat of your financial future and can rest easy knowing that you have planned for the best care, whatever kind of care that may be. With a Life Care contract, your future self will thank you.

Two Categories of Contracts

1.  Type A Life Care Contract

Applewood offers several contracts. One of the most popular is a Life Care contract, which takes into account every aspect of your long-term care planning. With a Type A Life Care contract, you prepay for long-term care with a monthly fee that remains stable no matter what kind of care you may receive. With preferred access, if you are in need of assisted living, skilled nursing, or memory care, you won’t have to search for providers or find yourself in the midst of a major move. There are potential tax benefits to a Type A contract as well, as services may qualify as prepaid medical expenses. Over the course of your retirement, the predictable costs of a Life Care contract can lead to significant savings when compared with in-home care or other assisted living communities. Type A contracts have highly refundable entrance fees and stable monthly charges.

2. Type C Fee-For-Service contract

Most members of the Applewood community agree that the greatest advantage of a Life Care contract is the stability and sense of security. However, some may prefer to skip the upfront costs and pay for services as needed at market rates. This is a Type C Fee-For-Service contract. Compared to a Life Care contract, a Type C contract generally requires the lowest entry fee and monthly fees. Some or all of the same residential services and amenities may be provided. However, if a resident needs assisted living, memory care, or skilled nursing, they will still receive priority access but will be charged market rates. If they need higher levels of care, the monthly fee will increase to cover the costs.

Do you have questions about Life Care contracts or how to start planning for your future? Get in touch with us today. Call us at 732-303-7416 to learn more about the options you have.

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