When researching your senior living options, understanding the costs and contract types can be tricky. There are three distinct types of contracts – Type A, Type B, and Type C – each with its own set of benefits and financial structures. At Montereau, we offer several contracts of different types so each resident can choose the best option for their unique situation.

To help make an informed decision, here’s a brief look at what Type A, Type B and Type C contracts entail.

Type A

Type A is often referred to as a Life Care contract. It provides the most comprehensive coverage and predictability when it comes to long-term care costs. Under a Type A contract, you pay a higher entrance fee and monthly service fee. However, this contract ensures that regardless of the level of care you may need in the future – whether it’s assisted living, memory care or skilled nursing or rehabilitation therapies – your monthly fee will remain relatively consistent. The financial predictability and peace of mind offered by this contract are invaluable, as it protects you from the rising costs of health care.

Type B (Modified Life Care Contract)

Type B is the most popular option among current residents at Montereau. This contract offers a lower entrance fee and monthly fee compared to Type A, with some limitations. While you receive the same upscale residential services and amenities, long-term care is provided at a discounted rate for a specified period. If you require long-term care beyond that period, you will pay an additional cost.

For example, at Montereau, long-term care is free for 15 days. After that, residents get a 20% discount. This option balances affordability with a moderate level of financial protection on future care.

Type C (Fee-for-Service Contract)

A Type C contract is the most cost-effective in terms of initial fees. Residents pay a lower entrance fee and monthly service fee. However, the resident assumes the risk for the costs of future care. If care becomes needed, the resident has priority access to the community health center but pays for care at full market rates.  

Tax Deduction Opportunities

At a Life Plan Community, a portion of the entrance fee and monthly fees may be deductible as pre-paid medical expenses. Deductions can vary depending on the contract type and your individual tax situation:

• Type A contracts often provide the largest tax deduction because they cover the most extensive long-term care services.
• Type B contracts may also offer significant deductions, particularly for the portion of care covered under the modified contract.
• Type C contracts typically offer fewer deductions, as the medical care component is not pre-paid and is instead billed separately as needed.

It’s advisable to consult with a tax professional about how these deductions apply to your situation.

Entrance Fee Refundability

Entrance fees are a key component of these contracts and can vary based on the size of the residence and the contract type you choose. At Montereau, a portion of the entrance fee may be refundable, depending on the specific contract terms – anywhere from nonrefundable after 48 months to 90% refundable. Generally:

• Type A contracts might offer less refundable entrance fees due to the comprehensive nature of the care provided.
• Type B contracts typically come with moderate refund options, balancing initial investment with long-term value.
• Type C contracts usually offer higher refundability on entrance fees since ongoing care is paid for as needed.

Finding the right plan for you

Choosing a contract type is a decision that requires careful consideration of your financial situation, health status and long-term care needs. At Montereau, our team of experienced Retirement Counselors is here to help you navigate these options. Give us a call at (918) 495-1500 today.