The unpredictability of health care costs in the U.S. poses financial challenges for older adults and their families. According to the 2023 Genworth Cost of Care Survey, expenses for various senior care services are steadily increasing, a trend which underscores the importance of a financial plan that includes long-term care, such as the Type A Life Care contract offered at select Life Plan Communities.
The Current Landscape and Future Projections
The Genworth study provides a detailed analysis of current and projected costs for different types of senior care, from in-home care to assisted living to nursing care.
In 2023, the annual costs were as follows:
- Homemaker services: $59,488
- Home health aide: $61,776
- Assisted living: $55,620
- Semi-private room in a nursing home: $108,405
- Private room in a nursing home: $120,494
By 2028, Genworth projects these costs will rise significantly:
- Homemaker services: Approximately $70,000
- Home health aide: Approximately $72,800
- Assisted living: Approximately $65,000
- Semi-private room in a nursing home: Approximately $130,000
- Private room in a nursing home: Approximately $145,000
These increases reflect an annual growth rate of around 3-5%, driven by factors such as inflation, increased demand for services and rising labor costs. For older adults and their families, these numbers highlight the need for effective financial planning and exploration of cost-saving options.
Understanding Life Plan Communities
One of the most effective ways to mitigate the rising health care costs for seniors is by choosing a Life Plan Community, also known as a Continuing Care Retirement Community (CCRC), which offers residential living, plus health care services under a single contract.
Listed below are the three primary types of contracts offered at Life Plan Communities:
- The Type A contract is the most comprehensive contract. Residents pay an entrance fee that is largely refundable, along with a monthly fee that remains relatively stable over time. In exchange, they enjoy residential, maintenance-free living in a rightsized home and have access to a range of health services, including assisted living, skilled nursing and rehabilitation, if ever needed.
- The Type B contract requires a lower upfront investment than Type A. Under this contract, access to health care services may be limited to a predetermined number of days in the community’s health center without a resident’s monthly fees increasing – after which care is provided at full market rates. Or, ongoing care is provided at a slightly lower-than-market rate.
- The Type C contract has the lowest entrance fee and monthly costs compared to Type A and B but requires the resident to take on the greatest financial risk of any Life Plan Community contracts. Although access to care is assured, the resident will have to pay full market health care costs for services needed beyond independent living.
For example, residents of a Life Plan Community with a comprehensive Type A contract enjoy financial predictability and peace of mind knowing they have priority access to higher levels of care if ever needed.
The Benefits of a Type A Contract at Wisteria at Warner Center
Wisteria, a premier Life Plan Community coming to Woodland Hills, will offer a maintenance-free retirement lifestyle that allows for residents to enjoy an array of amenities, services and activities just steps from their front door. Wisteria will also offer a Type A contract that’ll provide numerous financial advantages for residents:
Predictable costs: The Type A contract at Wisteria includes an entrance fee and a monthly fee that remains relatively stable over time, even if a move to higher levels of care is needed. Locking in this predictability helps seniors and their families budget for their retirement lifestyle more effectively without worrying about sudden increases in health care costs.
Tax advantages: With the Type A contract, a portion of the entrance fee and monthly fee could be tax-deductible as a prepaid medical cost. For more information, a financial advisor should be consulted.
Estate protection: Not only is the entrance fee tax deductible, but it’s also highly repayable should the resident leave the community. This ensures that a portion of the initial investment can be returned to the resident or their heirs, ultimately protecting the resident’s nest egg.
Lock in Predictable Rates with Wisteria at Warner Center
Even if you’re not quite ready to make your decision and lock in current rates today, visit our website to learn more about all the services and amenities Wisteria will offer its residents. If you have questions about the Wisteria’s Type A contract, explore our cost breakdown or contact us here.