A sales counselor in a Life Plan Community or Continuing Care Retirement Community (CCRC) that offers a Type A Agreement should certainly be well-versed in the terms of their LifeCare Agreement. I suggest that even sales counselors whose communities do not offer an A-type agreement should understand the basic tenants of various agreements in order to be an effective counselor to prospects researching several communities, one of which might offer an A Agreement. For those unfamiliar with this particular product, let’s take a minute for a brief review.
BRIEF OVERVIEW OF A LIFECARE AGREEMENT
A Lifecare (A) Agreement generally carries a higher Entry Fee and Monthly Fee. Within the fee structure, the resident is actually prepaying for potential future healthcare costs. At the time that a resident moves to a higher level of health care, the Monthly Fee either remains the same, is the weighted average of all Independent Living residences, or another pre-determined fixed rate. The Entry Fee includes future health care accessibility and costs while the Monthly Fee mainly serves the costs of operations with some coverage of future health. Therefore, it is rational that all the fees would be more costly because there is a greater degree of healthcare coverage in the future, whether or not it is ever accessed.
ADVANTAGES OF A LIFECARE AGREEMENT
There are obvious advantages to a LifeCare Agreement, particularly to individuals who prefer to anticipate their true costs in the future. With the fixed rates in health care, an individual knows exactly what to expect in Monthly Fees even during times of illness or recuperative health. For those who retreat from the hearty outlay of funds for the Entry Fee, a sales counselor can emphasize the advantages of knowing lifetime costs while covered under a LifeCare Agreement. A counselor may find it helpful to utilize a software program that will illustrate such comparisons (Financial Genie of MyLifesite.net or access the community’s software/ formularies used for the financial qualifying process).
With significant coverage of future health care costs, the LifeCare Agreement is quite desirable for the individual who does NOT have long term care insurance (LTC). Perhaps they postponed attaining a LTC policy and a condition was diagnosed that prevented them from qualifying for a policy; or perhaps a prospect(s) waited so long that the premiums became cost prohibitive. At any rate, a prospect can acquire a similar type coverage with a LifeCare Agreement at many Life Plan Communities (CCRCs).
Additionally, in a LifeCare Agreement, many of the residential services are “bundled” and incur no additional costs as services are utilized during the month. The most typical services included in the Monthly Fee are: meal or meal equivalency, utilities, maintenance, landscaping, pest control, transportation, housekeeping, life enrichment/wellness programs, an emergency response system, and in some communities, concierge services.
SELLING AGAINST COMPETITIVE AGREEMENTS
VERSUS A MODIFIED OR FEE-FOR-SERVICE AGREEMENTS
Consideration of lifetime costs can be game-changing when a prospect is comparing a LifeCare Agreement to other types of contracts. Until this awareness, prospects may have been focusing only on the Entrance Fees without considering how healthcare costs can escalate in the future. The graph found in RD’s Graph of the Month (from Age presentation with Dave Bond from CCA) may be utilized to illustrate the potential future costs of a Modified or Fee-for-Service Agreement compared to the same scenario using a LifeCare Agreement. When discussing a Fee-for-Service agreement, a sales counselor can mention the potential for “nickel and diming” when many ancillary services often incur an additional charge to the market rate fees in health care.
VERSUS EQUITY MODEL AGREEMENTS
A LifeCare Agreement may be advantageous to an Equity-based plan because the responsibility for re-selling or re-leasing the home lies with the management, both personally and financially. Often an Equity-based plan requires residents to turn over the responsibility of marketing their home to management for a percentage of the sale, often 10%. At that point an Equity Model has a similar arrangement as a 90% refundable fee. Unfortunately, with the Equity Model, the Monthly Fees may continue until the residence is resold, thus continuing a financial obligation.
VERSUS RENTAL AGREEMENTS
Both the availability and popularity of Rental Agreements have risen dramatically in recent years. The absence of a large Entry Fee is often quite attractive to today’s mature adults. Due to the lack of an upfront investment, a rental community with whom you are competing may not offer the depth and breadth of services and amenities that an Entry-Fee model might offer. Be sure to know your competition in order to be able to contrast the differences.Using hard data, explain the realities of lifetime costs as they have the potential to build over years with higher Monthly Fees in Independent Living and the higher market rate for healthcare, once a resident moves to a higher level of care within the community.
SELL THE VALUES OF YOUR AGREEMENT
Remember that selling the benefits of your community’s agreement should always outweigh your conversation about the drawbacks of other agreements. Each agreement has its own advantages and appeals to different prospects according to their unique situations. The most important selling technique is to be thoroughly knowledgeable about your community’s agreement and its values.
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