When explaining the comparison of agreements to a prospect, it is helpful to be specific regarding the order in which you explain them. Type A and Type C Agreements should be presented first in order to provide greater clarity in presenting Type B which is actually a hybrid of A and C.
BRIEF OVERVIEW OF A MODIFIED AGREEMENT
As a hybrid of Type A and C Agreements, a Modified Agreement assumes some of the characteristics of each. When moving into a higher level of healthcare, the resident receives either a pre-determined number of days at no additional charge or pays a reduced daily healthcare rate. With all other factors being equal (location, size of accommodation, etc.), the Entry Fee and Monthly Fees for a Modified Contract should fall somewhere in between those of a LifeCare and a Fee-for-Service Agreement. It is logical that the Entry Fee would be lower than a LifeCare Agreement because there is a lesser degree of healthcare coverage. Those same fees would be higher than a Fee-for-Service Agreement because a Type C provides no financial coverage for future healthcare expenses.
ADVANTAGES OF A MODIFIED AGREEMENT
A Modified Agreement appeals to mature adults who do not want to (or cannot) expend the larger upfront fees for a LifeCare Agreement; however, they desire some form of financial assurance for any potential healthcare expenses, should the need ever occur. The Modified Agreement presents the best of both worlds in that the resident AND the community mutually share in the risk of healthcare expenses in the future. Not only is the resident receiving priority access to healthcare, thus assuring admission into Assisted Living or Skilled Nursing with which they are familiar, but they also receive a reduction in price.
Similar to a LifeCare Agreement, residential services are usually bundled and covered by the Monthly Fee in a Modified Agreement. Ancillary services are available and provided at an additional a la carte charge. The inclusion of many services in the Monthly Fee assists prospects in their ability to prognosticate and budget the years ahead with some firm, predictable expenses while they live in Independent Living.
SELLING AGAINST COMPETITIVE AGREEMENTS
In comparing the Modified Contract to the A and C Contracts, some of the strategies are the same ones discussed in last week’s blog. Emphasize the potential savings over a lifetime should someone in the residence need additional care. Point out the advantages of reduced costs, particularly if both members of a spousal party/partnership should need assistance at the same time. Additionally, in comparing to a Type A Agreement, discuss the extent of potential need for future healthcare coverage - to what extent does the prospect need or desire coverage? If prospects hold a long term care (LTC) policy which is not indemnified (and few are any more), paying for a LifeCare Agreement in addition to a LTC policy might be redundant and fail to provide any additional coverage. Many people want partial coverage as a safety net but are comfortable bearing some of the risk. In that case, a Modified Contract is the perfect choice for them.
When prospects are comparing a Fee-for-Service Contract to your community’s Modified Contract, encourage them to inquire about the day-to-day costs that might be added to their monthly bill rather than being included in their Monthly Fee. The most important consideration is the risk of paying the full market rate for any future healthcare admissions.
KNOW YOUR COMMUNITY’S AGREEMENT
Know your agreement and how it compares to others in your area. Familiarize yourself with services that your community provides which might be an extra expense at other communities. Learn as much as you can about your prospect so that you can guide him/her towards the best agreement for their particular situation.
Next week, we will review the Fee-for-Service Contract. Stay tuned.
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