Updated August 3, 2026. Quick answer: the contract type decides who pays when you need more care, and that is the only question the letters are really answering. Type A moves that risk to the community. Type C leaves it with you. Type B splits it. The entrance fee is priced accordingly, which is why the cheapest option up front is often the most expensive outcome.
The three structures
| What the fee prepays | When you need more care | Who carries the risk | |
|---|---|---|---|
| Life Care / Extensive (Type A) | a broad continuum – independent living plus assisted living, memory care and skilled nursing – bundled into one entrance fee and a relatively stable monthly fee | the monthly fee generally does not rise materially beyond ordinary annual adjustments; the higher-acuity care is treated as already paid for | the provider and the pooled resident community |
| Modified (Type B) | independent living plus a capped allotment of higher-level care | once the included allotment is used, the resident pays more – often a discounted but not fully covered rate | shared |
| Fee-for-Service (Type C) | independent living housing, amenities and services only | the resident pays the full or near-full prevailing rate for care as needed, on top of the base fee | primarily the resident, who is self-insuring against future care cost; entrance and monthly fees are usually lower to reflect that |
And the fourth option, which is not a CCRC contract at all: No large entrance fee. Monthly rent for housing and amenities, usually short notice to leave, no continuum guarantee bundled into the price and no long-horizon refund to track. The legal position resembles senior-housing landlord-tenant law rather than continuing-care contract law.
The letters are not law
The Type A/B/C letters are industry and actuarial shorthand, not statute. No federal statute or regulator codifies the naming. California’s own continuing-care law defines the same substance under different labels: a ‘life care contract’ (Health & Safety Code 1771(l)), a ‘monthly fee contract’ (1771(m)), and a ‘prepaid contract’ (1771(p), where the monthly fee ‘may not be adjusted to cover the actual cost of care and services’).
This matters more than it sounds. Two communities can both call a contract “Type B” and mean materially different things, because nothing obliges them to use the label consistently. The letter is a shorthand for a sales conversation. The contract is the product.
Where a state does define the substance, the definition is worth reading. California’s life care contract is a promise to provide or pay for services “a continuing care contract that includes a promise … by a provider to provide or pay for routine services at all levels of care, including acute care … to a resident for the duration of his or her life” — note for the duration of his or her life. That is a very different sentence from a brochure saying a community offers a continuum of care.
How to work out which one you are actually being offered
- Ask what the monthly fee becomes if you move to skilled nursing tomorrow. Ask for the number, not the philosophy. Type A: roughly what you pay now. Type C: the market rate for skilled nursing, on top.
- If there is an included allotment, ask exactly what it is — how many days, at which level, and what happens on day one after it runs out.
- Ask whether the discount after the allotment is contractual or a current practice.
- Get all of it from the signed agreement, not the brochure.
What the choice really costs
A Type A contract is, in substance, long-term care insurance sold with an apartment attached. That is not a criticism — pooling the risk is exactly what it is for — but it means the comparison is not really A against C. It is A against C plus whatever else you would use to cover care, whether that is a policy, invested assets, or family. The wider planning picture and what each level of care actually costs.
The rest of the decision runs through the entrance fee: whether it comes back, whether part of it is deductible, and what happens if the money runs out.
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General information drawn from IRS, Medicare, HUD and state statute and regulation, not legal, tax or financial advice. Continuing-care law is state law and differs materially between states; every figure here is year-labelled and every source named so you can check it against your own contract. Read your own signed agreement before relying on any general description, including this one.