Updated August 3, 2026. Quick answer: this is the question the sales conversation answers warmly and the contract may not answer at all. Find out whether continued care is an enumerated term of your signed agreement, or a discretionary policy that depends on a fund balance and a board. Those are entirely different promises and they sound identical when spoken.
The distinction that decides it
California’s ‘life care contract’ definition is itself a binding promise to provide or pay for routine services at all levels of care for the duration of the resident’s life – so in a true life-care contract the commitment to keep a resident who runs out of money is generally already a contract term, not a separate fund.
So in a genuine life-care contract, the commitment is generally already in the document you signed. It is not charity, it is a term.
For non-life-care contract types, any promise to retain a resident who can no longer pay more likely rests on board policy outside the admission agreement, and is therefore more likely discretionary. This is an inference from the statutory structure, NOT a rule found stated in any source.
Being straight about the limits of this page: No primary statutory or regulatory source was found that mandates disclosure of, or standardises, whether a benevolent fund is a binding obligation or a discretionary policy. So the guidance below is about what to ask and what to read, not a claim about what communities generally do.
What to ask for, and the exact question
The clause in the individual signed residency agreement – not the brochure – saying what happens if funds are exhausted, and whether continued care is an enumerated contractual right, expressly contingent on a fund balance or board discretion, or simply unaddressed. Also the most recent audited financial statement and reserve report. For anything marketed as ‘life care’, confirm the duration-of-life language appears in the signed contract.
Phrase the question so it cannot be answered warmly: “If I exhaust my assets in year twelve, which clause of this agreement obliges you to keep me, and what are its conditions?” A contractual right has a clause number. A policy does not.
What a benevolent fund is and is not
Some operators, often nonprofit, maintain a pool – a resident assistance fund, benevolent fund or similar – funded by charitable gifts, a share of entrance fees, or operating surplus, intended to subsidise fees for residents who outlive their resources.
Many are real, well funded, and used exactly as intended. The issue is not that they are hollow. It is that a fund is a pool with a balance and a committee, and a contract term is an obligation — and only one of them survives a bad decade for the operator, which is precisely the decade in which you would need it.
Ask what the fund holds, how it is funded, how many residents it currently supports, and whether anyone has been asked to leave for inability to pay.
Where Medicaid does and does not fit
Medicaid does not pay CCRC entrance fees or ordinary independent-living or assisted-living housing and amenity charges. Where a community’s skilled-nursing component is itself separately licensed and Medicaid-certified, Medicaid can pay for care delivered in that component once the resident is medically and financially eligible.
The CFR and CMS citations for that last point could not be re-loaded this session (ecfr.gov redirected to a bot check, Medicaid.gov returned 403), so it rests on general programme architecture rather than a citation read today.
And a trap specific to this decision: a refundable entrance fee may be counted as an available resource for Medicaid eligibility. The statute sets three conditions and all three must be met together, under 42 U.S.C. § 1396p(g)(2) — the fee can be used to pay for your care, you are eligible for a refund on death or departure, and it confers no ownership interest. Which refund structure you have therefore affects more than your estate.
All three conditions must be satisfied together for the entrance fee to count as an available resource. If any one fails – for instance a fully non-refundable fee that returns nothing on death or departure – the fee is not treated as an available resource under this provision.
Related: what your state recovers after death · what a trust does and does not do here.
Talk to a fiduciary advisorSponsored advisor-matching link. We may earn compensation if you submit the third-party form. Compare fees, scope, conflicts, credentials, and fiduciary duty before hiring.
Sponsored advisor-matching link. We may earn compensation if you submit the third-party form. Compare fees, scope, conflicts, credentials and fiduciary duty before hiring. Affiliate Disclosure.
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.