Glossary

Type A / Type B / Type C CCRC Contracts

Also known as: life care contract, modified contract, fee-for-service CCRC contract, Type A/B/C

The standard industry classification of CCRC resident contracts by the degree of future cost protection they provide: Type A (life care) bundles unlimited future care at little to no rate increase for higher care levels; Type B (modified) provides limited care benefits with residents paying discounted but still-increasing rates at higher acuity; and Type C (fee-for-service) charges residents market rates for care as needed.

This typology is fundamental to CCRC financial analysis because it determines who bears the actuarial risk of a resident's future care costs: under Type A life care, the community absorbs the risk that a resident will need years of expensive skilled nursing care, which is why Type A entrance fees are priced highest and Type A communities require the most rigorous actuarial reserving; under Type C, the resident (or their long-term-care insurance) bears that risk directly, and the community's exposure is closer to a conventional rental operation with continuum access as an amenity rather than a guarantee. Rating agencies evaluating CCRC bond issuances weight contract-type mix heavily, since a portfolio skewed toward Type A life-care contracts requires materially stronger actuarial reserves and liquidity than one skewed toward Type C.