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AB-3088 Continuing care contracts: retirement communities.(2017-2018)

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Date Published: 09/01/2018 04:00 AM
AB3088:v95#DOCUMENT

Enrolled  August 31, 2018
Passed  IN  Senate  August 27, 2018
Passed  IN  Assembly  August 29, 2018
Amended  IN  Senate  August 20, 2018
Amended  IN  Assembly  April 12, 2018
Amended  IN  Assembly  March 22, 2018

CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Assembly Bill No. 3088


Introduced by Assembly Member Chu

February 16, 2018


An act to amend, repeal, and add Sections 1792.7 and 1792.10 of, and to add Section 1792.11 to, the Health and Safety Code, relating to health facilities.


LEGISLATIVE COUNSEL'S DIGEST


AB 3088, Chu. Continuing care contracts: retirement communities.
Existing law regulates life care contracts, also known as continuing care contracts, and imposes certain reporting and reserve requirements on continuing care communities. Existing law requires each provider that has entered into a specified type of continuing care contract with an up-front entrance fee, known as a Type A contract, to submit to the Department of Social Services, at least once every 5 years, an actuary’s opinion as to the provider’s actuarial financial condition.
This bill, until January 1, 2030, would instead require all providers to file an actuary’s findings, report, and opinion with the department, and further require all providers to post a copy of that information in its facility and on its Internet Web site within 10 days of filing with the department. The bill would, on January 1, 2030, reinstate the requirement for providers that entered into Type A contracts to file an actuary’s opinion.
The bill would require each provider to conduct, at least once every 5 years, a review of the accessible areas that the provider is obligated to repair, replace, restore, or maintain within the facility, as specified. The bill would require the governing body of each provider to use the review to consider and implement necessary adjustments to its reserve account requirements. The bill would require each provider to submit to the department, at least once every 5 years, a summary of the maintenance and replacement review and the adjustments the governing body of the provider has made or plans to make as a result of the review. The bill would also require the provider to post a copy of the summary and adjustment plan in its facility and on its Internet Web site.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 Section 1792.7 of the Health and Safety Code is amended to read:

1792.7.
 (a) The Legislature finds and declares all of the following:
(1) In continuing care contracts, providers offer a wide variety of living accommodations and care programs for an indefinite or extended number of years in exchange for substantial payments by residents.
(2) The annual reporting and reserve requirements for each continuing care provider should include a report that summarizes the provider’s recent and projected performance in a form useful to residents, prospective residents, and the department.
(3) Certain providers enter into “life care contracts” or similar contracts with their residents. Periodic actuarial studies that examine the actuarial financial condition of these providers will help to assure their long-term financial soundness.
(b) Each provider shall annually file with the department a report that shows certain key financial indicators for the provider’s past five years, based on the provider’s actual experience, and for the upcoming five years, based on the provider’s projections. Providers shall file their key indicator reports in the manner required by Section 1792.9 and in a form prescribed by the department.
(c) Each provider shall file with the department an actuary’s findings, report, and opinion as to the actuarial financial condition of the provider’s continuing care operations in the manner required by Section 1792.10.
(d) This section shall remain in effect only until January 1, 2030, and as of that date is repealed, unless a later enacted statute that is enacted before January 1, 2030, deletes or extends that date.

SEC. 2.

 Section 1792.7 is added to the Health and Safety Code, to read:

1792.7.
 (a) The Legislature finds and declares all of the following:
(1) In continuing care contracts, providers offer a wide variety of living accommodations and care programs for an indefinite or extended number of years in exchange for substantial payments by residents.
(2) The annual reporting and reserve requirements for each continuing care provider should include a report that summarizes the provider’s recent and projected performance in a form useful to residents, prospective residents, and the department.
(3) Certain providers enter into “life care contracts” or similar contracts with their residents. Periodic actuarial studies that examine the actuarial financial condition of these providers will help to assure their long-term financial soundness.
(b) Each provider shall annually file with the department a report that shows certain key financial indicators for the provider’s past five years, based on the provider’s actual experience, and for the upcoming five years, based on the provider’s projections. Providers shall file their key indicator reports in the manner required by Section 1792.9 and in a form prescribed by the department.
(c) Each provider that has entered into Type A contracts shall file with the department an actuary’s opinion as to the actuarial financial condition of the provider’s continuing care operations in the manner required by Section 1792.10.
(d) This section shall become operative on January 1, 2030.

SEC. 3.

 Section 1792.10 of the Health and Safety Code is amended to read:

1792.10.
 (a) Each provider shall submit to the department, at least once every five years, an actuary’s findings, report, and opinion as to the provider’s actuarial financial condition. The actuary’s opinion shall be based on an actuarial study completed by the opining actuary in a manner that meets the requirements described in Section 1792.8. The actuary’s opinion, and supporting actuarial study, shall examine, refer to, and opine on the provider’s actuarial financial condition as of a specified date that is within four months of the date the opinion is provided to the department.
(b) Each provider that held a certificate of authority on December 31, 2003, shall file its actuary’s opinion before the expiration of five years following the date it last filed an actuarial study or opinion with the department. Thereafter, the provider shall file its required actuary’s opinion before the expiration of five years following the date it last filed an actuary’s opinion with the department.
(c) Each provider that did not hold a certificate of authority on December 31, 2003, or was not required to file an actuary’s opinion prior to January 1, 2018, shall file its first actuary’s opinion within 45 days following the due date for the provider’s annual report for the fiscal year in which the provider obtained its certificate of authority. Thereafter, the provider shall file its required actuary’s opinion before the expiration of five years following the date it last filed an actuary’s opinion with the department.
(d) The actuary’s findings, report, and opinion required by subdivision (a) shall comply with generally accepted actuarial principles and the standards of practice adopted by the Actuarial Standards Board. The actuary’s opinion shall also include statements that the data and assumptions used in the underlying actuarial study are appropriate and that the methods employed in the actuarial study are consistent with sound actuarial principles and practices. The actuary’s opinion shall state whether the provider has adequate resources to meet all its actuarial liabilities and related statement items, including an appropriate surplus, and whether the provider’s financial condition is actuarially sound.
(e) A provider shall, within 10 days after filing its actuary’s findings, report, and opinion with the department pursuant to this section, post a copy of the actuary’s opinion in a central and conspicuous location at the facility and in a conspicuous location on the provider’s Internet Web site.
(f) This section shall remain in effect only until January 1, 2030, and as of that date is repealed, unless a later enacted statute that is enacted before January 1, 2030, deletes or extends that date.

SEC. 4.

 Section 1792.10 is added to the Health and Safety Code, to read:

1792.10.
 (a) Each provider that has entered into Type A contracts shall submit to the department, at least once every five years, an actuary’s opinion as to the provider’s actuarial financial condition. The actuary’s opinion shall be based on an actuarial study completed by the opining actuary in a manner that meets the requirements described in Section 1792.8. The actuary’s opinion, and supporting actuarial study, shall examine, refer to, and opine on the provider’s actuarial financial condition as of a specified date that is within four months of the date the opinion is provided to the department.
(b) Each provider required to file an actuary’s opinion under subdivision (a) that held a certificate of authority on December 31, 2003, shall file its actuary’s opinion before the expiration of five years following the date it last filed an actuarial study or opinion with the department. Thereafter, the provider shall file its required actuary’s opinion before the expiration of five years following the date it last filed an actuary’s opinion with the department.
(c) Each provider required to file an actuary’s opinion under subdivision (a) that did not hold a certificate of authority on December 31, 2003, shall file its first actuary’s opinion within 45 days following the due date for the provider’s annual report for the fiscal year in which the provider obtained its certificate of authority. Thereafter, the provider shall file its required actuary’s opinion before the expiration of five years following the date it last filed an actuary’s opinion with the department.
(d) The actuary’s opinion required by subdivision (a) shall comply with generally accepted actuarial principles and the standards of practice adopted by the Actuarial Standards Board. The actuary’s opinion shall also include statements that the data and assumptions used in the underlying actuarial study are appropriate and that the methods employed in the actuarial study are consistent with sound actuarial principles and practices. The actuary’s opinion must state whether the provider has adequate resources to meet all its actuarial liabilities and related statement items, including an appropriate surplus, and whether the provider’s financial condition is actuarially sound.
(e) This section shall become operative on January 1, 2030.

SEC. 5.

 Section 1792.11 is added to the Health and Safety Code, to read:

1792.11.
 (a) At least once every five years, each provider shall conduct a review of the accessible areas that the provider is obligated to repair, replace, restore, or maintain within the facility. The governing body of each provider shall use the review to consider and implement necessary adjustments to its reserve account requirements.
(b) The review required by this section shall, at a minimum, include all of the following:
(1) Identification of the major components that the provider is obligated to maintain that, as of the date of the review, have a remaining useful life of less than 20 years.
(2) An estimate of the remaining useful life of the components identified in paragraph (1) as of the date of the review.
(3) An estimate of the cost of repair, replacement, restoration, or maintenance of the components identified in paragraph (1).
(4) An estimate of the total annual contribution necessary to defray the cost to repair, replace, restore, or maintain the components identified in paragraph (1) during, and at the end of, the components’ useful life.
(5) An estimated funding plan that indicates how the governing body of the provider plans to fund its obligation to repair or replace the major components identified in paragraph (1), with the exception of those components that the governing body has determined it will not replace or repair, as well as a timeline detailing when those repairs or replacements will be made.
(c) Each provider shall submit to the department, at least once every five years, a summary of the maintenance and replacement review required by this section and the necessary adjustments the governing body of the provider has made or plans to make as a result of the review. Within 10 days of filing the summary and adjustment plan with the department, the provider shall post a copy of the summary and adjustment plan in a central and conspicuous location at the facility and in a conspicuous location on the provider’s Internet Web site.