SENATE BILL REPORT

SSB 5854

BYSenate Committee on Financial Institutions (originally sponsored by Senators Kreidler, Moore, Metcalf and Deccio)

Providing for regulation of retirement care communities.

Senate Committee on Financial Institutions & Insurance

Senate Hearing Date(s):March 4, 1987; March 6, 1987; February 4, 1988

Senate Staff:Walt Corneille (786-7416)

AS OF FEBRUARY 3, 1988

BACKGROUND:

Continuing care contracts are usually life-long contracts that involve a significant investment by prospective residents.  The Long-Term Care Insurance Act became effective in November 1986.  However, continuing care retirement communities (CCRC) were expressly extracted from that act.

During the fall and winter of 1985-86 a CCRC advisory group was appointed jointly by the State Council on Aging and the State Health Coordinating Council.  The advisory group developed recommendations for legislation to protect CCRC consumers from some of the risks inherent in long-term residential and health service contracts.

SUMMARY:

The Continuing Care Retirement Community Act provides for extensive regulation and disclosure by those persons seeking to provide continuing care contracts.  Providers offering continuing care contracts must be certified by the Department of Social and Health Services prior to marketing the contracts and prior to commencing construction on a new facility.  The Insurance Commissioner provides actuarial and rule-making advice when necessary.

DSHS has the authority to make and enforce rules; issue, revoke and suspend licenses and permits; and examine and audit all records and disclosure statements.  The form and contents of continuing care contracts must be approved by DSHS.  Approved disclosure documents must be available at the CCRC for public inspection.  Elements of the disclosure statements are enumerated in the act.

Any provider seeking to market contracts must submit information to DSHS dealing with actuarial, demographic and financial circumstances indicating the feasibility of the project.  An escrow plan, a model continuing care contract and other documents available to the consumer must be approved.  The provider must file annually a disclosure statement containing any material changes in the information required.  The disclosure statement available to the public must be updated continually to correct errors, misstatements, or omissions.  A transitional period is provided for existing CCRCs not in compliance with the act on its effective date.

Residents in CCRCs have the right to organize a residence council and to meet with administration as a council at least quarterly.  The CCRC must offer an approved group long-term care supplementary insurance plan to residents involved in certain types of continuing care contracts.

Unencumbered equity in real property may be employed to satisfy the requirement that reserves be maintained by CCRCs in an amount sufficient to secure future obligations.

Civil and criminal penalties are established for those who function outside the rules set forth by this act.

Appropriation:    none

Revenue:    yes

Fiscal Note:      available

Effective Date:July 1, 1988