SENATE BILL REPORT

SB 5854

BYSenators Kreidler, Moore, Metcalf and Deccio

Providing for regulation of retirement care communities.

Senate Committee on Financial Institutions

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

Majority Report:  That Substitute Senate Bill No. 5854 be substituted therefor, and the substitute bill do pass.

      Signed by Senators Moore, Chairman; Bender, Vice Chairman; Bottiger, Fleming, McDermott, Metcalf, von Reichbauer.

Senate Staff:Phil Sorensen (786-7470)

                  March 6, 1987

AS REPORTED BY COMMITTEE ON FINANCIAL INSTITUTIONS, MARCH 6, 1987

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 jointly appointed 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 Insurance Commissioner prior to marketing the contracts and prior to commencing construction on a new facility.

The Commissioner 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 the Commissioner.  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 the Commissioner 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 continually updated to correct errors, misstatements, or omissions.

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.

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

EFFECT OF PROPOSED SUBSTITUTE:

The Department of Social and Health Services is the lead oversight agency and the Commissioner provides the actuarial and rule making advice when necessary.  A transition period is provided for existing CCRCs not in compliance with the act on its effective date.

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.

Revenue:    yes

Fiscal Note:      requested

Effective Date:July 1, 1988

Senate Committee - Testified: Senator Kreidler; Cameron Sherwood, Panorama Residential Protection Association; J.T. Quigg, Panorama City; Bob Eglsaer, Panorama City; Charles Hawley,l WAHA; Ward Miles, Chairman, State Health Coordinating Council; Dan Rubin, DSHS; Kirk Gulledge, RCAI, Glendale, Arizona