AN ACT Relating to continuing care contracts; adding a new section to chapter 48.84 RCW; adding a new chapter to Title 70 RCW; prescribing penalties; making an appropriation; and providing an effective date.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. This chapter shall be known and may be cited as the "continuing care retirement community act."

NEW SECTION. Sec. 2. The legislature finds that continuing care retirement communities can provide a valued option in meeting long-term residential, social, and health needs for many of Washington's senior citizens. However, consumers in Washington and nationwide have encountered serious, documented problems in dealing with some retirement communities, generally stemming from long-term financial instability of the community, or insufficient disclosure to consumers. Because existing law does not provide for financial oversight or disclosure, the legislature has determined that any entity offering continuing care contracts should be certified and regulated in accordance with the provisions of this chapter.

NEW SECTION. Sec. 3. Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.

(1) "Commissioner" means the insurance commissioner.

(2) "Continuing care contract" means a contract to provide a person, for the duration of such person's life or for a term in excess of one year, shelter along with nursing, medical, health-related, or personal care services, which is conditioned upon the transfer of property, the payment of an entrance fee to the provider of such services, or the payment of periodic charges for the care and service involved. A continuing care contract is not excluded from this definition because the contract is mutually terminable or because shelter and services are not provided at the same location.

(3) "Department" means the department of social and health services.

(4) "Member" means an individual who has signed a continuing care contract with a retirement community.

(5) "Nursing, medical, health-related, or personal care services" includes, but is not limited to, nursing home care, home health services or assistance with activities of daily living.

(6) "Provider" means a retirement community as defined in subsection (7) of this section.

(7) "Retirement community" means a person, association, or organization of any kind which provides, or proposes to provide, shelter and services pursuant to a continuing care contract.

(8) "Shelter" means lodging with or without meals.

(9) "Waiting list deposit" means a fee, whether refundable or not, which a provider requires of an individual seeking to become a member as a condition of being placed on a waiting list of those seeking a continuing care contract with a provider.

NEW SECTION. Sec. 4. (1) No person, association, or organization may enter into a continuing care contract as a provider except pursuant to this chapter.

(2) Prior to offering for sale continuing care contracts, a provider must possess a permit to market contracts, which permit has been issued by the department pursuant to section 10(4) of this act.

(3) Providers offering continuing care contracts must possess a final certificate of authority issued by the department pursuant to section 10(4) of this act prior to starting construction of facilities or making lodgings available for occupancy.

NEW SECTION. Sec. 5. (1) There shall be a program for the regulation of retirement communities within the department.

(2) In carrying out responsibilities under this chapter, the department shall have powers of rule-making, investigation, and enforcement including the following:

(a) Adoption of application forms and data requirements for permits to market contracts and for final certificates of authority for continuing care providers;

(b) Subpoena of records and witnesses;

(d) Examination and audit of records, including field audits and on-site inspections;

(e) Suspension, limitation, or revocation of any permit to market contracts or final certificate of authority after notice and hearing, and upon written findings of fact by the department, if the provider has:

(i) Wilfully violated any provision of this chapter or of any rule, regulation, or order adopted hereunder;

(ii) Failed to file a disclosure statement, continuing care contract, or other document or data as required by this chapter;

(iii) Failed to deliver to current or prospective members the disclosure statements required by this chapter;

(iv) Delivered to current or prospective members a disclosure statement which makes an untrue statement, or omits a material fact, which the provider, at the time of the delivery of the disclosure statement, had actual knowledge or should reasonably have known was a misstatement or omission; or

(v) Failed to comply with the terms of a cease and desist order;

(f) Adoption of such rules as are deemed necessary for the administration of this chapter. In developing initial rules, the department shall seek the advice of representatives of both nonprofit and proprietary retirement communities, organizations, and agencies representing aging consumers including current members of retirement communities, the attorney general's consumer protection staff, and others as deemed appropriate;

(g) Any other powers expressly conferred or reasonably inferred from provisions of this chapter.

(3) Findings of fact in support of the revocation of a permit or certificate under subsection (2)(e) of this section shall be accompanied by a concise and explicit statement of the underlying facts supporting the findings.

(4) If the department finds good cause to believe that the provider has been guilty of a violation for which revocation could be ordered under subsection (2)(e) of this section, the department may first issue a cease and desist order. If the cease and desist order is not or cannot be effective in remedying the violation, the department may, after notice and hearing, order that the certificate of authority be revoked and surrendered. Such a cease and desist order may be appealed to a court of competent jurisdiction.

NEW SECTION. Sec. 6. (1) Rules and regulations that determine the form of continuing care contracts, and such matters of content as are specified in subsection (4) of this section, shall be promulgated by the department.

(2)(a) No provider shall enter into or renew a continuing care contract after the effective date of this section unless the contract form has been approved by the department.

(b) The forms of all continuing care contracts in effect on the effective date of this section shall be submitted to the department, but do not require approval by the department for the duration of their effective periods.

(3) All contracts shall be written in plain English.

(4) All contracts entered into or renewed following the effective date of this section shall contain at least the following provisions:

(a) A contract cover sheet which summarizes provisions and facilitates comparisons with other continuing care contracts. The department shall specify by rule the format of the cover sheet and other contract form requirements including size of type;

(b) A list of all services to be provided, including the extent and limitations of all service benefits with particular attention to the nature and duration of health and nursing care benefits, and the boundaries between services provided under the terms of the contract and services which are not covered;

(c) Specification of all fees, charges, and other transfers of property which will be imposed, including the amount of any initial payment(s), and the initial amounts of all periodic payments, and a description of all methods by which the provider may change or add fees;

(d) Specification of the circumstances under which members will be permitted to remain in the retirement community if unable to pay fees, including any use of benevolent funds and any circumstances under which continuation of services would require the member to use public assistance or medicaid funds;

(e) A statement in a prominent location that a continuing care contract may involve significant financial risk;

(f) Identification of the specific living unit initially contracted for, and description of all provisions governing issues of tenancy including transfers among living units, reoccupancy of units after an illness or other absence, and what will happen, in cases of dual tenancy, if one of the two residents dies, withdraws, is dismissed, or needs to be transferred to a health facility;

(g) Description of all procedures by which a member may be evicted or otherwise required to leave a residence unit, or the contract terminated by the provider. Dismissal and contract termination shall be limited to good cause as defined in rule. Eviction or other retaliation against a member due to complaints against the provider shall be contractually prohibited;

(h) A clear statement of all rights of cancellation by the member;

(i) Description of all refund policies, including those pertaining to situations where the member has canceled the contract during the cooling-off period or probationary period, has withdrawn at a later time, has been dismissed, or has died;

(j) A cooling-off period of not under seven days from the date the continuing care contract is signed and a probationary period of not under ninety days from the date the member is permitted to take occupancy, during which the new member may cancel with or without cause with a full refund, less reasonable costs determined pursuant to rules adopted by the department. The provider may require by contract a thirty day written notice from members requesting cancellation during the probationary period. Additionally, contracts shall provide for a full refund less reasonable costs in the event the member dies before the date the member is permitted to take occupancy;

(k) Specification of whether or not the contract creates a property interest, and, if so, the exact nature of that interest;

(l) A guarantee that members have the right to organize a resident council, including the right to collectively represent the concerns of members in dealings with the retirement community's administration, as provided in section 14 of this act.

NEW SECTION. Sec. 7. (1) Waiting list deposits shall be the subject of a separate formal contract between the retirement community and a person seeking to become a member which specifies at least: The amount of the deposit; the amount refundable in the event the application is withdrawn, rejected, or accepted; the maximum time in which a refund will be made; and what interest will be paid on the applicant's funds, if any.

(2) Waiting list deposit contracts shall be subject to prior approval by the department.

NEW SECTION. Sec. 8. The provider shall maintain at the retirement community for inspection by any person, and shall distribute to a prospective member prior to entering into a continuing care or waiting list contract, a document approved by the department pursuant to section 10(4) of this act that discloses the following:

(1) The names, business addresses, legal/corporate forms, experience in establishing or operating retirement communities, nursing homes, or other health facilities, and other existing and proposed retirement community properties, of the provider and of each individual constituting, owning an interest in, serving on the governing board of, or managing the continuing care retirement community. In the case of a nonprofit corporation, the provisions of federal, state, and local laws under which nonprofit status is claimed shall be disclosed.

(2) With respect to any person named in subsection (1) of this section:

(a) A description of the business experience of such person, if any, in the operation or management of retirement communities, nursing homes, or other health-related facilities;

(b) The identity of any business or professional service entity in which such person has a ten percent or greater ownership, or beneficial interest, and which the provider will employ to provide goods, services, or any other thing of value in excess of five hundred dollars within any year, and a description of the goods, services, and other things of value and the anticipated costs thereof to the provider;

(c) A statement as to whether any such person has been convicted of a crime or been a party to any civil action claiming fraud, embezzlement, fraudulent conversion, or misappropriation of property which resulted in a judgment against said person for damages, or enjoining any such activity, and whether any such person has had any state or federal licenses or permits suspended or revoked in connection with any business activities related thereto.

(3) Whether the provider is, or is affiliated with, a religious, charitable, or other organization, and the extent, if any, to which any such affiliated organization is responsible for any financial service liabilities of the provider.

(4) If the retirement community is to be or is operated by a manager, the following additional information shall be supplied in the disclosure statement:

(a) A copy of the agreement currently in effect or to be entered into between the provider and said manager for the operation of the retirement community;

(b) The fees or any other compensation anticipated to be paid by the provider to the manager for the operation of the retirement community;

(c) The method by which the manager was or will be chosen to manage the retirement community and, if the manager will be or was chosen because of a condition in a mortgage commitment to the provider, the identity of the mortgagee requiring the condition in the commitment.

(5) A description of all services provided or proposed by the retirement community under its continuing care contracts, including the extent to which nursing, medical, health-related, or personal care is furnished, the present or proposed costs of all services, and a description of any services made available by the provider at an additional charge beyond initial and periodic fees in the contract.

(6) A description of how contractually guaranteed services will be provided in the event that the provider's own services or facilities are unavailable or full.

(7) The location and description of both existing and proposed properties and services provided under the continuing care contract. To the extent that any of these services are not yet available, disclosure shall include estimated completion date or dates; a statement as to whether or not construction has begun; and enumeration of any contingencies subject to which construction may be deferred, including, in the case of a proposed retirement community, final certification by the department pursuant to section 10(4) of this act.

(8) A description of all fees required of residents, including initial and periodic charges, apartment resale fees, and special service fees; all methods by which the provider may adjust fees; the history of fee increases for at least five years for the provider, if in operation, and for any other retirement communities which the provider or manager operates; the circumstances under which members will be permitted to remain in the retirement community, including any use of benevolent funds, if the member is unable to pay charges; whether continuation of services may in any circumstances require the member to use public assistance or medicaid funds; and the method of calculating fees that will be charged if the member marries while in the retirement community. If it is actuarially clear that fees will need to increase substantially to maintain solvency of the retirement community, the anticipated amounts and timing of such increases shall be disclosed.

(9) A description of health and financial conditions required to be accepted as a member and to continue membership, including provisions for any changes in these conditions between the date the continuing care contract is executed and the date the member occupies a living unit. Disclosure shall include requirements for entry of a spouse to the facility, and the consequences to the member if the spouse does not meet these requirements.

(10) All provisions for contract cancellation and refunds which are included in the continuing care contract or the waiting list deposit contract.

(11) The conditions under which a living unit occupied by a resident may be made available by the provider to another resident other than on the death of the resident executing the continuing care agreement.

(12) Income statements for the three most recent fiscal years of the provider, or such shorter period of time as the provider shall have been in existence, and certified financial statements of the provider including a balance sheet and income statement as of the end of the provider's most recent fiscal year. If the provider's fiscal year ended more than ninety days prior to the date the application is filed, an interim uncertified financial statement also shall be included as of a date not more than ninety days prior to the date the disclosure document is filed with the department pursuant to this section or section 9 of this act.

(13) A statement of any changes in operations or management that are expected to substantially affect financial position over the next three years, or a statement that no significant changes in financial position are expected in the next three years.

(14) If operation of the retirement community has not begun, a statement of the anticipated sources and application of funds to be used in the purchase or construction and startup of the retirement community; a description of any mortgage, loan, or other long-term financing and its terms and conditions; an estimate of the total entrance fees to be received from members at or prior to the commencement of operations; and an estimate of any startup losses.

(15) Professional summaries of accounting, audit, and actuarial opinions received by the provider or other developer as part of professional accounting and actuarial studies or reports, and a statement that the full text of such summaries, studies, or reports is available on request.

(16) The general nature of any anticipated cost-shifting and cross-subsidization among members.

(17) A copy of the form or forms of contracts for continuing care used or to be used by the provider, and information on contract term and renewability.

(18) Unless demonstrably untrue, a statement to the effect that the individual contracts of various members may over time be different as to services and fees due to contract changes resulting from changing conditions.

(19) Any other information necessary to understand the nature of the agreement and the risks involved in membership.

(20) A list of the regulatory agencies with responsibility over various aspects of retirement community operation, and their areas of responsibility.

(21) A statement on the cover page of the disclosure statement in a prominent location and type face that certification of the retirement community does not constitute approval, recommendation, or endorsement of the retirement community by the department or the commissioner, nor does such certification evidence the accuracy or completeness of the information set forth in the disclosure statement.

NEW SECTION. Sec. 9. (1) The provider shall annually file with the department, within four months following the end of the provider's fiscal year, unless such time shall be extended by the written consent of the department, an annual disclosure statement which shall contain a statement setting forth, as of the end of such fiscal year, any material changes in the information required by section 8 of this act for initial disclosure.

(2) From the date an annual disclosure statement is filed until the date the next succeeding disclosure form is filed with the department, a copy of the current annual disclosure statement shall be provided to all prospective members prior to the provider accepting part or all of any application or entry fee, or execution of any continuing care contract, whichever first occurs.

(3) In addition to filing the annual disclosure statement, the provider must amend its currently filed disclosure statements at any other time if an amendment is necessary to prevent the initial disclosure statement and annual disclosure statement from containing any material misstatement of fact, or omitting to state a material fact required to be stated therein. The provider may combine the initial and annual disclosure documents into an updated initial disclosure statement subject to approval by the department. Any such amendment or amended disclosure statement must be filed with the department and is subject to all the requirements of this chapter.

(4) Every time a disclosure statement is amended, all members shall be given a summary of the changes and informed of their right to inspect the full document at the retirement community.

NEW SECTION. Sec. 10. (1) The application for a permit to market contracts shall be filed with the department by the provider on forms prescribed by the department and shall include:

(a) Such actuarial, demographic, financial, and other reasonably related information as the department deems necessary in order to demonstrate the likely financial and actuarial feasibility of the project. Such information shall include:

(i) A feasibility study and financial plan based on marketing analysis, relevant literature, experience of other similar retirement communities, and specific actuarial study which meets requirements to be specified by rule by the department; and

(ii) An actuarial opinion, written and signed by a qualified actuary as defined by the department, which indicates the likely feasibility of the project based on the feasibility study and financial plan referenced in (a)(i) of this subsection and the sample contract referenced in (c) of this subsection.

(b) An escrow plan which:

(i) Identifies escrow agents;

(ii) Includes a copy of executed escrow agreements;

(iii) States the anticipated application of all escrow funds;

(iv) Safeguards all deposits received from members or prospective members, including initial membership fees;

(v) Identifies conditions under which each escrow shall be released; and

(vi) Complies with all requirements established by rule by the department.

(c) A sample continuing care contract which meets the requirements of section 6 of this act and is actuarially consistent with the feasibility study referenced in (a)(i) of this subsection.

(d) A sample waiting list deposit contract which meets the requirements of section 7 of this act.

(e) An initial disclosure statement which meets the requirements of section 8 of this act.

(2) The application for a final certificate of authority shall be filed with the department by the provider on forms prescribed by the department and shall include:

(a) A final feasibility study and financial plan which includes such actuarial, demographic, financial, and other reasonably related information as the department deems necessary in order to reach final approval, based on likely actual membership as indicated by individuals who have paid subscription deposits and/or have signed continuing care contracts.

(b) A final escrow plan and initial disclosure statement with any revisions needed to meet all requirements of subsection (1) (a) and (b) of this section.

(c) The continuing care contract form and waiting list deposit contract form, with any revisions needed to meet all requirements of sections 6 and 7 of this act and, in the case of the continuing care contract, to be actuarially consistent with the final feasibility study referenced in (a) of this subsection.

(3) The department may determine that certain of the requirements of subsections (1)(a) and (2)(a) of this section are inapplicable to specific retirement community projects which have demonstrated that they present minimal actuarial risk.

(4) Upon receipt of a complete application for a permit to market contracts, or a final certificate of authority, in proper form, the department shall, within ten business days, issue a notice of filing to the provider-applicant. Within a period ordinarily not to exceed sixty days of the notice of filing, the department shall enter an order issuing the permit or certificate, or rejecting the application. Grounds for rejection include, but are not limited to, failure to demonstrate financial and actuarial feasibility to the satisfaction of the department or failure to submit the information required by the department under this chapter.

(5) If the department determines that any of the requirements of this chapter have not been met, the department shall notify the applicant that the application must be corrected in such particulars as designated by the department within a period, not under thirty days, to be established by rule. If the requirements are not met within the time allowed, the department may enter an order rejecting the application which shall include the finding of fact upon which the order is based and which shall not become effective until twenty days after the end of the foregoing thirty-day period. During the twenty-day period, the applicant may petition for reconsideration and shall be entitled to a hearing.

(6) A retirement community in operation on the effective date of this section must obtain a final certificate of authority, but is exempt from the requirement to obtain a permit to market contracts.

(7) If the department determines that a retirement community in operation on the effective date of this section has financial or actuarial problems which preclude issuance of a final certificate of authority, the department may issue a nonrenewable limited certificate good for a maximum period of three years which specifies a plan of correction.

(8) If the department determines that the plan of correction has been carried out satisfactorily, the department shall issue a final certificate of authority.

NEW SECTION. Sec. 11. The department shall establish by rule application fees for review of applications under section 10 (1) and (2) of this act, and annual review fees for all retirement communities, not to exceed the reasonable costs of carrying out the department's responsibilities under this chapter. The department may establish by rule different fees for varieties of retirement communities requiring different levels of financial and actuarial oversight.

NEW SECTION. Sec. 12. (1) Providers shall not commingle donor-restricted funds, including resident benevolent funds and any personal funds held for individual members, with other funds. Donor-restricted funds shall be used only for the purposes specifically stated.

(2) Providers shall at all times secure their future service obligations through some combination of designated reserves; reinsurance, such as stop-loss insurance; bonding; escrow accounts; and/or contractually mandated purchase by members of group long-term care insurance which has been approved by the commissioner pursuant to section 20 of this act.

(3) Providers shall conduct or obtain actuarial repricing studies as necessary pursuant to rules established by the department.

NEW SECTION. Sec. 13. The department shall establish rules to ensure that all waiting list deposits and initial fees, including subscription fees, received by providers are maintained in escrow. These rules shall include conditions for release of escrow funds which distinguish between those funds received prior to completion of construction of facilities, and those funds received after facilities are in operation but prior to the date a member is permitted to occupy a living unit.

NEW SECTION. Sec. 14. (1) Retirement community members have the right to organize a resident council, including the right to collectively represent the concerns of members in dealings with the retirement community administration.

(2) The administration of each operating retirement community shall meet at least quarterly with the resident council, if one exists, or with interested members if there is no resident council.

NEW SECTION. Sec. 15. (1) Retirement communities shall submit copies of all advertising and promotional material to the department. Advance approval of such material by the department is not required. The department shall have the power to order cessation of unfair or deceptive claims.

(2) All written promotional material shall include a statement that the disclosure statements required under sections 8 and 9 of this act are available on request from the retirement community.

(3) Any violation of this chapter shall also be a violation of the consumer protection act, chapter 19.86 RCW.

NEW SECTION. Sec. 16. The department shall maintain comparable data on retirement community services, benefits, charges, and financial status for use by consumers. The department may require all providers to submit summary information in a consistent form specified by the department.

NEW SECTION. Sec. 17. (1) Nothing contained in this chapter shall alter any other statutory obligation of the department of social and health services, or any rule or regulation promulgated thereunder, including, but not limited to, obligations under the following:

(a) Chapter 18.20 RCW (boarding homes);

(b) Chapter 18.51 RCW (nursing homes);

(d) Chapter 70.38 RCW (health planning and resources development);

(e) Chapter 70.40 RCW (hospital and medical facilities survey and construction act);

(f) Chapter 70.41 RCW (hospital licensing and regulation);

(g) Chapter 70.62 RCW (transient accommodations - licensing - inspections);

(h) Chapter 70.124 RCW (abuse of patients - nursing homes, state hospitals);

(i) Chapter 70.126 RCW (home health care and hospice care);

(j) Chapter 74.34 RCW (abuse of vulnerable adults);

(k) Chapter 74.42 RCW (nursing homes - resident care, operating standards); and

(l) Chapter 74.46 RCW (nursing home auditing and cost reimbursement act of 1980).

(2) All benefits promised in continuing care contracts must be consistent with state regulatory policy for the facilities and service entities by which these benefits are to be provided.

NEW SECTION. Sec. 18. (1) Civil liability:

(a) Any person who, as a provider, or on behalf of a provider:

(i) Enters into a contract for continuing care at a facility which does not have a permit to market contracts or a certificate of authority under this chapter;

(ii) Enters into a contract for continuing care at a facility without having first delivered a disclosure statement meeting the requirements of this chapter to the person contracting for such continuing care; or

(iii) Enters into a contract for continuing care at a facility with a person who has relied on a disclosure statement which omits a material fact required to be stated therein or necessary in order to make the statement made therein, in light of the circumstances under which they are made, not misleading;

!ixshall be liable to the person contracting for such continuing care for damages and repayment of all fees paid to the provider, facility, or person violating this chapter, less the reasonable value of care and lodging provided to the member by whom or on whose behalf the contract for continuing care was entered into prior to discovery of the violation, misstatement, or omission, or the time the violation, misstatement, or omission should reasonably have been discovered, together with interest thereon at the legal rate for judgments, court costs, and reasonable attorney fees.

(b) Liability under this section shall exist regardless of whether or not the provider or person liable had actual knowledge of the misstatement or omission.

(c) A person may not file or maintain an action under this section if the person, before filing the action, received an offer, approved by the department, with notice to that person, to refund all amounts paid the provider, facility, or person violating this chapter together with interest from the date of payment, less the reasonable value of care and lodging provided prior to receipt of the offer and the person failed to accept the offer within thirty days of its receipt. At the time a provider makes a written offer of rescission, the provider shall file a copy with the department. The rescission offer shall recite the provisions of this subsection.

(d) An action shall not be maintained to enforce a liability created under this chapter unless brought before the expiration of six years after the execution of the contract for continuing care which gave rise to the violation.

(e) Except as expressly provided in this chapter, civil liability in favor of a private party shall not arise against a person, by implication, from or as a result of the violation of this chapter or a rule or order promulgated or issued under this chapter. This chapter shall not limit a liability which may exist by virtue of any other statute or under common law if this chapter were not in effect.

(2) Criminal penalties:

(a) Any person who, as a provider, wilfully and knowingly violates any provision of this chapter, or any rule or order under this chapter, shall, upon conviction, be sentenced to pay a fine of not more than ten thousand dollars, or to imprisonment for not more than two years or both, for each violation.

(b) The department may refer such evidence as is available concerning violations of this chapter or of any rule or order hereunder to the attorney general, or the proper county attorney who may, with or without such a reference, institute the appropriate criminal proceedings under this chapter.

(c) Nothing in this chapter limits the power of the state to punish any person for any conduct which constitutes a crime under any other statute.

NEW SECTION. Sec. 19. (1) Upon request by the department, the commissioner shall provide the department with actuarial and other technical assistance in carrying out the department's responsibilities under this chapter, including, but not limited to, assistance in reviewing submissions by applicants and making recommendations concerning:

(a) Rules necessary to implement this chapter, including rules related to:

(i) Submission of information by providers pursuant to sections 10 (1) and (2), 12 (2) and (3), and 16 of this act;

(ii) Determination of "minimal actuarial risk" pursuant to section 10(3) of this act; and

(iii) The appropriate frequency of actuarial repricing studies under section 12(3) of this act;

(b) Whether applications for permits to market contracts, and certificates of authority, submitted under section 10 (1) and (2) of this act, are sufficiently complete and specific to support actuarial analysis, and if not, what deficiencies exist;

(c) The adequacy of reserves and charges, as proposed by a provider, to meet obligations of the retirement community, with respect to the provider's qualifications for a permit to sell continuing care contracts, its qualifications for a certificate of authority, or its continuing operation;

(d) Whether disclosure statements filed by a retirement community pursuant to sections 8 and 9 of this act are consistent with other filings and actuarial findings, with regard to:

(i) Whether there is actuarial need for substantial future price increases;

(ii) Whether professional summaries of actuarial opinions, which have been submitted by the retirement community as part of disclosure statements, are consistent with the full actuarial studies on which they are based; and

(iii) The general nature of future cost-shifting and cross-subsidization among members;

(e) Whether a specific retirement community presents minimal actuarial risk pursuant to section 10(3) of this act;

(f) Whether a retirement community in operation on the effective date of this section has at that time serious actuarial problems, and, if so, what elements in a plan of correction, pursuant to section 10(6) of this act, are indicated by actuarial problems; and

(g) Whether assumptions underlying studies and other filings submitted to the department by retirement communities are consistent with generally accepted morbidity and mortality statistics used in actuarial work.

(2) The commissioner shall bill the department no less frequently than annually for the actual costs of providing assistance pursuant to this section.

NEW SECTION. Sec. 20. A new section is added to chapter 48.84 RCW to read as follows:

(1) Every retirement community shall offer an opportunity to participate in a group long-term care supplementary insurance plan, which has been approved by the commissioner for this purpose, to each member whose continuing care contract has one or more of the following features:

(a) Nursing home care is not a contractual benefit;

(b) Nursing home care is a contractual benefit, but is subject to limitations on duration which are unrelated to medical need;

(c) Nursing home care is a contractual benefit, but the contract specifies a higher fee for members using nursing home care, immediately or after a limited period of coverage at the same fee, than is specified for like members not using nursing home care.

(2) The commissioner shall specify by rule the requirements for group long-term care insurance plans for use as described in subsection (1) of this section. These requirements shall include:

(a) That the plan offer benefits which supplement those of the continuing care contract so that total combined coverage for nursing home care equals or exceeds a level of coverage to be specified by the commissioner in rules. These rules shall include specification of required duration of care, benefit amounts, and any limitations on gate requirements and preexisting condition exclusions which the commissioner deems necessary.

(b) Coordination of benefits to avoid duplication in the group plan of benefits covered by the continuing care contract, by medicare, or by other coverage.

(c) Provisions to ensure that the amount charged to a member for supplemental long-term care insurance shall not exceed the premiums charged by the insurer, as computed at the time the charge to the member is determined.

(3) The commissioner shall have the authority to waive requirements of this section if it is determined that group supplementary long-term care insurance plans meeting the requirements of subsection (2) of this section are not reasonably available for purchase.

NEW SECTION. Sec. 21. Sections 1 through 19 of this act shall constitute a new chapter in Title 70 RCW.

NEW SECTION. Sec. 22. If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

NEW SECTION. Sec. 23. There is appropriated from the general fund to the department of social and health services for the biennium ending June 30, 1989, the sum of .......... dollars, or so much thereof as may be necessary, to carry out the purposes of this act.

NEW SECTION. Sec. 24. This act shall take effect on July 1, 1988. By July 1, 1988, the department of social and health services and the insurance commissioner shall have adopted all rules as are necessary to ensure that this act is implemented on its effective date.