Since the Great Recession and the U.S. Senate’s subsequent study and hearings on continuing care retirement communities (CCRCs), financial regulation and contract terms have become a hot-button issues among prospective CCRC residents and regulatory bodies. Here are a few important details to understand about regulation of CCRCs.
Continuing care retirement communities are regulated at the state level, although Congress has considered various proposals over the years to introduce greater federal oversight. There are thirty-eight states that regulate CCRCs through various state divisions such as insurance, financial services, aging or elder services, or social services1. The remaining twelve states and the District of Columbia currently have no regulatory structure in place. (As of July 2013, there are two states—Alaska and Wyoming—that do not have any CCRCs.)
For those states that regulate CCRCs the mandatory requirements and degree of oversight can vary drastically from one state to another. For instance, the state of North Carolina, which has fifty-eight CCRCs regulated through the NC Department of Insurance, requires a number of documents to be submitted annually to the state, including a disclosure statement, actuarial studies, audited financial statements, and much more. They also have strict cash reserve requirements and escrow requirements related to entry fees for start-up communities.
Yet some states may require little more than submission of a disclosure statement annually, and – according to what we have been told specifically by representatives of certain states- submission of such documents is sometimes only voluntary. (We have not yet determined the specific reason why a particular state would only seek these documents on a voluntary basis or the benefit to a CCRC for voluntarily submitting these documents.) The state of Ohio, which has well over one hundred retirement communities that likely would meet the definition of a continuing care retirement community, does not provide any regulatory oversight of CCRCs.
State regulation of continuing a care retirement communities, which tends to focus mostly on financial regulation, should not be confused with healthcare-related regulations. For instance, the on-site healthcare facility will be strictly regulated by the appropriate licensing body within the state. Additionally, facilities that wish to receive Medicare and/or Medicaid reimbursements must be certified in accordance with federal guidelines.
But these agencies do not regulate the overall operations and financial management of the CCRC, including independent living operations. Currently, the only organization that analyzes and accredits the entire operation of a CCRC, including financial management and healthcare, is the non-profit accreditation commission, CARF-CCAC (www.carf.org)2.
Be sure to find out if the continuing care retirement community in which you or a loved one is considering is located in a state that regulates CCRCs. If so reach out to the appropriate regulatory body and ask about their financial requirements and oversight process for CCRCs.
1 GAO Report to the Chairman, Special Committee on Aging, U.S. Senate, June 2010.
2 CARF/CCAC is an independent accrediting body sponsored by the American Association of Homes and Services for the Aging. The commission is the only accrediting body strictly for CCRCs. Visit www.carf.org for more information.
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