Choosing to move to a continuing care retirement community (CCRC or “life plan community”) is a big decision—one that necessitates thorough research and planning on your part. You want to be certain that you are selecting a community that will uphold its contractual responsibilities to provide you with a continuum of care services, if needed, by remaining financially solvent. But what type of industry oversight is in place to help ensure that CCRCs are keeping their end of the commitments they have made to their residents?
Regulation of CCRCs takes place at the state level, although Congress has considered various proposals over the years to introduce greater federal oversight. There are currently 38 states that regulate CCRCs through various state divisions, such as the Department of Insurance or the Division of Aging and Elder Services. The remaining 12 states and the District of Columbia currently have no regulatory structure in place related to continuing care retirement communities. Wyoming is the only state that does not have any retirement communities offering a continuing care contract.
CCRC regulation is different from licensure for care services
Regulation of continuing care retirement communities, which tends to focus mostly on financial regulation, should not be confused with healthcare-related regulations. For instance, a CCRC’s on-site healthcare facility will be strictly regulated by the appropriate licensing body within the state and must meet various standards of care and staffing. Additionally, facilities that accept Medicare and/or Medicaid 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.
What does regulation of CCRCs involve?
Among the various states that regulate CCRCs, the mandatory requirements and degree of regulatory oversight can vary quite a bit. For instance, the state of North Carolina, which has 59 CCRCs regulated through the Department of Insurance, requires each provider to submit updated disclosure statements annually, including audited financial statements. Additionally, North Carolina’s CCRCs must maintain operating reserves equal to 50 percent of forecasted operating costs for the next 12 months. For CCRCs in North Carolina that are at an occupancy level of 90 percent or higher, the reserve requirement drops to 25 percent of forecasted operating expenses. To date, there has never been a North Carolina CCRC that has gone bankrupt.
Other states may have requirements that are more or less stringent than North Carolina. Some require little more than the submission of a disclosure statement annually, sometimes only voluntarily. The state of Ohio, which has around 150 retirement communities that likely would meet the definition of a continuing care retirement community, does not provide any regulatory oversight of CCRCs. (Again, this does not mean that the assisted living or healthcare centers within Ohio CCRCs are not regulated by the appropriate licensing bodies.)
>> Related: How Do I Know If a CCRC is Financially Viable?
Do CCRCs perform better in regulated states?
I have not found any research showing that CCRCs located in regulated states perform better financially than those in non-regulated states. Given the fact that some regulated states provide only minimum oversight, a study comparing purely regulated versus non-regulated states likely wouldn’t be too helpful. However, it might be interesting to see a comparison of states like North Carolina, where regulations are tighter, versus non-regulated states.
The bottom line for CCRC regulation
It can be difficult to make an apples-to-apples comparison between CCRCs—especially if you are considering communities in several states—since different states have different approaches to oversight of the senior living industry. There are arguments on both sides as to whether it would be beneficial to delegate CCRC financial and quality oversight to a centralized body at the federal level, or if it is a matter better-handled by the individual states. But regardless of the level of regulatory oversight it’s still important for you to do your own due diligence.
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