Act Now to Oppose Unnecessary CCRC Actuary Requirement Bill

A CALCRA-sponsored assembly bill that would require all Continuing Care Retirement Communities (CCRCs) to conduct an actuarial study every five years is now on the senate floor. If the bill is passed off the floor without any amendments, the bill will head to the governor’s office for signature.

AB 3088 (Chu, D-San Jose) would not only require all CCRCs to conduct an actuarial study every five years, but would also require a CCRC to conduct a review of major components in the facility that the provider obligated to repair, replace, restore or maintain. Furthermore, the CCRC would be required to provide various cost estimates and a funding plan to finance the finding of the review. LeadingAge California is opposed to the bill.

Current law requires that a CCRC offering Type-A contracts to conduct an actuarial analysis every five years. This current provision is important in that the actuarial analysis provides the community deeper insight into their future healthcare obligations and potential financial risk the community may absorb under the promissory nature of the contact type. However, Type B and Type C contracts are substantially different in that residents are typically financing their own healthcare needs at a discounted rate, or at market rate. These contracts do not contain a promissory note of care, and there is little need to cost of future healthcare obligations that the CCRC will not necessarily be at risk for. Simply put, Type A contracts are more financially risky for the future financial health of the CCRC, and should require deeper actuarial understanding. Type B and C contracts are less risky contract types do not carry the same level of risk, and mandating that all CCRCs conduct an actuarial study, regardless of contract type offered, is expensive, unnecessary and will provide little value.

LeadingAge California worked with multiple committees to delete some of the more onerous provisions, but we remained opposed to the bill as it currently stands. The Department of Social Services has also expressed concern with the portion of the bill that deals with actuarial studies, and is working with the author’s office on potentially drafting amendments.

In the meantime, we are asking all LeadingAge California members to take action by sending in a letter to the Governor opposing this bill.

You can click on the link below to voice your opposition: