Legislation Requiring Continuing Care Retirement Communities to Conduct Actuarial Studies Passes the Assembly

A CALCRA-sponsored Assembly bill that would require all Continuing Care Retirement Communities (CCRCs) to conduct an actuarial study every five years has passed through two committees.

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.

The bill passed off the Assembly floor on May 11. 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.

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.

AB 3088 will be referred to the Senate Human Services Committee later this month. LeadingAge California will continue to keep members apprised of the status of this bill.