The following words and terms, when used in this chapter, have
the following meanings, unless the context clearly indicates otherwise.
(1) Act--The Texas Continuing Care Facility Disclosure
and Rehabilitation Act, Health and Safety Code, Chapter 246.
(2) Actuarial funded status--The ratio of actuarial
assets plus net accounting assets to actuarial liabilities plus actuarial
refund liabilities.
(3) Actuarial review--An analysis performed by a qualified
actuary in accordance with actuarial standards of practice of the
current actuarial balance of the financial condition of a facility
and of the provider's continuing care in residence operations, if
any. An actuarial review includes, but is not limited to, the following:
(A) an actuarial report;
(B) a statement of actuarial opinion;
(C) an actuarial balance sheet;
(D) a cash flow projection; and
(E) disclosure of the actuarial methodology, formulas,
and assumptions, including justification for continuing care in residence
entrance fee escrow account amortization schedules.
(4) Affiliate--A person that directly, or indirectly
through one or more intermediaries, controls, is controlled by, or
is under common control with, the person specified.
(5) Audited financial statements--Statements prepared
by an independent Certified Public Accountant (CPA), which includes
an audit opinion from the CPA concerning the financial statements.
(6) Commissioner--The Commissioner of Insurance of
the Texas Department of Insurance.
(7) Continuing care--The furnishing of a living unit,
together with personal care services, nursing services, medical services,
or other health-related services, to an individual who is not related
by consanguinity or affinity to the provider of the care under a continuing
care contract, regardless of whether the services and the living unit
are provided at the same location. The term "continuing care" includes
continuing care in residence.
(8) Continuing care contract--An agreement that requires
the payment of an entrance fee by or on behalf of an individual in
exchange for the furnishing of continuing care by a provider and that
is effective for:
(A) the life of the individual; or
(B) more than one year.
(9) Continuing care in residence--Continuing care services
provided to an individual in the individual's residence or otherwise
enabling the individual to remain in the individual's residence, as
authorized under Health and Safety Code §246.0025.
(10) Control--The possession, direct or indirect, of
the power to direct or cause the direction of management and policies
of a person, whether through the ownership of voting securities, by
contract other than a commercial contract for goods or non-management
services, or otherwise, unless the power is the result of an official
position with or corporate office held by the person. This definition
also includes the terms "controlling," "controlled by," and "under
common control with." Control is presumed to exist if any person,
directly or indirectly, owns, controls, or holds with the power to
vote, or holds irrevocable proxies representing, 10 percent or more
of the voting securities or authority of any other person. This presumption
may be rebutted to show that control does not in fact exist.
(11) Debt service coverage ratio--Total excess (deficit)
of revenues and gains in excess of expenses and losses plus interest
expense plus depreciation expense plus amortization expense minus
amortization of deferred revenues from entry fees plus net proceeds
from entry fees, divided by annual debt service (annual principal
and interest payment or maximum annual debt service).
(12) Department--The Texas Department of Insurance.
(13) Entrance fee--An initial or deferred transfer
of money, or other property valued at an amount in excess of three
months' payments for rent or services, made, or promised to be made,
as full or partial consideration for acceptance by a provider of a
specified individual entitled to receive continuing care under a continuing
care contract. The term does not include a deposit made under a reservation
agreement.
(14) Facility--A place in which a person undertakes
to provide continuing care. A place is an establishment, complex,
campus, or group of living units at which a provider engages in the
business of providing continuing care. If two or more establishments,
complexes, campuses, or groups of living units are located on one
premises, they must be treated as one facility if their operations
are controlled by the same provider. If two or more establishments,
complexes, campuses, or group of living units are located on one premises
but controlled by separate providers, they must be treated as separate
facilities. A facility that is constructed on an as-needed basis and
for which a certificate of authority is obtained from the department
prior to facility construction will be considered a phase-in facility.
The term does not include an individual's residence if the residence
is not a living unit provided by a provider.
(15) Financial Statements--Financial statements completed
in accordance with generally accepted accounting principles. Financial
statements for providers with continuing care in residence operations
must:
(A) include segmented financial statement reporting,
separating the facility services and in residence services, including
an actuarial review;
(B) include a balance sheet that reports liabilities
for obligations for facility-based services and obligations for in
residence services separately;
(C) disclose entrance fee activity for the fiscal year
including the amount held in escrow at the beginning of the year,
any amounts collected during the year, any amounts released during
the year, and the total amount held in escrow at the end of the year;
and
(D) disclose the ratios addressed in §33.505(b)(2)
- (7) of this title.
(16) Fund balance--Assets as shown on the balance sheet
minus liabilities shown on the balance sheet.
(17) Living unit--A room, apartment, cottage, or other
area within a facility that is set aside for the exclusive use or
control of one or more specified individuals.
(18) Long-term nursing care--Nursing care provided
for a period longer than 365 consecutive days.
(19) Person--An individual, corporation, association,
or partnership, including a fraternal or benevolent order or society.
(20) Provider--A person who undertakes to provide continuing
care under a continuing care contract, whether in a facility or in
an individual's residence.
(21) Qualified actuary--A member of the American Academy
of Actuaries or the Society of Actuaries or a person recognized by
the Commissioner as having comparable training or experience.
(22) Reservation agreement--An agreement that requires
the payment of a deposit to reserve a living unit for a prospective
resident. A deposit made under a reservation agreement is not considered
an entrance fee.
(23) Reservation agreement deposit--A deposit paid
under a reservation agreement.
(24) Resident--An individual entitled to receive continuing
care from a provider under a continuing care contract.
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| Source Note: The provisions of this §33.2 adopted to be effective March 9, 1989, 14 TexReg 986; amended to be effective March 1, 1990, 15 TexReg 879; amended to be effective March 14, 1996, 21 TexReg 1765; amended to be effective March 9, 2009, 34 TexReg 1608; amended to be effective April 17, 2019, 44 TexReg 1867 |
