Continuing Care Contracts and Communities

Is a Continuing Care Contract for You?

In Maryland, Continuing Care Retirement Communities (CCRC) offer older adults a variety of services and care facilities, ranging from independent living arrangements to nursing home care.

A retirement community is considered to be providing continuing care when it furnishes shelter, medical, nursing services, or other health related services to unrelated adults 60 years old or older, for their lifetime, or a period in excess of one year, under a written agreement which requires a transfer of assets or an entrance fee. At a minimum, a CCRC must provide its subscribers with priority access to assisted living or nursing services. Those services may be available on-campus, or, the community can have a priority admissions arrangement with other health-care facilities.

Nursing homes and communities cannot offer continuing care until they obtain certification from the Maryland Department of Aging, and, if assisted living or nursing services are offered in the community, are licensed to provide health care by the Office of Health Care Quality of the Maryland Department of Health and Mental Hygiene.

CCRCs in Maryland vary widely in the facilities and services they provide and the fee structure for which care is purchased. All of them require an entrance fee, and most require periodic (monthly or daily) fees throughout your stay. Some communities charge additional fees for services that you may want or need during your stay.

You can enter into a continuing care contract with a retirement home or community. The home agrees to give you a place to live and certain kinds of care for either a designated period of time or the rest of your life. Maryland law deals with continuing care contracts. To be covered under the law, the home or community must:

Give room and board and health care or personal care to people (promising, at a minimum, priority access to assisted living or nursing care).
Agree to give this service for the person's life or a designated time period more than one year.
Collect an entrance fee.

That's what this guide is about.

Before You Sign a Continuing Care Contract

Call the Maryland Department of Aging at 410-767-1118, or toll free at 1-800-AGE-DIAL. Inquire as to whether the Department has issued a Certificate of Registration to the continuing care retirement community you are interested in. The Maryland Department of Aging can also send you a consumer packet which lists all of the certified CCRCs in Maryland, contains a copy of Maryland’s continuing care law and regulations, and provides other helpful information to assist you in making an informed decision. You should also contact the Office of Health Care Quality of the Maryland Department of Health and Mental Hygiene at 410-402-8001 or 800-492-6005 to inquire as to whether the home or community is licensed to provide assisted living or nursing care, and obtain information as to the quality of health care they offer. With regard to assisted living, find out what "level of care" the community is licensed to provide. Assisted living communities may receive licenses for up to 3 levels of care – low, moderate, and high. If you require a higher level of care than that community is licensed to provide, it will not be permitted to provide those additional services of you.

A CCRC is required by law to include certain provisions in its continuing care agreements. The agreement must describe the living unit assigned to you, provide a detailed statement of all items of service to be provided, the total consideration paid, or to be paid, whether there will be periodic increases in monthly fees, as well as other pertinent information. You and your attorney should carefully review the agreement to be certain that it contains all of the provisions required by law. For example, under Maryland law, a community cannot terminate your contract prematurely or discharge you from a CCRC before expiration of the contract without just cause, which is defined as: (1) nonpayment; (2) a material breach of the agreement or written, reasonable rules of the community, or (3) if your health status or behavior is a substantial threat to your health or safety or that of other residents of the community. If you are discharged for just cause, the CCRC must refund you a portion of your entrance fee.

The contract should also clearly set forth your understanding of what you are getting. Some terms that you should consider are:

Is any portion of the entrance fee refundable if you decide to leave the community? Under what terms and restrictions? Can the community "hold" your refund until it finds another subscriber to fill your accommodations?
How does the community charge for services that you may want or need? If you need additional services at a later time (such as housekeeping or special meal service), will this result in a substantial increase to your fees?
What provisions for care have been made if, at the time you need to relocate to an assisted living or nursing unit, no beds are available?
Does the CCRC have "resident’s rules" which you will be expected to follow upon entering the community? If so, take a look at them to make sure the community is a good match for you.

In Maryland, a CCRC is required to file a disclosure statement on an annual basis with the Department of Aging. It must furnish a copy of this disclosure statement, free of charge, to all prospective subscribers before they sign a continuing care agreement or pay an entrance fee. Under the law, the disclosure statement must contain information regarding organizational structure and management of the CCRC, a description of all basic fees charged by the facility during the past five years, and the amount and frequency of any fee changes during that period. It must also include a copy of the most recent certified financial statement, as well as other pertinent information. It is important that you and your attorney and accountant review the disclosure statement of any CCRC you are considering, prior to signing a continuing care agreement with them.

Talk to some of the people who live there now to see if they like it.

Change Your Mind?

If you sign a contract, and then change your mind and wish to cancel the continuing care agreement before entering the community, Maryland law lets you cancel the contract, if you act in time.

You may cancel a continuing care agreement for any reason prior to the date you become an occupant of the facility.

If, prior to the date of your occupancy, you wish to terminate the continuing care agreement because of a substantial change in your physical, mental or financial condition, upon your election, the continuing care agreement will be automatically canceled by operation of the law, and the CCRC must return a full refund of all monies paid to you, less a processing fee and any special costs incurred to modify the unit you requested.

You also have the right to cancel a continuing care agreement for any other reason, within ninety (90) days after entering into the agreement, and prior to the date of your occupancy. Again, upon termination, the CCRC must refund all monies paid by you less a processing fee and any special costs incurred. If you cancel the agreement after the ninety-day period, the CCRC may require you to forfeit up to 25% of your entrance fee deposit.

Under Maryland law, you may cancel a continuing care agreement at any time if the terms of the agreement are in violation of any provision of the Continuing Care Contract Act, and you are injured by the violation.

A continuing care agreement is automatically canceled by operation of the law, if you die before the date of occupancy. The community may also rescind the agreement if you no longer meet the community’s eligibility requirements.

___________________________________

SAMPLE LETTER TO CANCEL CONTINUING CARE CONTRACT

(Your Address)

(Today's Date)

By Registered Mail (return receipt requested)

(Name of the Home)

(Address)

About: Contract No. or Account No. (fill in the contract number or the account number)

To Whom It May Concern:

This letter notifies you that I am canceling the contract made with (write Name of the Home) on (fill in date of Agreement). I have done this within the time given by the Maryland Continuing Care Contract Act. Please send me $(fill in the amount which you have paid), the full refund of all money I paid to your home under this agreement. Send the refund to:

(Print your name)

(Print your address)

Sincerely,

(Sign your name)

(Print your name)

Adapted by Section of Elder Law, MSBA, from an AARP Legal Services Network publication. Updated by the Maryland State Law Library (MSLL).

Last legal review 4/11/08 (PLL/M.A.J.)