Is a Continuing Care Contract for You?

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What Is a Continuing Care Retirement Community?

In Maryland, Continuing Care Retirement Communities (CCRC), also known as Life Care Communities, or Independent Living Communities, offer older adults a variety of services and care facilities, ranging from independent living arrangements to nursing home care. 
Although the legal definition of "continuing care" is complex, in general, "continuing care" exists when all three of the following are present:  

  1. The consumer pays an entrance fee that is, at a minimum, three times the average monthly fee; 
  2. The provider furnishes or makes available shelter and health-related services to persons 60 years of age or older; and   
  3. The shelter and services are offered under a contract that lasts for a period of more than one year, usually for life.

As of January 1, 2020 there were 38 operating continuing care retirement communities in Maryland.

 

Who Oversees Continuing Care Providers?

Providers of Continuing Care in Maryland must complete the CCRC Development Process as specified in Maryland law.  The Maryland Department of Aging is charged with administering Maryland’s continuing care laws.  The Department reviews CCRC applications (called feasibility studies), reviews requests by CCRCs to renovate or expand, and issues certificates of registrations to approved CCRCs.  
As part of the CCRC Development Process, the Department reviews the CCRC’s continuing care agreement to assure compliance with continuing care laws. The Department also annually reviews the financial statement, disclosure statement, and marketing of each CCRC.

The Department of Health, though its Office of Health Care Quality, regulates the healthcare facilities that are part of the CCRC.

 

What is a Continuing Care Agreement?

A continuing care agreement is a legally binding contract between a provider of continuing care services and a subscriber (the resident). When a resident enters a continuing care contract with a retirement home or community, the home agrees to provide a place to live and certain kinds of care for either a designated period or the rest of their life. The specifics of the living accommodations and healthcare services agreed to, as well as the length of time the services are to be provided, are set out in a continuing care agreement. 

 

Types of Continuing Care Agreements

Generally, three are three types of CCRC agreements:

  • Type A – Extensive or Life Care 
  • An extensive agreement includes housing, residential services, amenities, and unlimited, specific health-related services with little or no substantial increase in monthly payments, except to cover normal operating costs and inflation adjustments.
  • Type B – Modified 
  • A modified agreement includes housing, residential services, and amenities and a specific amount of healthcare with no substantial increase in monthly payments, except to cover normal operating costs and inflation adjustments. After the specified amount of healthcare is used, persons served pay either a discounted rate or the full per diem rates for required healthcare services.
  • Type C – Fee-for-Service 
  • A fee-for-service agreement includes housing, residential services, and amenities for the fees stated in the continuing care agreement. Access to healthcare services is guaranteed, but services may be billed at full fee-for-service rates.

 

CCRCs are required by law to include certain provisions in continuing care agreements. An 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. For a continuing care contract to be covered under Maryland law, the home or community must: 

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

Because only a portion of the content of continuing care agreements is prescribed by law, much of the content of continuing care agreements varies from community to community. For example, nursing care can range from full coverage in an on-site health center at no additional charge to priority admission to nursing facilities on a fee-for-service basis.

Read the law: Md. Code, Human Services § 10-444 and § 10-445

 

Before You Sign a Continuing Care Agreement

The Maryland Department of Aging urges anyone who is considering moving into a CCRC to consult with an attorney and a financial advisor familiar with these types of agreements before signing any documents and provides a list of Lawyer Referral Services.  The Department provides consumer information for individuals interested in learning more about CCRCs. The consumer information can assist you in making an informed decision.  The packet includes:

  1. Packet Cover Letter
  2. Continuing Care Facilities List – a list of names, addresses and contact information for Maryland CCRCs, with an approved preliminary or initial certificate of registration;
  3. CCRC Unit Matrix – a list indicating the number of units and levels of care available at each community;
  4. What is Continuing Care? – a document providing answers to some frequently asked questions.

If you would like a copy of the consumer information packet mailed to you, contact the Department at 410-767-1100.

 

Getting to Know the CCRC

You should contact the Office of Health Care Quality of the Maryland Department of Health 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 to obtain information as to the quality of health care they offer. 
Regarding assisted living, you should start by finding 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 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. 

As of October 1, 2012, it must also include:  

  1. a table of contents; 
  2. if the provider has a governing body, a description of the process used by the provider to select a subscriber member of the governing body and satisfy other specified requirements; 
  3. if the provider offers a contractual entrance fee refund after occupancy, a statement whether the portion of the entrance fee to be refunded is held in trust or escrow for the subscriber and, if applicable, a description of where and how the funds are held; and 
  4. if an extensive agreement is offered, a specific statement regarding coordination of benefits. 

Read the law: Md. Code, Human Services § 10-424 and § 10-425

It is important that you, your attorney, and your accountant review the disclosure statement of any CCRC you are considering, prior to signing a continuing care agreement with them.  The CCRC FAQ Worksheet provided by the Department of Aging includes a list of questions to ask when reviewing financial information.

 

Understand what the CCRC is offering to provide

CCRCs are required by law to include certain provisions in continuing care agreements. An 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 the provisions required by law. 

The contract should also clearly set forth the services being provided to you. 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 later (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 "residents' rules" which you will be expected to follow upon entering the community? If so, look at them to make sure the community is a good match for you.

The CCRC FAQ Worksheet provided by the Department of Aging includes a list of questions to ask when reviewing a continuing care agreement.

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.

If you decide to terminate the agreement after the date of occupancy, any refund of the entrance fee is governed by the terms of the agreement. 

 

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 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.

Read the law: Md. Code, Human Services § 10-446
Read the regulation: Code of Md. Regulations 32.02.01.29

All marketing materials, including disclosure statements, that state that part or all of the entrance fee is or may be refundable shall include a conspicuous disclaimer that states at least the following: "Carefully read the continuing care agreement for the conditions that must be satisfied before the provider is required to pay the entrance fee refund."

Read the Law: Md. Code, Human Services § 10-430

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.

Read the Law: Md. Code, Human Services § 10-446
Read the regulation: Code of Md. Regulations 32.02.01.30

 

________________________________________

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)

 

Source
Adapted by Section of Elder Law, MSBA, from an AARP Legal Services Network publication; Updated by Amy Whitsel, PLL Contributors
Source URL: https://www.peoples-law.org/continuing-care-contract-you

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