By: Perry S.B. No. 1522
A BILL TO BE ENTITLED
AN ACT
relating to the regulation of continuing care facilities.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 246.002, Health and Safety Code, is
amended by amending Subdivisions (1), (5), and (7) and adding
Subdivisions (1-a) and (8-a) to read as follows:
(1) "Assisted living facility" has the meaning
assigned by Section 247.002.
(1-a) "Board" means the Texas Department [State Board]
of Insurance.
(5) "Entrance fee" means an initial or deferred
transfer of money or other property valued at an amount exceeding
three months' payments for residency in a living unit and related
services at a facility [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 or amounts paid for an optional
modification to a living unit under an agreement separate from a
continuing care contract.
(7) "Living unit" means a room, apartment, cottage, or
other area that is in a facility and that is set aside for the
exclusive use or control of one or more specified individuals. The
term does not include a room, apartment, cottage, or other area that
is in a nursing facility or assisted living facility.
(8-a) "Nursing facility" has the meaning assigned by
Section 242.301.
SECTION 2. Section 246.0025, Health and Safety Code, is
amended to read as follows:
Sec. 246.0025. DEFINITION OF CONTINUING CARE. (a) In this
chapter, "continuing care" means to provide the following care
under a continuing care contract to an individual who is not related
by consanguinity or affinity, as determined under Chapter 573,
Government Code, to the person providing the care:
(1) the furnishing of a living unit and related
services; and
(2) an agreement to provide priority, guaranteed, or
discounted access to progressive levels of health care services to
an individual as necessary[, together with personal care services,
nursing services, medical services, or other health-related
services], regardless of whether the services are provided at the
same facility in which [and] the living unit is located or whether
the services are provided through a contract with a third party,
including the provision of health care services:
(A) in an assisted living facility or nursing
facility; and
(B) by a home and community support services
agency, as defined by Section 142.001 [are provided at the same
location:
[(1) to an individual who is not related by
consanguinity or affinity, as determined under Chapter 573,
Government Code, to the person furnishing the care; and
[(2) under a continuing care contract].
(b) The term "continuing care" includes the furnishing of
services under a continuing care contract with an agreement to
provide priority, guaranteed, or discounted access to progressive
levels of health care services to an individual as necessary,
[described by Subsection (a)] to enable [an individual in the
individual's residence or otherwise enabling] the individual to
remain in the individual's residence.
SECTION 3. Section 246.004, Health and Safety Code, is
amended to read as follows:
Sec. 246.004. RIGHTS OF RESIDENTS. (a) A resident
receiving care in a portion of a facility licensed to provide
nursing home care[, personal care,] or assisted living services
[custodial care] is entitled to all statutory rights provided to a
resident of a nursing home[, personal care,] or an assisted living
facility, as applicable [custodial care resident].
(b) A continuing care contract or reservation agreement may
not prohibit residents from assembling.
(c) A facility shall provide to a resident, prospective
resident, or designated agent of a resident or prospective
resident, on request, an electronic or hard copy of the most recent
revised disclosure statement filed by the provider under Section
246.054.
SECTION 4. Subchapter B, Chapter 246, Health and Safety
Code, is amended by adding Section 246.0215 to read as follows:
Sec. 246.0215. APPLICABILITY. This chapter does not apply
to an admission or residence agreement offered by a residential
community that charges an entrance fee if:
(1) residents of the residential community pay for
available assisted living services and nursing home care on a
fee-for-service basis;
(2) fees for available assisted living services and
nursing home care are the same for a prospective resident as a
current resident of the living unit; and
(3) the admission or residence agreement includes the
following statement or a substantially equivalent statement in type
that is boldfaced, capitalized, underlined, or otherwise set out
from the surrounding written material so as to be conspicuous:
"A continuing care contract provides priority,
guaranteed, or discounted access to progressive levels of health
care services. ____________ (Name of community or facility) is not
a licensed continuing care facility and does not hold a certificate
of authority from the Texas Department of Insurance. This
agreement is not a continuing care contract and is exempt from the
requirements of Chapter 246, Health and Safety Code."
SECTION 5. Section 246.022, Health and Safety Code, is
amended by amending Subsection (c) and adding Subsection (c-1) to
read as follows:
(c) Except as provided by Subsection (c-1), the [The]
commissioner shall grant an application for a certificate of
authority if the commissioner finds that:
(1) the applicant or the facility is financially
sound;
(2) the competence, experience, and integrity of the
applicant, its board of directors, its officers, or its management
make it in the public interest to issue the certificate; and
(3) the applicant is capable of complying with this
chapter.
(c-1) The commissioner may reject an application for a
certificate of authority under Subsection (c) if the applicant does
not own the real property on which the facility is located or
proposed to be located.
SECTION 6. Section 246.055, Health and Safety Code, is
amended to read as follows:
Sec. 246.055. ADVERTISEMENT IN CONFLICT WITH DISCLOSURES.
(a) A provider may not engage in any type of advertisement for a
continuing care contract or facility if the advertisement contains
a statement or representation in conflict with the disclosures
required under this subchapter.
(b) A person may not use the title "continuing care
facility" or "continuing care retirement community" in advertising
materials unless the person holds a certificate of authority issued
under this chapter.
SECTION 7. Sections 246.056(c) and (d), Health and Safety
Code, are amended to read as follows:
(c) If a continuing care contract is rescinded under this
section, the entrance fee [any money or property transferred to the
provider, other than periodic charges specified in the contract and
applicable only to the period a living unit was actually occupied by
the resident,] shall be refunded not later than the 30th day after
the date of rescission.
(d) Each continuing care contract must include the
following statement or a substantially equivalent statement in type
that is boldfaced, capitalized, underlined, or otherwise set out
from the surrounding written material so as to be conspicuous:
"You may cancel this contract at any time prior to midnight of
the seventh day, or a later day if specified in the contract, after
the date on which you sign this contract or you receive the
facility's disclosure statement, whichever occurs later. If you
elect to cancel the contract, you must do so by written notice and
you will be entitled to receive a refund of the entrance fee [all
assets transferred other than periodic charges applicable to your
occupancy of a living unit]."
SECTION 8. Section 246.057(b), Health and Safety Code, is
amended to read as follows:
(b) If a continuing care contract is canceled under this
section, the resident or the resident's legal representative is
entitled to a refund of all money or property transferred to the
provider, minus:
(1) any nonstandard costs specifically incurred by the
provider or facility at the request of the resident that are
described in the contract or in an addendum to the contract signed
by the resident; [and]
(2) a reasonable service charge, if set out in the
contract, that may not exceed the greater of $1,000 or two percent
of the entrance fee; and
(3) any money transferred to the provider for optional
modifications to the resident's or prospective resident's living
unit under an agreement that is separate from the continuing care
contract.
SECTION 9. Section 246.071(a), Health and Safety Code, is
amended to read as follows:
(a) If a [Before a] provider accepts [may accept] the
payment of a deposit made under a reservation agreement or any
portion of an entrance fee before the date the prospective resident
may occupy a living unit, the provider must establish an entrance
fee escrow account with a bank or trust company, as escrow agent,
that is located in this state.
SECTION 10. Section 246.072, Health and Safety Code, is
amended to read as follows:
Sec. 246.072. RETURN OF DEPOSITS; RELEASE OR RETURN OF
ENTRANCE FEE. (a) On a written request from or on behalf of the
provider or a prospective resident, the escrow agent shall return
the amount on deposit to the person who paid the deposit if the
reservation agreement is terminated before the prospective
resident occupies the living unit [or shall maintain the deposit as
an entrance fee in the entrance fee escrow account].
(b) Unless the escrow agent receives a written request from
or on behalf of a provider or a resident for the return of an
entrance fee under Subsection (a) [Section 246.056], the agent
shall, at the provider's discretion, release the fee to the
provider or place the fee in a loan reserve fund escrow.
SECTION 11. The heading to Section 246.073, Health and
Safety Code, is amended to read as follows:
Sec. 246.073. RELEASE TO [THE] PROVIDER FOR NEW FACILITY OR
EXPANSION.
SECTION 12. Section 246.073, Health and Safety Code, is
amended by amending Subsection (a) and adding Subsection (a-1) to
read as follows:
(a) This section applies only to:
(1) a newly constructed facility; or
(2) an expansion of an existing facility in which the
number of existing living units is increased by 50 percent or more.
(a-1) Except as provided by Subsection (b), an escrow agent
shall release an entrance fee to the provider if:
(1) a minimum of 50 percent of the number of living
units in the facility have been reserved for residents, as
evidenced by:
(A) uncanceled executed continuing care
contracts or reservation agreements with those residents; and
(B) the receipt by the agent of entrance fee
deposits of at least 10 percent of the entrance fee designated for
each reserved living unit [in each continuing care contract];
(2) the total amount of aggregate entrance fees
received or receivable by the provider under binding continuing
care contracts or reservation agreements, the anticipated proceeds
of any first mortgage loan or other long-term financing commitment
described under Subdivision (3), and funds from other sources in
the actual possession of the provider are equal to or more than the
total amount of:
(A) 90 percent of the aggregate cost of
constructing or purchasing, equipping, and furnishing the
facility;
(B) 90 percent of the funds estimated, in the
statement of anticipated source and application of funds included
in the disclosure statement, to be necessary to cover initial
losses of the facility; and
(C) 90 percent of the amount of any loan reserve
fund escrow required to be maintained by the provider under Section
246.077; and
(3) a commitment has been received by the provider for
any permanent mortgage loan or other long-term financing described
in the statement of anticipated source and application of funds
included in the current disclosure statement and any conditions of
the commitment before disbursement of funds have been substantially
satisfied, other than completion of the construction or closing on
the purchase of the facility, [;] and[:
[(A)] if construction of the facility has not
been [substantially] completed:
(A) [(i)] all necessary government permits or
approvals have been obtained;
(B) [(ii)] the provider and the general
contractor responsible for construction of the facility have
entered into a maximum price contract;
(C) [(iii)] a recognized surety authorized to do
business in this state has executed in favor of the provider a bond
covering faithful performance of the construction contract by the
general contractor and the payment of all obligations under the
contract;
(D) [(iv)] the provider has entered a loan
agreement for an interim construction loan in an amount that, when
combined with the amount of entrance fees in escrow plus the amount
of funds from other sources in the actual possession of the
provider, equals or exceeds the estimated cost of constructing,
equipping, and furnishing the facility;
(E) [(v)] the lender has disbursed not less than
10 percent of the amount of the construction loan for physical
construction or completed site preparation work;
(F) [and
[(vi)] the provider has placed orders at
firm prices for not less than 50 percent of the value of items
necessary for equipping and furnishing the facility in accordance
with the description in the disclosure statement, including any
installation charges;
(G) [or
[(B) if construction or purchase of the facility
has been substantially completed:
[(i)] an occupancy permit covering the
living unit has been issued by the local government that has
authority to issue the permit; and
(H) [(ii) if the entrance fee applies to a living
unit that has been previously occupied,] the living unit is
available for occupancy by the new resident.
SECTION 13. Section 246.0736, Health and Safety Code, is
amended by amending Subsection (a) and adding Subsection (d) to
read as follows:
(a) After the initial release of an entrance fee by an
escrow agent for a specific facility subject to Section 246.073,
and before construction of the facility is completed, the
commissioner shall authorize an escrow agent to continue to release
escrowed entrance fees for that facility to the provider without
further proof of satisfying the requirements of Section 246.073 if:
(1) the provider provides a monthly report to the
department on marketing activities for living units of the
facility; and
(2) the provider immediately informs the department of
any problems, issues, or irregularities encountered in its
marketing activities for the facility.
(d) After construction on a facility described by Section
246.073(a) is completed, all necessary occupancy permits for the
facility have been issued by the local government that has
authority to issue permits, and all living units in the facility are
available for occupancy, the release of escrowed entrance fees for
the facility is governed by Section 246.072.
SECTION 14. Section 246.074, Health and Safety Code, is
amended to read as follows:
Sec. 246.074. RETURN OF ENTRANCE FEE. The escrow agent
shall return an entrance fee to the person who paid it if the fee is
not released to the provider or placed in the loan reserve fund
escrow required under Section 246.077 [within]:
(1) not later than 36 months after the date on which
any portion of the entrance fee is received by the provider; [or]
(2) within the time period [a longer time] specified
by the provider in the disclosure statement delivered with the
continuing care contract under which the fee was paid, if the
specified time period is longer than the time period under
Subdivision (1); or
(3) if any of the following events occur, as soon as
practicable after the date the event occurs:
(A) the prospective resident dies before
occupying a unit;
(B) construction on a facility not yet in
operation is stopped indefinitely before the facility is completed;
or
(C) a continuing care contract is rescinded under
Section 246.056.
SECTION 15. Section 246.075, Health and Safety Code, is
amended to read as follows:
Sec. 246.075. ESCROW OF CERTAIN FEES [APPLICATION FEE] NOT
REQUIRED. This subchapter does not require the escrow of a waitlist
fee or a similar fee of $1,000 or less, or of any nonrefundable
portion of a deposit or entrance fee that:
(1) does not exceed an amount equal to two percent of
the entrance fee; and
(2) is clearly designated as nonrefundable in the
continuing care contract or reservation agreement.
SECTION 16. Section 246.077(b), Health and Safety Code, is
amended to read as follows:
(b) At the option of the facility, the loan reserve fund
escrow amount may exclude the portion of principal and interest
payments applicable to that portion of the facility that is a
licensed nursing facility or licensed assisted living facility
[home].
SECTION 17. Sections 246.114(b) and (d), Health and Safety
Code, are amended to read as follows:
(b) A facility subject to this section [that initially filed
with the commissioner an actuarial review performed on or after
September 1, 1982, and before September 1, 1987,] shall file with
the commissioner [subsequent] actuarial reviews at least once every
five years [five-year intervals from the date of completion of the
initial actuarial review].
(d) The commissioner may require an actuarial review of a
facility more often than once every five years [before the end of
the five-year interval in which the facility would otherwise be
required to file an actuarial review] if:
(1) the facility leases from a third party any portion
of the grounds on which the facility is located or buildings in
which the facility operates; or
(2) [,] in the opinion of the commissioner, the
facility exhibits conditions of financial instability warranting
an earlier review.
SECTION 18. Section 246.114(c), Health and Safety Code, is
repealed.
SECTION 19. Section 246.0025, Health and Safety Code, as
amended by this Act, applies only to a provider that is issued a
certificate of authority under Subchapter B, Chapter 246, Health
and Safety Code, on or after January 1, 2026. A provider that is
issued a certificate of authority before that date is governed by
the law in effect immediately before January 1, 2026, and the former
law is continued in effect for that purpose.
SECTION 20. This Act takes effect January 1, 2026.