Texas 2025 - 89th Regular

Texas Senate Bill SB1522 Compare Versions

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1	1	By: Perry S.B. No. 1522
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6	6	A BILL TO BE ENTITLED
7	7	AN ACT
8	8	relating to the regulation of continuing care facilities.
9	9	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
10	10	SECTION 1. Section 246.002, Health and Safety Code, is
11	11	amended by amending Subdivisions (1), (5), and (7) and adding
12	12	Subdivisions (1-a) and (8-a) to read as follows:
13	13	(1) "Assisted living facility" has the meaning
14	14	assigned by Section 247.002.
15	15	(1-a) "Board" means the Texas Department [State Board]
16	16	of Insurance.
17	17	(5) "Entrance fee" means an initial or deferred
18	18	transfer of money or other property valued at an amount exceeding
19	19	three months' payments for residency in a living unit and related
20	20	services at a facility [rent or services,] made, or promised to be
21	21	made, as full or partial consideration for acceptance by a provider
22	22	of a specified individual entitled to receive continuing care under
23	23	a continuing care contract. The term does not include a deposit
24	24	made under a reservation agreement or amounts paid for an optional
25	25	modification to a living unit under an agreement separate from a
26	26	continuing care contract.
27	27	(7) "Living unit" means a room, apartment, cottage, or
28	28	other area that is in a facility and that is set aside for the
29	29	exclusive use or control of one or more specified individuals. The
30	30	term does not include a room, apartment, cottage, or other area that
31	31	is in a nursing facility or assisted living facility.
32	32	(8-a) "Nursing facility" has the meaning assigned by
33	33	Section 242.301.
34	34	SECTION 2. Section 246.0025, Health and Safety Code, is
35	35	amended to read as follows:
36	36	Sec. 246.0025. DEFINITION OF CONTINUING CARE. (a) In this
37	37	chapter, "continuing care" means to provide the following care
38	38	under a continuing care contract to an individual who is not related
39	39	by consanguinity or affinity, as determined under Chapter 573,
40	40	Government Code, to the person providing the care:
41	41	(1) the furnishing of a living unit and related
42	42	services; and
43	43	(2) an agreement to provide priority, guaranteed, or
44	44	discounted access to progressive levels of health care services to
45	45	an individual as necessary[, together with personal care services,
46	46	nursing services, medical services, or other health-related
47	47	services], regardless of whether the services are provided at the
48	48	same facility in which [and] the living unit is located or whether
49	49	the services are provided through a contract with a third party,
50	50	including the provision of health care services:
51	51	(A) in an assisted living facility or nursing
52	52	facility; and
53	53	(B) by a home and community support services
54	54	agency, as defined by Section 142.001 [are provided at the same
55	55	location:
56	56	[(1) to an individual who is not related by
57	57	consanguinity or affinity, as determined under Chapter 573,
58	58	Government Code, to the person furnishing the care; and
59	59	[(2) under a continuing care contract].
60	60	(b) The term "continuing care" includes the furnishing of
61	61	services under a continuing care contract with an agreement to
62	62	provide priority, guaranteed, or discounted access to progressive
63	63	levels of health care services to an individual as necessary,
64	64	[described by Subsection (a)] to enable [an individual in the
65	65	individual's residence or otherwise enabling] the individual to
66	66	remain in the individual's residence.
67	67	SECTION 3. Section 246.004, Health and Safety Code, is
68	68	amended to read as follows:
69	69	Sec. 246.004. RIGHTS OF RESIDENTS. (a) A resident
70	70	receiving care in a portion of a facility licensed to provide
71	71	nursing home care[, personal care,] or assisted living services
72	72	[custodial care] is entitled to all statutory rights provided to a
73	73	resident of a nursing home[, personal care,] or an assisted living
74	74	facility, as applicable [custodial care resident].
75	75	(b) A continuing care contract or reservation agreement may
76	76	not prohibit residents from assembling.
77	77	(c) A facility shall provide to a resident, prospective
78	78	resident, or designated agent of a resident or prospective
79	79	resident, on request, an electronic or hard copy of the most recent
80	80	revised disclosure statement filed by the provider under Section
81	81	246.054.
82	82	SECTION 4. Subchapter B, Chapter 246, Health and Safety
83	83	Code, is amended by adding Section 246.0215 to read as follows:
84	84	Sec. 246.0215. APPLICABILITY. This chapter does not apply
85	85	to an admission or residence agreement offered by a residential
86	86	community that charges an entrance fee if:
87	87	(1) residents of the residential community pay for
88	88	available assisted living services and nursing home care on a
89	89	fee-for-service basis;
90	90	(2) fees for available assisted living services and
91	91	nursing home care are the same for a prospective resident as a
92	92	current resident of the living unit; and
93	93	(3) the admission or residence agreement includes the
94	94	following statement or a substantially equivalent statement in type
95	95	that is boldfaced, capitalized, underlined, or otherwise set out
96	96	from the surrounding written material so as to be conspicuous:
97	97	"A continuing care contract provides priority,
98	98	guaranteed, or discounted access to progressive levels of health
99	99	care services. ____________ (Name of community or facility) is not
100	100	a licensed continuing care facility and does not hold a certificate
101	101	of authority from the Texas Department of Insurance. This
102	102	agreement is not a continuing care contract and is exempt from the
103	103	requirements of Chapter 246, Health and Safety Code."
104	104	SECTION 5. Section 246.022, Health and Safety Code, is
105	105	amended by amending Subsection (c) and adding Subsection (c-1) to
106	106	read as follows:
107	107	(c) Except as provided by Subsection (c-1), the [The]
108	108	commissioner shall grant an application for a certificate of
109	109	authority if the commissioner finds that:
110	110	(1) the applicant or the facility is financially
111	111	sound;
112	112	(2) the competence, experience, and integrity of the
113	113	applicant, its board of directors, its officers, or its management
114	114	make it in the public interest to issue the certificate; and
115	115	(3) the applicant is capable of complying with this
116	116	chapter.
117	117	(c-1) The commissioner may reject an application for a
118	118	certificate of authority under Subsection (c) if the applicant does
119	119	not own the real property on which the facility is located or
120	120	proposed to be located.
121	121	SECTION 6. Section 246.055, Health and Safety Code, is
122	122	amended to read as follows:
123	123	Sec. 246.055. ADVERTISEMENT IN CONFLICT WITH DISCLOSURES.
124	124	(a) A provider may not engage in any type of advertisement for a
125	125	continuing care contract or facility if the advertisement contains
126	126	a statement or representation in conflict with the disclosures
127	127	required under this subchapter.
128	128	(b) A person may not use the title "continuing care
129	129	facility" or "continuing care retirement community" in advertising
130	130	materials unless the person holds a certificate of authority issued
131	131	under this chapter.
132	132	SECTION 7. Sections 246.056(c) and (d), Health and Safety
133	133	Code, are amended to read as follows:
134	134	(c) If a continuing care contract is rescinded under this
135	135	section, the entrance fee [any money or property transferred to the
136	136	provider, other than periodic charges specified in the contract and
137	137	applicable only to the period a living unit was actually occupied by
138	138	the resident,] shall be refunded not later than the 30th day after
139	139	the date of rescission.
140	140	(d) Each continuing care contract must include the
141	141	following statement or a substantially equivalent statement in type
142	142	that is boldfaced, capitalized, underlined, or otherwise set out
143	143	from the surrounding written material so as to be conspicuous:
144	144	"You may cancel this contract at any time prior to midnight of
145	145	the seventh day, or a later day if specified in the contract, after
146	146	the date on which you sign this contract or you receive the
147	147	facility's disclosure statement, whichever occurs later. If you
148	148	elect to cancel the contract, you must do so by written notice and
149	149	you will be entitled to receive a refund of the entrance fee [all
150	150	assets transferred other than periodic charges applicable to your
151	151	occupancy of a living unit]."
152	152	SECTION 8. Section 246.057(b), Health and Safety Code, is
153	153	amended to read as follows:
154	154	(b) If a continuing care contract is canceled under this
155	155	section, the resident or the resident's legal representative is
156	156	entitled to a refund of all money or property transferred to the
157	157	provider, minus:
158	158	(1) any nonstandard costs specifically incurred by the
159	159	provider or facility at the request of the resident that are
160	160	described in the contract or in an addendum to the contract signed
161	161	by the resident; [and]
162	162	(2) a reasonable service charge, if set out in the
163	163	contract, that may not exceed the greater of $1,000 or two percent
164	164	of the entrance fee; and
165	165	(3) any money transferred to the provider for optional
166	166	modifications to the resident's or prospective resident's living
167	167	unit under an agreement that is separate from the continuing care
168	168	contract.
169	169	SECTION 9. Section 246.071(a), Health and Safety Code, is
170	170	amended to read as follows:
171	171	(a) If a [Before a] provider accepts [may accept] the
172	172	payment of a deposit made under a reservation agreement or any
173	173	portion of an entrance fee before the date the prospective resident
174	174	may occupy a living unit, the provider must establish an entrance
175	175	fee escrow account with a bank or trust company, as escrow agent,
176	176	that is located in this state.
177	177	SECTION 10. Section 246.072, Health and Safety Code, is
178	178	amended to read as follows:
179	179	Sec. 246.072. RETURN OF DEPOSITS; RELEASE OR RETURN OF
180	180	ENTRANCE FEE. (a) On a written request from or on behalf of the
181	181	provider or a prospective resident, the escrow agent shall return
182	182	the amount on deposit to the person who paid the deposit if the
183	183	reservation agreement is terminated before the prospective
184	184	resident occupies the living unit [or shall maintain the deposit as
185	185	an entrance fee in the entrance fee escrow account].
186	186	(b) Unless the escrow agent receives a written request from
187	187	or on behalf of a provider or a resident for the return of an
188	188	entrance fee under Subsection (a) [Section 246.056], the agent
189	189	shall, at the provider's discretion, release the fee to the
190	190	provider or place the fee in a loan reserve fund escrow.
191	191	SECTION 11. The heading to Section 246.073, Health and
192	192	Safety Code, is amended to read as follows:
193	193	Sec. 246.073. RELEASE TO [THE] PROVIDER FOR NEW FACILITY OR
194	194	EXPANSION.
195	195	SECTION 12. Section 246.073, Health and Safety Code, is
196	196	amended by amending Subsection (a) and adding Subsection (a-1) to
197	197	read as follows:
198	198	(a) This section applies only to:
199	199	(1) a newly constructed facility; or
200	200	(2) an expansion of an existing facility in which the
201	201	number of existing living units is increased by 50 percent or more.
202	202	(a-1) Except as provided by Subsection (b), an escrow agent
203	203	shall release an entrance fee to the provider if:
204	204	(1) a minimum of 50 percent of the number of living
205	205	units in the facility have been reserved for residents, as
206	206	evidenced by:
207	207	(A) uncanceled executed continuing care
208	208	contracts or reservation agreements with those residents; and
209	209	(B) the receipt by the agent of entrance fee
210	210	deposits of at least 10 percent of the entrance fee designated for
211	211	each reserved living unit [in each continuing care contract];
212	212	(2) the total amount of aggregate entrance fees
213	213	received or receivable by the provider under binding continuing
214	214	care contracts or reservation agreements, the anticipated proceeds
215	215	of any first mortgage loan or other long-term financing commitment
216	216	described under Subdivision (3), and funds from other sources in
217	217	the actual possession of the provider are equal to or more than the
218	218	total amount of:
219	219	(A) 90 percent of the aggregate cost of
220	220	constructing or purchasing, equipping, and furnishing the
221	221	facility;
222	222	(B) 90 percent of the funds estimated, in the
223	223	statement of anticipated source and application of funds included
224	224	in the disclosure statement, to be necessary to cover initial
225	225	losses of the facility; and
226	226	(C) 90 percent of the amount of any loan reserve
227	227	fund escrow required to be maintained by the provider under Section
228	228	246.077; and
229	229	(3) a commitment has been received by the provider for
230	230	any permanent mortgage loan or other long-term financing described
231	231	in the statement of anticipated source and application of funds
232	232	included in the current disclosure statement and any conditions of
233	233	the commitment before disbursement of funds have been substantially
234	234	satisfied, other than completion of the construction or closing on
235	235	the purchase of the facility, [;] and[:
236	236	[(A)] if construction of the facility has not
237	237	been [substantially] completed:
238	238	(A) [(i)] all necessary government permits or
239	239	approvals have been obtained;
240	240	(B) [(ii)] the provider and the general
241	241	contractor responsible for construction of the facility have
242	242	entered into a maximum price contract;
243	243	(C) [(iii)] a recognized surety authorized to do
244	244	business in this state has executed in favor of the provider a bond
245	245	covering faithful performance of the construction contract by the
246	246	general contractor and the payment of all obligations under the
247	247	contract;
248	248	(D) [(iv)] the provider has entered a loan
249	249	agreement for an interim construction loan in an amount that, when
250	250	combined with the amount of entrance fees in escrow plus the amount
251	251	of funds from other sources in the actual possession of the
252	252	provider, equals or exceeds the estimated cost of constructing,
253	253	equipping, and furnishing the facility;
254	254	(E) [(v)] the lender has disbursed not less than
255	255	10 percent of the amount of the construction loan for physical
256	256	construction or completed site preparation work;
257	257	(F) [and
258	258	[(vi)] the provider has placed orders at
259	259	firm prices for not less than 50 percent of the value of items
260	260	necessary for equipping and furnishing the facility in accordance
261	261	with the description in the disclosure statement, including any
262	262	installation charges;
263	263	(G) [or
264	264	[(B) if construction or purchase of the facility
265	265	has been substantially completed:
266	266	[(i)] an occupancy permit covering the
267	267	living unit has been issued by the local government that has
268	268	authority to issue the permit; and
269	269	(H) [(ii) if the entrance fee applies to a living
270	270	unit that has been previously occupied,] the living unit is
271	271	available for occupancy by the new resident.
272	272	SECTION 13. Section 246.0736, Health and Safety Code, is
273	273	amended by amending Subsection (a) and adding Subsection (d) to
274	274	read as follows:
275	275	(a) After the initial release of an entrance fee by an
276	276	escrow agent for a specific facility subject to Section 246.073,
277	277	and before construction of the facility is completed, the
278	278	commissioner shall authorize an escrow agent to continue to release
279	279	escrowed entrance fees for that facility to the provider without
280	280	further proof of satisfying the requirements of Section 246.073 if:
281	281	(1) the provider provides a monthly report to the
282	282	department on marketing activities for living units of the
283	283	facility; and
284	284	(2) the provider immediately informs the department of
285	285	any problems, issues, or irregularities encountered in its
286	286	marketing activities for the facility.
287	287	(d) After construction on a facility described by Section
288	288	246.073(a) is completed, all necessary occupancy permits for the
289	289	facility have been issued by the local government that has
290	290	authority to issue permits, and all living units in the facility are
291	291	available for occupancy, the release of escrowed entrance fees for
292	292	the facility is governed by Section 246.072.
293	293	SECTION 14. Section 246.074, Health and Safety Code, is
294	294	amended to read as follows:
295	295	Sec. 246.074. RETURN OF ENTRANCE FEE. The escrow agent
296	296	shall return an entrance fee to the person who paid it if the fee is
297	297	not released to the provider or placed in the loan reserve fund
298	298	escrow required under Section 246.077 [within]:
299	299	(1) not later than 36 months after the date on which
300	300	any portion of the entrance fee is received by the provider; [or]
301	301	(2) within the time period [a longer time] specified
302	302	by the provider in the disclosure statement delivered with the
303	303	continuing care contract under which the fee was paid, if the
304	304	specified time period is longer than the time period under
305	305	Subdivision (1); or
306	306	(3) if any of the following events occur, as soon as
307	307	practicable after the date the event occurs:
308	308	(A) the prospective resident dies before
309	309	occupying a unit;
310	310	(B) construction on a facility not yet in
311	311	operation is stopped indefinitely before the facility is completed;
312	312	or
313	313	(C) a continuing care contract is rescinded under
314	314	Section 246.056.
315	315	SECTION 15. Section 246.075, Health and Safety Code, is
316	316	amended to read as follows:
317	317	Sec. 246.075. ESCROW OF CERTAIN FEES [APPLICATION FEE] NOT
318	318	REQUIRED. This subchapter does not require the escrow of a waitlist
319	319	fee or a similar fee of $1,000 or less, or of any nonrefundable
320	320	portion of a deposit or entrance fee that:
321	321	(1) does not exceed an amount equal to two percent of
322	322	the entrance fee; and
323	323	(2) is clearly designated as nonrefundable in the
324	324	continuing care contract or reservation agreement.
325	325	SECTION 16. Section 246.077(b), Health and Safety Code, is
326	326	amended to read as follows:
327	327	(b) At the option of the facility, the loan reserve fund
328	328	escrow amount may exclude the portion of principal and interest
329	329	payments applicable to that portion of the facility that is a
330	330	licensed nursing facility or licensed assisted living facility
331	331	[home].
332	332	SECTION 17. Sections 246.114(b) and (d), Health and Safety
333	333	Code, are amended to read as follows:
334	334	(b) A facility subject to this section [that initially filed
335	335	with the commissioner an actuarial review performed on or after
336	336	September 1, 1982, and before September 1, 1987,] shall file with
337	337	the commissioner [subsequent] actuarial reviews at least once every
338	338	five years [five-year intervals from the date of completion of the
339	339	initial actuarial review].
340	340	(d) The commissioner may require an actuarial review of a
341	341	facility more often than once every five years [before the end of
342	342	the five-year interval in which the facility would otherwise be
343	343	required to file an actuarial review] if:
344	344	(1) the facility leases from a third party any portion
345	345	of the grounds on which the facility is located or buildings in
346	346	which the facility operates; or
347	347	(2) [,] in the opinion of the commissioner, the
348	348	facility exhibits conditions of financial instability warranting
349	349	an earlier review.
350	350	SECTION 18. Section 246.114(c), Health and Safety Code, is
351	351	repealed.
352	352	SECTION 19. Section 246.0025, Health and Safety Code, as
353	353	amended by this Act, applies only to a provider that is issued a
354	354	certificate of authority under Subchapter B, Chapter 246, Health
355	355	and Safety Code, on or after January 1, 2026. A provider that is
356	356	issued a certificate of authority before that date is governed by
357	357	the law in effect immediately before January 1, 2026, and the former
358	358	law is continued in effect for that purpose.
359	359	SECTION 20. This Act takes effect January 1, 2026.