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Section 1792.6 Of Article 6. Reporting And Reserve Requirements From California Health And Safety Code >> Division 2. >> Chapter 10. >> Article 6.
1792.6
. (a) Any provider offering a refundable contract, or other
entity assuming responsibility for refundable contracts, shall
maintain a refund reserve in trust for the residents. The amount of
the refund reserve shall be revised annually by the provider and the
provider shall submit its calculation of the refund reserve amount to
the department in conjunction with the annual report required by
Section 1790. This reserve shall accumulate interest and earnings and
shall be invested in any of the following:
(1) Qualifying assets as defined in Section 1792.2.
(2) Real estate, subject to all of the following conditions:
(A) To the extent approved by the department, the trust account may invest up to 70 percent of the refund reserves in real estate that is both used to provide care and housing for the holders of the refundable continuing care contracts and is located on the same campus where these continuing care contractholders reside.
(B) Investments in real estate shall be limited to 50 percent of the providers' net equity in the real estate. The net equity shall be the book value, assessed value, or current appraised value within 12 months prior to the end of the fiscal year, less any depreciation, and encumbrances, all according to audited financial statements acceptable to the department.
(b) Each refund reserve trust shall be established at an institution qualified to be an escrow agent. The escrow agreement between the provider and the institution shall be in writing and include the terms and conditions described in this section. The escrow agreement shall be submitted to and approved by the department before it becomes effective.
(c) The amount to be held in the reserve shall be the total of the amounts calculated with respect to each individual resident holding a refundable contract as follows:
(1) Determine the age in years and the portion of the entry fee for the resident refundable for the seventh year of residency and thereafter.
(2) Determine life expectancy of that individual based on all of the following rules:
(A) The following life expectancy table shall be used in connection with all continuing care contracts:
(1) Qualifying assets as defined in Section 1792.2.
(2) Real estate, subject to all of the following conditions:
(A) To the extent approved by the department, the trust account may invest up to 70 percent of the refund reserves in real estate that is both used to provide care and housing for the holders of the refundable continuing care contracts and is located on the same campus where these continuing care contractholders reside.
(B) Investments in real estate shall be limited to 50 percent of the providers' net equity in the real estate. The net equity shall be the book value, assessed value, or current appraised value within 12 months prior to the end of the fiscal year, less any depreciation, and encumbrances, all according to audited financial statements acceptable to the department.
(b) Each refund reserve trust shall be established at an institution qualified to be an escrow agent. The escrow agreement between the provider and the institution shall be in writing and include the terms and conditions described in this section. The escrow agreement shall be submitted to and approved by the department before it becomes effective.
(c) The amount to be held in the reserve shall be the total of the amounts calculated with respect to each individual resident holding a refundable contract as follows:
(1) Determine the age in years and the portion of the entry fee for the resident refundable for the seventh year of residency and thereafter.
(2) Determine life expectancy of that individual based on all of the following rules:
(A) The following life expectancy table shall be used in connection with all continuing care contracts:
