Supplemental Information and Other Required Disclosures for Continuing Care Retirement Communities

JACQUELINE K. CUNNINGHAM COMMISSIONER OF INSURANCE STATE CORPORATION COMMISSION BUREAU OF INSURANCE February 1, 2013 P.O. BOX 1157 RICHMOND, VIRGINIA 23218 TELEPHONE: (804) 371-9741 TDD/VOICE: (804) 371-9206 www.scc.virginia.gov/boi Administrative Letter 2013-01 To: Continuing Care Retirement Communities Re: Supplemental Information and Other Required Disclosures Section 38.2-4902 A 15 of the Code of Virginia allows the State Corporation Commission to require disclosure of material information in the disclosure statement filed by Continuing Care Retirement Communities (“CCRC”). In order to assist residents in understanding the financial position and the results of operations of a CCRC, we ask that each provider include supplemental information on its facilities and other consolidated entities in its audited financial statements for the two most recent years. In addition, we ask that each provider include a summary of the financial condition of each facility. Please find attached the format samples for the supplemental and financial summary information. We ask that this information be included in the provider’s next annual filing with the State Corporation Commission Bureau of Insurance. Section 38.2-4904 A of the Code of Virginia requires the provider to make the annual disclosure statement available by written notice to each resident at no cost. In accordance with § 38.2-4904 D of the Code of Virginia, the provider should amend its currently filed disclosure statement at any time if an amendment is necessary to prevent the disclosure statement from containing any material misstatement of fact or failing to state any material fact required. The provider must file any amendment with the State Corporation Commission Bureau of Insurance before distributing it to any resident. The provider is obligated to notify each resident of the existence of any such amendment or amended disclosure statement. An amendment would be required if the provider has concerns about its ability to continue as a going concern, is unable to perform fully its obligations pursuant to its contracts due to financial instability, or has any problems with meeting the terms of its debt obligations. The State Corporation Commission Bureau of Insurance should be notified immediately of any such financial concerns. Administrative Letter 2013-01 February 1, 2013 Page Two Sections 38.2-4910 A and B of the Code of Virginia require the provider to hold meetings at least quarterly with the residents or representatives elected by the residents of the continuing care facility for the purpose of free discussion of issues relating to the facility. These issues may include income, expenditures and financial matters as they apply to the facility and proposed changes in policies, programs, facilities and services. The provider is required to give the resident’s organization a copy of all submissions to the Commission. The provider is also required to give residents seven days' notice of each meeting. Questions concerning this administrative letter may be addressed to: Ms. Daryl Hepler Senior Insurance Financial Analyst (804) 371-9999 Daryl.Hepler@scc.virginia.gov Or Ms. Toni Janoski Senior Insurance Financial Analyst 804-371-9945 Toni.Janoski@scc.virginia.gov Sincerely, Jacqueline K. Cunningham Commissioner of Insurance Attachments                                                                                                                                                                                                                Company Name Sample ‐ Consolidating Balance Sheet As of Date Facility 1 Facility 2 Facility 3 Other Subsidiaries Eliminations Combined Assets Current Assets Cash and Cash Equivalents Current Portion of Assets Limited as to Use Accounts Receivable Prepaid Expenses Supplies Inventory Other Current Assets Total Current Assets Assets Limited as to Use Externally Restricted Internally Restricted Investments Property Plant and Equipment Other Assets Deferrals Total Assets Liabilities and Net Assets Current Liabilities Current Potion of Long‐Term Debt Accounts Payable and Accrued Expenses Accrued Salaries and Wages Other Accrued Expenses Current Portion of Refundable Advance Fees Interest Payable Total Current Liabilities Advance Fees and Deposits Deferred Revenue from Advance Fees Obligation to Provide Future Services Other Liabilities Total Liabilities Net Assets Unrestricted Temporarily Restricted Permanently Restricted Total Net Assets (Deficit)                                                                                 Company Name Sample ‐ Consolidating Statement of Operations As of Date Facility 1 Facility 2 Facility 3 Other Subsidiaries Eliminations Combined Revenues Monthly Resident Fees ‐ IL Amortization of Deferred Revenue Assisted Living Services Health Care Services Investment Income Other Revenues Total Revenues Expenses Advertizing and Marketing Depreciation and Amortization Dining Services General and Administrative Insurance Interest Management Fees Medical Supplies Nursing Services Other Resident Programs Resident Services Salaries Taxes and License Fees Utilities Total Expenses Operating Income (Loss) Sample Summary of Financial Information Facility Name As of Date Current Year Prior Year Total Assets Total Liabilities Total Net Assets Total Revenues Total Expenses Operating Income (Loss) Net Income (Loss) Narrative on financial condition: Occupancy Information: Capacity of Units Average Occupancy Percentage Occupancy Independent Living Assisted Living Nursing