BILL ANALYSIS
AB 1044
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Date of Hearing: May 20, 2009
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Kevin De Leon, Chair
AB 1044 (Jones) - As Amended: May 5, 2009
Policy Committee: Aging & LTC Vote:
4-2
Health 13-6
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill transfers the oversight and regulation of continuing
care retirement communities (CCRC) from the California
Department of Social Services (DSS) to the California Department
of Insurance (CDI). Specifically, this bill:
1)Requires CDI to be vested with all the duties, powers,
purposes, functions, responsibilities, and jurisdiction of DSS
over CCRC, except for oversight and regulation of programs and
services provided directly to residents of the CCRC.
2)Requires CDI to review the requirements of the CCRC body of
law and make recommendations to the Legislature to improve the
oversight and regulation of the financial management of CCRC
to protect consumers who enter into continuing care contracts.
3)Requires the Continuing Care Provider Fee Fund to consist of
two accounts: (a) the Insurance Account and (b) DSS Account
and requires 95% of fees received to be deposited in the
Insurance Account and 5% in the DSS Account.
FISCAL EFFECT
Annual increased fee-supported special fund costs of $1 million
to CDI to provide a higher level of oversight with respect to
financial surveillance, legal analysis, information technology,
and overhead. Actual costs may be lower to the extent CDI is
able to provide new regulatory infrastructure and scrutiny of
the CCRC industry in the early years following enactment of this
AB 1044
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legislation and permanent workload is less.
COMMENTS
1)Rationale . This bill transfers the oversight of CCRC from DSS
to CDI. The author indicates continuing care contracts should
be regulated more like insurance products due to transactions
between an individual and the CCRC provider in which the
business sells a future benefit in terms of housing, health
care, and other services to support aging residents, in return
for one-time and recurring fees.
2)Background . CCRC provide a long-term continuing care contract
that supports independent living, residential care/assisted
living services, and skilled nursing care, usually in one
location, and usually for a resident's lifetime. California
currently has 79 CCRC serving approximately 20,000 adults over
60 years of age. According to DSS, there are 15 CCRC which
serve lower income residents, but statewide, the growth has
been in the higher cost CCRC. Most CCRC require a substantial
entrance fee (from a low of $100,000 to over $1 million) to be
paid by the applicant upon admission in addition to on-going
fees. CCRC provide three levels of care: independent living,
assisted living, and skilled nursing. The author contends that
financial oversight differs considerably from the bulk of the
regulation that DSS is engaged in, and financial analysis is
not a typical role for state social services agencies to play.
This bill increases the oversight and financial scrutiny of a
growing industry serving wealthy Californians.
Analysis Prepared by : Mary Ader / APPR. / (916) 319-2081