28 Tex. Admin. Code § 33.2 - Definitions

The following words and terms, when used in this chapter, have the following meanings, unless the context clearly indicates otherwise.

(1) Act--The Texas Continuing Care Facility Disclosure and Rehabilitation Act, Health and Safety Code, Chapter 246.

(2) Actuarial funded status--The ratio of actuarial assets plus net accounting assets to actuarial liabilities plus actuarial refund liabilities.

(3) Actuarial review--An analysis performed by a qualified actuary in accordance with actuarial standards of practice of the current actuarial balance of the financial condition of a facility and of the provider's continuing care in residence operations, if any. An actuarial review includes, but is not limited to, the following:

(A) an actuarial report;

(B) a statement of actuarial opinion;

(C) an actuarial balance sheet;

(D) a cash flow projection; and

(E) disclosure of the actuarial methodology, formulas, and assumptions, including justification for continuing care in residence entrance fee escrow account amortization schedules.

(4) Affiliate--A person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, the person specified.

(5) Audited financial statements--Statements prepared by an independent Certified Public Accountant (CPA), which includes an audit opinion from the CPA concerning the financial statements.

(6) Commissioner--The Commissioner of Insurance of the Texas Department of Insurance.

(7) Continuing care--The furnishing of a living unit, together with personal care services, nursing services, medical services, or other health-related services, to an individual who is not related by consanguinity or affinity to the provider of the care under a continuing care contract, regardless of whether the services and the living unit are provided at the same location. The term "continuing care" includes continuing care in residence.

(8) Continuing care contract--An agreement that requires the payment of an entrance fee by or on behalf of an individual in exchange for the furnishing of continuing care by a provider and that is effective for:

(A) the life of the individual; or

(B) more than one year.

(9) Continuing care in residence--Continuing care services provided to an individual in the individual's residence or otherwise enabling the individual to remain in the individual's residence, as authorized under Health and Safety Code § 246.0025.

(10) Control--The possession, direct or indirect, of the power to direct or cause the direction of management and policies of a person, whether through the ownership of voting securities, by contract other than a commercial contract for goods or non-management services, or otherwise, unless the power is the result of an official position with or corporate office held by the person. This definition also includes the terms "controlling," "controlled by," and "under common control with." Control is presumed to exist if any person, directly or indirectly, owns, controls, or holds with the power to vote, or holds irrevocable proxies representing, 10 percent or more of the voting securities or authority of any other person. This presumption may be rebutted to show that control does not in fact exist.

(11) Debt service coverage ratio--Total excess (deficit) of revenues and gains in excess of expenses and losses plus interest expense plus depreciation expense plus amortization expense minus amortization of deferred revenues from entry fees plus net proceeds from entry fees, divided by annual debt service (annual principal and interest payment or maximum annual debt service).

(12) Department--The Texas Department of Insurance.

(13) Entrance fee--An initial or deferred transfer of money, or other property valued at an amount in excess of three months' payments for 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.

(14) Facility--A place in which a person undertakes to provide continuing care. A place is an establishment, complex, campus, or group of living units at which a provider engages in the business of providing continuing care. If two or more establishments, complexes, campuses, or groups of living units are located on one premises, they must be treated as one facility if their operations are controlled by the same provider. If two or more establishments, complexes, campuses, or group of living units are located on one premises but controlled by separate providers, they must be treated as separate facilities. A facility that is constructed on an as-needed basis and for which a certificate of authority is obtained from the department prior to facility construction will be considered a phase-in facility. The term does not include an individual's residence if the residence is not a living unit provided by a provider.

(15) Financial Statements--Financial statements completed in accordance with generally accepted accounting principles. Financial statements for providers with continuing care in residence operations must:

(A) include segmented financial statement reporting, separating the facility services and in residence services, including an actuarial review;

(B) include a balance sheet that reports liabilities for obligations for facility-based services and obligations for in residence services separately;

(C) disclose entrance fee activity for the fiscal year including the amount held in escrow at the beginning of the year, any amounts collected during the year, any amounts released during the year, and the total amount held in escrow at the end of the year; and

(D) disclose the ratios addressed in § 33.505(b)(2) - (7) of this title.

(16) Fund balance--Assets as shown on the balance sheet minus liabilities shown on the balance sheet.

(17) Living unit--A room, apartment, cottage, or other area within a facility that is set aside for the exclusive use or control of one or more specified individuals.

(18) Long-term nursing care--Nursing care provided for a period longer than 365 consecutive days.

(19) Person--An individual, corporation, association, or partnership, including a fraternal or benevolent order or society.

(20) Provider--A person who undertakes to provide continuing care under a continuing care contract, whether in a facility or in an individual's residence.

(21) Qualified actuary--A member of the American Academy of Actuaries or the Society of Actuaries or a person recognized by the Commissioner as having comparable training or experience.

(22) Reservation agreement--An agreement that requires the payment of a deposit to reserve a living unit for a prospective resident. A deposit made under a reservation agreement is not considered an entrance fee.

(23) Reservation agreement deposit--A deposit paid under a reservation agreement.

(24) Resident--An individual entitled to receive continuing care from a provider under a continuing care contract.

Notes

28 Tex. Admin. Code § 33.2

The provisions of this §33.2 adopted to be effective March 9, 1989, 14 TexReg 986; amended to be effective March 1, 1990, 15 TexReg 879; amended to be effective March 14, 1996, 21 TexReg 1765; amended to be effective March 9, 2009, 34 TexReg 1608; Amended by Texas Register, Volume 44, Number 15, April 12, 2019, TexReg 1868, eff. 4/17/2019