Is a Continuing Care Contract for You?
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In Maryland, Continuing Care Retirement Communities (CCRC), also known as Life Care Communities, or Independent Living Communities, offer older adults a variety of services and care facilities, ranging from independent living arrangements to nursing home care.
Although the legal definition of "continuing care" is complex, in general, "continuing care" exists when all three of the following are present:
- The consumer pays an entrance fee that is, at a minimum, three times the average monthly fee;
- The provider furnishes or makes available shelter and health-related services to persons 60 years of age or older; and
- The shelter and services are offered under a contract that lasts for a period of more than one year, usually for life.
The Maryland Department of Aging regulates the providers of continuing care. As of January 1, 2020 there were 38 operating continuing care retirement communities (CCRSs) in Maryland.
The CCRC contracts, legal contracts between the providers and residents, are known as a continuing care agreements. The content of these contracts is regulated by the continuing care law, and they outline the responsibilities of the provider and the resident with regard to continuing care.
Because only a portion of the content of continuing care agreements is prescribed by law, much of the content of continuing care agreements varies from community to community. For example, nursing care can range from full coverage in an on-site health center at no additional charge to priority admission to nursing facilities on a fee-for-service basis.
Read the law: Md. Code, Human Services § 10-444
Read the regulation: Code. of Md. Regulations 32.02.01.28
The principal continuing care laws are located at Title 10, Subtitle 4, of the Human Services Article ("HSA"), Code of Maryland
and 32.02.01.01 through 32.02.01.36 of the Code of Maryland Regulations.
Continuing Care providers in Maryland must complete the CCRC Development Process as specified in the Human Services Article, Sections 10-401 - 10-499 of the Maryland Code, as amended effective 2012. The Maryland Department of Aging, the state regulatory authority for continuing care, provides an information packet for potential providers describing the Development and Application process.
When a resident enters into a continuing care contract with a retirement home or community, the home agrees to provide a place to live and certain kinds of care for either a designated period of time or the rest of their life. In order for a continuing care contract to be covered under Maryland law, the home or community must:
- Give room and board and health care or personal care to people (promising, at a minimum, priority access to assisted living or nursing care).
- Agree to give this service for the person's life or a designated time period more than one year.
- Collect an entrance fee.
Before You Sign a Continuing Care Contract
Call the Maryland Department of Aging at 410-767-1118, or toll free at 1-800-AGE-DIAL. Inquire as to whether the Department has issued a Certificate of Registration to the continuing care retirement community you are interested in. The Maryland Department of Aging can also send you a consumer packet which lists all of the certified CCRCs in Maryland, contains a copy of Maryland’s continuing care law and regulations, and provides other helpful information to assist you in making an informed decision. You can order a packet online. You should also contact the Office of Health Care Quality of the Maryland Department of Health at 410-402-8001 or 800-492-6005 to inquire as to whether the home or community is licensed to provide assisted living or nursing care, and to obtain information as to the quality of health care they offer. With regard to assisted living, you should start by finding out what "level of care" the community is licensed to provide. Assisted living communities may receive licenses for up to 3 levels of care – low, moderate, and high. If you require a higher level of care than that community is licensed to provide, it will not be permitted to provide those additional services for you.
CCRCs are required by law to include certain provisions in continuing care agreements. An agreement must describe the living unit assigned to you, provide a detailed statement of all items of service to be provided, the total consideration paid, or to be paid, whether there will be periodic increases in monthly fees, as well as other pertinent information. You and your attorney should carefully review the agreement to be certain that it contains all of the provisions required by law. For example, under Maryland law, a community cannot terminate your contract prematurely or discharge you from a CCRC before expiration of the contract without just cause, which is defined as: (1) nonpayment; (2) a material breach of the agreement or written, reasonable rules of the community, or (3) if your health status or behavior is a substantial threat to your health or safety or that of other residents of the community. If you are discharged for just cause, the CCRC must refund you a portion of your entrance fee.
If you decide to terminate the agreement after the date of occupancy, any refund of the entrance fee is governed by the terms of the agreement.
Read the regulation: Code of Md. Regulations 32.02.01.31
The contract should also clearly set forth your understanding of the services being provided to you. Some terms that you should consider are:
- Is any portion of the entrance fee refundable if you decide to leave the community? Under what terms and restrictions? Can the community "hold" your refund until it finds another subscriber to fill your accommodations?
- How does the community charge for services that you may want or need? If you need additional services at a later time (such as housekeeping or special meal service), will this result in a substantial increase to your fees?
- What provisions for care have been made if, at the time you need to relocate to an assisted living or nursing unit, no beds are available?
- Does the CCRC have "residents' rules" which you will be expected to follow upon entering the community? If so, take a look at them to make sure the community is a good match for you.
In Maryland, a CCRC is required to file a disclosure statement on an annual basis with the Department of Aging. It must furnish a copy of this disclosure statement, free of charge, to all prospective subscribers before they sign a continuing care agreement or pay an entrance fee. Under the law, the disclosure statement must contain information regarding organizational structure and management of the CCRC, a description of all basic fees charged by the facility during the past five years, and the amount and frequency of any fee changes during that period. It must also include a copy of the most recent certified financial statement, as well as other pertinent information. As of October 1, 2012, it must also include (1) a table of contents; (2) if the provider has a governing body, a description of the process used by the provider to select a subscriber member of the governing body and satisfy other specified requirements; (3) if the provider offers a contractual entrance fee refund after occupancy, a statement whether the portion of the entrance fee to be refunded is held in trust or escrow for the subscriber and, if applicable, a description of where and how the funds are held; and (4) if an extensive agreement is offered, a specific statement regarding coordination of benefits.
It is important that you, your attorney, and your accountant review the disclosure statement of any CCRC you are considering, prior to signing a continuing care agreement with them.
Read the law: Md. Code, Human Services § 10-425
Read the regulation: Code of Md. Regulations 32.02.01.21
Change Your Mind?
If you sign a contract, and then change your mind and wish to cancel the continuing care agreement before entering the community, Maryland law lets you cancel the contract, if you act in time.
You may cancel a continuing care agreement for any reason prior to the date you become an occupant of the facility.
If, prior to the date of your occupancy, you wish to terminate the continuing care agreement because of a substantial change in your physical, mental or financial condition, upon your election, the continuing care agreement will be automatically canceled by operation of the law, and the CCRC must return a full refund of all monies paid to you, less a processing fee and any special costs incurred to modify the unit you requested.
You also have the right to cancel a continuing care agreement for any other reason, within ninety (90) days after entering into the agreement, and prior to the date of your occupancy. Again, upon termination, the CCRC must refund all monies paid by you less a processing fee and any special costs incurred. If you cancel the agreement after the ninety-day period, the CCRC may require you to forfeit up to 25% of your entrance fee deposit.
Read the law: Md. Code, Human Services § 10-446
Read the regulation: Code of Md. Regulations 32.02.01.29
Alll marketing materials, including disclosure statements, that state that part or all of the entrance fee is or may be refundable shall include a conspicuous disclaimer that states at least the following: "Carefully read the continuing care agreement for the conditions that must be satisfied before the provider is required to pay the entrance fee refund."
Read the Law: Md. Code, Human Services § 10-430
You may cancel a continuing care agreement at any time if the terms of the agreement are in violation of any provision of the Continuing Care Contract Act, and you are injured by the violation.
A continuing care agreement is automatically canceled by operation of the law, if you die before the date of occupancy. The community may also rescind the agreement if you no longer meet the community’s eligibility requirements.
Read the Law: Md. Code, Human Services § 10-446
Read the regulation: Code of Md. Regulations 32.02.01.30
SAMPLE LETTER TO CANCEL CONTINUING CARE CONTRACT
By Registered Mail (return receipt requested)
(Name of the Home)
About: Contract No. or Account No. (fill in the contract number or the account number)
To Whom It May Concern:
This letter notifies you that I am canceling the contract made with (write Name of the Home) on (fill in date of Agreement). I have done this within the time given by the Maryland Continuing Care Contract Act. Please send me $(fill in the amount which you have paid), the full refund of all money I paid to your home under this agreement. Send the refund to:
(Print your name)
(Print your address)
(Sign your name)
(Print your name)