N.Y. Comp. Codes R. & Regs. tit. 11 § 350.9

Current through Register Vol. 46, No. 42, October 16, 2024

Section 350.9 - Actuarial study

(a) Once a continuing care retirement community has commenced operations, the first actuarial study shall be due within four months following the third fiscal year end that the community has been in operation. Thereafter, the continuing care retirement community shall submit a new actuarial study at least triennially and such study shall be due within four months of the close of the community's fiscal year. For each actuarial study, the current valuation date (reporting date) shall be the last day of the fiscal year just ended.

(b) A continuing care retirement community shall submit a new actuarial study upon request by the superintendent.

(c) An actuarial study shall contain at a minimum the following information:

(1) the name of the continuing care retirement community for which the study was prepared;

(2) the current valuation date of the study;

(3) the preparation date of the study;

(4)

(i) an opinion signed by a qualified consulting actuary that identifies the actuary and the scope of the project and opines on the following items:

(a) the appropriateness of the data and assumptions;

(b) whether the methods employed are consistent with sound actuarial principles and practices;

(c) the adequacy of the reserve liabilities and other liabilities;

(d) the adequacy of the fee schedule for each type of continuing care retirement contract and continuing care at home contract available to new residents to the community; and

(e) whether the community meets the definition of being in satisfactory actuarial balance, and the implications if the community does not meet the definition of being in satisfactory actuarial balance;

(ii) if the actuary does not express an opinion as to the accuracy and completeness of underlying listings and summaries used in the actuary's evaluation, there shall be attached to the actuarial study a statement by an officer of the continuing care retirement community, management company, or accounting firm, who prepared the underlying data, affirming that the listings and summaries prepared for and submitted to the actuary were prepared under the direction of the officer, and, to the best of the officer's knowledge and belief, are accurate and complete;

(iii) if the actuary is unable to form a needed opinion, or if the opinion is adverse or qualified, the statement of actuarial opinion and the actuarial study shall specifically state the reason;

(5) discussion of the various projection starting points, projection assumptions, and projection methodology, including but not limited to the following information:

(i) the resident entrance fees, resident monthly fees, and health center non resident fees assumed for the first projection year and the percentage change to the initial fees assumed for each projection year thereafter;

(ii) how the expenses for the first projection year were developed and the expense inflation rate assumed for each projection year thereafter;

(iii) investment income rate of return assumed for each projection year and the methodology used to project the investment income amounts;

(iv) interest rate used for discounting purposes in calculating the prospective reserve;

(v) interest rate used in calculating imputed interest;

(vi) assumptions and methodology used in the depreciation and amortization calculations including the assumed lifetimes for the class 2, 3 and 4 capital assets;

(vii) the different continuing care retirement contract types and different continuing care at home contract types that apply to current and new residents of the community and the methodology used to composite these different contract types in the projected data;

(viii) the mortality, morbidity, transfer and withdrawal factors;

(ix) methodology used in projecting the open group population and the closed group population;

(x) methodology used in projecting the annual cash flows;

(xi) methodology for allocating expenses to each of the levels of care;

(xii) methodology for determining projected Medicare, other insurance and third party reimbursements to the continuing care retirement community on behalf of residents;

(xiii) assumptions and methodology used for projecting the expense of using offsite facilities, if needed;

(xiv) any projected change to the part 1 paid in surplus or part 2 paid in surplus;

(xv) any projected distributions to the operator;

(xvi) any reliance by the continuing care retirement community on assistance from benevolence funds, an affiliate, or other outside source;

(xvii) any financial assistance subsidies assumed to apply to residents; and

(xviii) any material changes in actuarial assumptions or methodology from those used in the prior actuarial study prepared on behalf of the continuing care retirement community, to the extent known by the actuary;

(6) an actuarial balance sheet that shows the assets, liabilities and reserves as of the current valuation date. The actuarial balance sheet shall include the amount of the net surplus, and the amount of the earned surplus if different than the net surplus. The actuarial balance sheet shall include the amount of any part 1 paid in surplus or part 2 paid in surplus if the amount is positive;

(7) a cash flow projection that shows the projected revenues, expenses, surplus distributions, and cash flows for at least the next 10 projection years assuming an open group projection method. The total projected amount of invested assets of the continuing care retirement community shall be shown as of the beginning and end of each projection year;

(8) a new resident cohort pricing analysis for each continuing care retirement contract type and each continuing care at home contract type available to new residents to the community;

(9) an exhibit showing the configuration of the continuing care retirement community for each projection year shown on the cash flow page of the actuarial study by each of the levels of care included in the community;

(10) the open group population flow projection by level of care for each projection year shown on the cash flow page of the actuarial study, including any projected use of offsite facilities. This shall include information sufficient to determine the number of independent living units occupied in total and the number of independent living units occupied by more than one person and the number of continuing care at home contracts, if applicable;

(11) an exhibit showing the expected time in whole and fractional years that a new resident to the community would spend in each of the levels of care and in total. This exhibit shall show information separately for male and female new residents and by assumed entry ages into the community of at least 70, 75, 80, 85 and 90;

(12) an exhibit summarizing the distribution of residents as of the beginning of the first projection year by type of continuing care retirement contract and type of continuing care at home contract, by gender, by single versus joint occupancy status, and by level of care;

(13) an exhibit summarizing the expected distribution of new residents to the community by age and gender, by single versus joint occupancy status, and by type of continuing care retirement contract and continuing care at home contract;

(14) a summary by each independent living unit type of the assumed single versus joint occupancy percentage for such unit type, and over all the independent living units combined;

(15) documentation showing the development of the retrospective and prospective reserves as defined in section 350.3 of this Part, and of the minimum liquid requirement as defined in section 350.6(a) of this Part, as of the valuation date of the study. The documentation shall include the closed group population projection used to develop the prospective reserve; and

(16) documentation of how the depreciation and amortization charges for the capital assets were developed. A summary shall be included showing the capital expenditures for each actual and projection year by class and assumed lifetime.

(d) The continuing care retirement community shall submit additional exhibits or documentation as requested by the superintendent.

N.Y. Comp. Codes R. & Regs. Tit. 11 § 350.9

Amended New York State Register November 27, 2019/Volume XLI, Issue 48, eff. 12/27/2019