Since the 2008 recession — an event that remains influential in discussions about senior living — financial oversight of continuing care retirement communities (CCRCs) has become a central concern for both prospective residents and regulators. Many people are unsure whether CCRCs are subject to formal financial regulation, so it helps to clarify how oversight works and what to look for when evaluating a community.
Key points about the financial regulation of CCRCs:
- Regulation happens primarily at the state level. While federal oversight has been proposed at various times, most authority and enforcement reside with individual states.
- Thirty-eight states currently have regulatory systems that cover CCRCs. These programs may be administered by departments of insurance, financial services, aging services, or social services. Twelve states do not have a specific regulatory structure for CCRCs; two states, Alaska and Wyoming, do not have CCRCs at all.
- Financial oversight of a CCRC is distinct from healthcare regulation. A healthcare facility on a CCRC campus that participates in Medicare or Medicaid will be subject to strict healthcare regulation and certification by the appropriate state or federal agencies. However, those agencies typically do not oversee the CCRC’s overall financial operations or business management.
- The definition of what constitutes a CCRC and the scope of regulation vary widely between states. Some states require annual financial reporting, submission of audited financial statements, minimum cash reserves, and other specific safeguards. Other states impose lighter requirements or fewer reporting obligations.
Because state requirements differ so much, it’s important to research the regulatory environment in the state where you are considering moving. If the state regulates CCRCs, ask the community about the state’s oversight process and what financial standards the community must meet. Request copies of recent audited financial statements, reserve policies, and other documentation the state requires or the community provides voluntarily.
When evaluating a specific CCRC, consider these practical steps:
- Confirm whether the state regulates CCRCs and which agency is responsible for oversight.
- Ask for the community’s most recent audited financial statements and review trends in operating income, liabilities, and reserve levels.
- Inquire whether the state requires minimum reserve funds or other financial safeguards and whether the community meets those standards.
- Request information about the community’s entrance fee refund policies and how those obligations are funded.
- Check for independent third-party assessments or accreditation that may provide additional confidence in the community’s financial practices.
Understanding the regulatory framework and the financial condition of a CCRC helps protect prospective residents and their families. Even in states with limited oversight, diligent review of financial documents and direct questions about fiscal practices can reveal important information about long-term stability and risk.
>> Related: How to Have Confidence a CCRC Will Be a Sound Long-Term Investment