(1)Any provider shall maintain reserves
covering obligations under all life care agreements. The reserves shall be
equivalent to the sum of the following:
(a)(I) For those debt obligations that are collateralized by the provider's
facility and that require a balloon payment, the amount of interest due and payable
or accrued in the next eighteen months.
(II)For purposes of this subsection (1)(a), any amounts held in reserve or
escrow to fulfill debt agreements shall be considered eligible to meet the
requirements of this subsection (1)(a).
(b)(I) For all other debt obligations that are collateralized by the provider's
facility, an amount equal to the next twelve months' principal and interest.
(II)For purposes of this subsection (1)(b), any amounts held in reserve or
escrow
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(1) Any provider shall maintain reserves
covering obligations under all life care agreements. The reserves shall be
equivalent to the sum of the following:
(a) (I) For those debt obligations that are collateralized by the provider's
facility and that require a balloon payment, the amount of interest due and payable
or accrued in the next eighteen months.
(II) For purposes of this subsection (1)(a), any amounts held in reserve or
escrow to fulfill debt agreements shall be considered eligible to meet the
requirements of this subsection (1)(a).
(b) (I) For all other debt obligations that are collateralized by the provider's
facility, an amount equal to the next twelve months' principal and interest.
(II) For purposes of this subsection (1)(b), any amounts held in reserve or
escrow to fulfill debt agreements shall be considered eligible to meet the
requirements of this subsection (1)(b).
(c) (I) An amount not less than twenty percent of the facility's operating
expenses for the immediately preceding year.
(II) For purposes of this subsection (1)(c), operating expenses:
(A) Includes all expenses of the facility, except interest included in
subsections (1)(a) and (1)(b) of this section and depreciation or amortization
expenses; and
(B) Means budgeted expenses pursuant to a budget approved by the
governing board of the provider, for providers in operation less than twelve months.
(2) The reserves must consist of one or more of the following:
(a) Savings accounts or certificates of deposit in state or national banks
located in this state that are members of the federal deposit insurance corporation
or any successor agency thereto;
(b) Savings accounts or savings certificates in state or federal savings or
loan associations located in this state that are members of the federal deposit
insurance corporation or any successor agency thereto;
(c) Notes receivable from residents to the extent of the portion due and
payable within twelve months;
(d) Bonds and stocks selected from an approved list, as determined by the
commissioner. If stocks, bonds, and securities that are not on the approved list are
part of the reserves, and if they are to be retained as part of the reserves, it shall
not be necessary that the unapproved stocks, bonds, and securities be disposed of
immediately, but they shall be disposed of in accordance with rules promulgated
pursuant to this article 49, which disposal shall be accomplished in a gradual
manner so as to avoid loss to providers. Securities that, although not on the
approved list, should be retained in the reserve for reasons acceptable to the
commissioner may be retained with the specific approval of the commissioner.
Investments in stocks and bonds will be valued at their fair market value.
(e) (I) Except as provided in subsection (2)(e)(II) of this section, accounts
receivable with respect to life care contracts that are:
(A) Not considered past due by the provider if owed to the provider by a
natural person;
(B) Due from the United States or any agency thereof, any state in the United
States or any agency thereof, or any institution, pension fund, or trust fund from
which collection is reasonably assured.
(II) Accounts receivable that are eligible under this subsection (2)(e) may be
used to fulfill no more than fifty percent of the provider's total reserve requirement.
(f) Investment certificates or shares in open-end investment trusts whose
management has been managing a mutual fund registered under the federal
Investment Company Act of 1940, 15 U.S.C. secs. 80a-1 to 80a-64, or whose
management has been registered as an investment adviser under the federal
Investment Advisers Act of 1940, 15 U.S.C. secs. 80b-1 to 80b-21, and in either
case currently has at least one hundred million dollars under its supervision, is
qualified for sale in Colorado, has at least forty percent of its directors or trustees
not affiliated with the fund's management company or principal underwriter or any
of their affiliates, is registered under the federal Investment Company Act of
1940, and is a fund listed as qualifying under rules maintained by the secretary of
state in cooperation with the division of insurance;
(g) A surety bond in a form acceptable to the commissioner.
(3) Any person or organization that entered into life care contracts prior to
January 1, 1974, but that was not required prior to that date to obtain a license is not
required to maintain reserves covering obligations assumed under any such
contract entered into prior to January 1, 1974.
(4) A CBCC provider shall maintain separate reserves tied to an actuarial
assessment, in the form and manner required by the commissioner, in order for the
provider to fully perform its obligations under its community-based continuing care
contracts.