Requires continuing care retirement community agreements to require refund of refundable entrance fees within one year.

A2421

ASSEMBLY, No. 2421

STATE OF NEW JERSEY

222nd LEGISLATURE

�

PRE-FILED FOR INTRODUCTION IN THE 2026 SESSION

Sponsored by:

Assemblywoman TENNILLE R. MCCOY

District 14 (Mercer and Middlesex)

SYNOPSIS

���� Requires continuing care retirement community
agreements to require refund of refundable entrance fees within one year.

CURRENT VERSION OF TEXT

���� Introduced Pending Technical Review by Legislative
Counsel.

��

An Act

concerning continuing care retirement community
contracts and amending P.L.1986, c.103 and P.L.2013, c.167.

����
Be It
Enacted
by the Senate and General Assembly of
the State of New Jersey:

���� 1.��� Section 15 of P.L.1986,
c.103 (C.52:27D-344) is amended to read as follows:

���� 15.� a.� A continuing care
agreement executed on or after the effective date of
[
this act
]

P.L.1986,
c.103 (C.52:27D-330 et seq.)
shall be written in plain English and in
language understandable by a layperson and shall include, but not be limited
to, the following:

���� (1)�� A provision for the
continuing care of one resident, or two or more residents occupying space
designed for multiple occupancy under appropriate procedures established by the
provider, and a statement showing the value of all property transferred,
including donations, subscriptions, fees and any other amounts payable by, or
on behalf of, the resident;

���� (2)�� A statement on a form
provided by the commissioner specifying all services which are to be provided
to the resident by the provider, including, in detail, all items which the
resident will receive, such as food, shelter, nursing care, pharmaceuticals and
burial, and whether the items will be provided for a designated period of time
or for life;

���� (3)�� A description of the
health and financial conditions upon which the provider may have the resident
relinquish his space in the designated facility;

���� (4)�� A description of the
health and financial conditions required for a person to continue as a
resident;

���� (5)�� A description of the
circumstances under which the resident shall be permitted to remain in the
facility in the event of financial difficulties of the resident.� The stated
policy may not be less than the terms stated in subsection e. of this section;

���� (6)�� A statement of the fees
that will be charged if the resident marries a person who is not a resident of
the facility, the terms concerning the entry of a spouse into the facility and
the consequences if the spouse does not meet the requirements for entry;

���� (7)�� A statement providing
that the agreement may be canceled upon giving at least 60 days' notice by the
provider or the resident, except that if an agreement is canceled by the
provider because there has been a good faith determination in writing, signed
by the medical director and the administrator of the facility, that a resident
is a danger to himself or others, only notice that is reasonable under the
circumstances is required;

���� (8)�� A statement providing in
clear and understandable language, in print no smaller than the largest type
used in the body of the agreement, the terms governing the refund of any
portion of the entrance fee;

���� (9)�� A statement of the terms
under which an agreement is canceled by the death of the resident, which
statement may contain a provision stating that upon the death of the resident
the moneys paid for the continuing care of the resident shall be considered earned
and become the property of the provider;
[
and
]

���� (10)� A statement providing
for at least 30 days' advance notice to the resident before any change in fees
or changes in the scope of care or services are effective, except for changes
required by State or federal assistance programs
; and

����
(11)� For an agreement
entered into on or after the effective date of P.L.���� , c.��� (C.������� )
(pending before the Legislature as this bill), a statement that,
notwithstanding any other provision of law or the agreement to the contrary,
when the resident is eligible for refund of a refundable entrance fee, the
balance of the refundable entrance fee that is owed to the resident shall be
refunded within one year after the resident ceases to be a resident of the
facility, in the same manner as provided in subsection e. of this section
.

���� b.��� A resident has the right
to rescind a continuing care agreement without penalty or forfeiture, except
those costs specifically incurred by the facility at the request of the
resident and set forth in writing in a separate addendum signed by both parties
to the agreement, within 30 days after making an initial deposit or executing
the agreement.� A resident shall not be required to move into the facility
designated in the agreement before the expiration of the 30 day period.

���� c.���� If a resident dies
before the occupancy date, or through illness, injury or incapacity is
precluded from becoming a resident under the terms of the continuing care
agreement, the agreement shall be automatically rescinded and the resident or
the resident's legal representative shall receive a full refund of all moneys
paid to the facility, except those costs specifically incurred by the facility
at the request of the resident and set forth in writing in a separate addendum
signed by both parties to the agreement.

���� d.��� No agreement for care
shall permit dismissal or discharge of the resident from the facility prior to
the expiration of the agreement without just cause for the removal.� For the
purposes of
[
this
act
]

P.L.1986,
c.103 (C.52:27D-330 et seq.)
, "just cause" means but is not
limited to a good faith determination in writing, signed by the medical
director and the administrator of the facility, that a resident is a danger to
himself or others while remaining in the facility.� The written determination
shall state:� (1) that the determination is made in good faith; (2) the reasons
supporting the determination that the resident is a danger to himself or
others; (3) the basis for the conclusion that there is no less restrictive
alternative to dismissal, discharge or cancellation, as the case may be, for
abating the dangerousness of the resident; and (4) the basis for the conclusion
that the danger is such that a notice period of less than 60 days is appropriate.

���� If a facility dismisses a
resident for just cause, the resident shall be entitled to a refund of
[
his
]

the
resident�s
unearned entrance fee, if any, in the same manner as provided in
subsection e. of this section.� A resident may request a hearing to contest a
facility's decision to dismiss or discharge the resident.� The hearing shall be
held pursuant to the "Administrative Procedure Act," P.L.1968, c.410
(C.52:14B-1 et seq.).

���� e.���� It shall not be deemed
just cause if the resident is unable to pay monthly maintenance fees until the
entire unearned entrance fee plus, where applicable, any third-party insurance
benefits received, are earned by the facility.� For the purpose of this subsection,
the unearned portion shall be the difference between the entrance fee paid by,
or on behalf of, the resident and the cost of caring for the resident based
upon the per capita cost to the facility.� In lieu of calculating the actual
per capita cost of caring for a resident, a facility may provide, in the
agreement for continuing care, that the per capita cost of caring for the
resident shall be calculated as follows:

���� (1)�� No more than 2% of the
entrance fee for each month the resident occupies, or is entitled to occupy, a
bed in the residential unit of the facility;

���� (2)�� No more than 4% of the
entrance fee for each month the resident occupies, or is entitled to occupy, a
bed in the nursing unit of the facility; and

���� (3)�� No more than 10% of the
entrance fee as a one-time charge for processing and refurbishment.

���� If these entrance fees are
exhausted within 90 days of the date of failure to pay, the facility may not
require the resident to leave before 90 days from the date of failure to pay,
during which time the resident shall continue to pay the facility a reduced fee
based upon the resident's current income.

���� f.���� No act, agreement or
statement of a resident or of an individual purchasing care for a resident
under any agreement to furnish care to the resident shall constitute a valid
waiver of any provision of
[
this
act
]

P.L.1986,
c.103 (C.52:27D-330 et seq.)
intended for the benefit or protection of the
resident or the individual purchasing care for the resident.

���� g.��� An agreement entered
into prior to the effective date of
[
this
act
]

P.L.1986,
c.330 (C.52:27D-330 et seq.)
or prior to the issuance of a certificate of
authority to the provider is valid and binding upon both parties in accordance
with the terms of the agreement.

���� h.��� The provider shall
designate and make knowledgeable personnel available to prospective residents
to answer questions about any information contained in the agreement for
continuing care.� The provider shall also advise prospective residents to seek
the independent advice of an attorney or financial advisor of their choice
concerning the agreement.� The agreement shall state on the cover or top of the
first page in bold print the following:� "This matter involves a
substantial financial investment and a legally binding contract.� In evaluating
the disclosure statement and the contract prior to any commitment, it is
recommended that you consult with an attorney and financial advisor of your
choice, if you so elect, who can review these documents with you."

(cf: P.L.1986, c.103, s.15)

���� 2.��� Section 7 of P.L.2013,
c.167 (C.52:27D-360.7) is amended to read as follows:

���� 7.��� a.� (1)� A resident may,
upon 60-days' written notice of the intent to vacate, cancel the continuing
care agreement for any reason.

���� (2)�� Upon vacating the unit,
a resident or resident's estate cancelling a continuing care agreement also
shall provide written notice to the owner or manager of that facility that the
unit is vacated. The notice shall declare that all personal property of the
resident or estate thereof has been removed.

���� (3)�� After a unit is vacated,
the facility may restore the unit to its original condition. The facility may
remove any personal property of the prior resident that remains in the unit
beginning on the twenty-first day following the date upon which notice of vacancy
was received.

���� (4)�� In the case of a
continuing care agreement that provides for a refundable entrance fee, the
facility shall assign the vacated unit a sequential refund number among all the
available units with refundable entrance fees once the unit is restored
pursuant to paragraph (3) of this subsection, but not later than 60 days after
the date that all the conditions for issuing a sequential refund number, as
provided in the continuing care agreement, are fulfilled.

���� b.��� Upon cancellation of the
continuing care agreement by either the resident or the facility, the resident
shall have the right to receive a refund of the amount of any entrance fee as
provided in the continuing care agreement.� The amount of the entrance fee
shall be set forth in a clear and conspicuous manner in the continuing care
agreement.�
For a continuing care agreement entered into on or after the
effective date of P.L.��� , c.��� (pending before the Legislature as this
bill), the agreement shall provide that the balance of a refundable entrance
fee owed to a resident be paid no later than one year after the date the
resident ceases to be a resident of the facility, regardless of the sequential
refund number assigned to the unit and regardless of whether the unit has been
resold.

���� c.���� A resident shall be
provided at least 60-days' written notice from the facility if the resident's
continuing care agreement is being cancelled due to a violation of the
facility's rules or regulations. Notification may be waived if the facility can
demonstrate just cause for terminating the continuing care agreement in
accordance with N.J.A.C.5:19-6.5(c).� The resident may challenge the facility's
notice of continuing care agreement cancellation by requesting a hearing in the
same manner as for a hearing in a contested case pursuant to section 9 of
P.L.1968, c.410 (C.52:14B-9).

���� d.��� In a continuing care
agreement that provides for a refundable entrance fee, when a resident
permanently vacates the facility, or, in the case of two residents occupying
the same residence, when both vacate at the same time, the facility shall
provide to the resident or residents or the legal representative of the
resident's estate, whichever is applicable, a refund of the refundable entrance
fee amount without interest, as set forth in the agreement.� Any unpaid fees or
charges incurred by the resident including unpaid monthly service fees, as well
as the amount of any charitable assistance that the facility has provided to
the resident, may also be deducted from the remaining balance of the refund of
the entrance fee.� Any balance to the resident shall be payable based upon the
order of the sequential refund number assigned to a unit pursuant to paragraph
(4) of subsection a. of this section and the availability of funds from the
proceeds of the resale of all vacated units with refundable entrance fees
,
except that, in the case of agreements entered into on or after the effective
date of P.L.��� , c.��� (pending before the Legislature as this bill), the
refund shall be paid no later than one year after the resident ceases to be a
resident of the facility, regardless of the sequential refund number assigned
to the unit and regardless of whether the unit has been resold
.

���� e.���� When an entrance fee
deposit is refundable, it shall be paid to either the resident, the resident's
named beneficiary, or the legal representative of the resident's estate,
whichever is applicable.� A resident shall have the right to change, in
writing, the named beneficiary for the entrance fee refund at any time.

���� f.���� Notwithstanding the
provisions of subsection d. of this section to the contrary, a facility may
apply to the Commissioner of Community Affairs for approval to implement an
alternative methodology for making refund payments of refundable entrance fees,
which approval shall not be granted unless the facility can demonstrate that
the use of the alternative methodology is resident-focused and provides for a
more equitable and timely payment of refundable entrance fees.

(cf: P.L.2018, c.98, s.1)

���� 3.��� This act shall take
effect 30 days after the date of enactment, and shall apply to all continuing
care retirement community agreements entered into on or after the effective
date.

STATEMENT

����
This bill requires continuing care retirement community
agreements to include a provision requiring the balance of any refundable
entrance fee owed to a resident be paid no later than one year after the date
the resident ceases to be a resident of the facility.� Currently, refundable
entrance fees are paid out based on the order in which units at the facility
become vacant and funds become available to repay the refundable fees from the
facility entering into new residency agreements.�