Relating to the regulation of continuing care facilities, the official text

S.B. No. 1522

AN ACT

relating to the regulation of continuing care facilities.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 246.002, Health and Safety Code, is

amended by amending Subdivisions (1), (5), (6), and (7) and adding

Subdivisions (1-a) and (8-a) to read as follows:

(1) "Assisted living facility" has the meaning

assigned by Section 247.002.

(1-a) "Board" means the Texas Department [State Board]

of Insurance.

(5) "Entrance fee" means an initial or deferred

transfer of money or other property valued at an amount exceeding

three months' payments for residency in a living unit and related

services at a facility [rent or services,] made, or promised to be

made, as full or partial consideration for acceptance by a provider

of a specified individual entitled to receive continuing care under

a continuing care contract. The term does not include a deposit

made under a reservation agreement or amounts paid for an optional

modification to a living unit under an agreement separate from a

continuing care contract.

(6) "Facility" means an establishment that provides

continuing care to an individual. The term includes [does not

include] an individual's residence [if the residence is not a

living unit provided by a provider].

(7) "Living unit" means a room, apartment, cottage, or

other area that is in a facility and that is set aside for the

exclusive use or control of one or more specified individuals. The

term does not include a room, apartment, cottage, or other area that

is in a nursing facility or assisted living facility.

(8-a) "Nursing facility" has the meaning assigned by

Section 242.301.

SECTION 2. Section 246.0025, Health and Safety Code, is

amended to read as follows:

Sec. 246.0025. DEFINITION OF CONTINUING CARE. (a) In this

chapter, "continuing care" means to provide the following care

under a continuing care contract to an individual who is not related

by consanguinity or affinity, as determined under Chapter 573,

Government Code, to the person providing the care:

(1) the furnishing of a living unit and related

services; and

(2) an agreement to provide priority, guaranteed, or

discounted access to progressive levels of health care services to

an individual as necessary[, together with personal care services,

nursing services, medical services, or other health-related

services], regardless of whether the services are provided at the

same facility in which [and] the living unit is located or whether

the services are provided through a contract with a third party,

including the provision of health care services:

(A) in an assisted living facility or nursing

facility; and

(B) by a home and community support services

agency, as defined by Section 142.001 [are provided at the same

location:

[(1) to an individual who is not related by

consanguinity or affinity, as determined under Chapter 573,

Government Code, to the person furnishing the care; and

[(2) under a continuing care contract].

(b) The term "continuing care" includes the furnishing of

services under a continuing care contract with an agreement to

provide priority, guaranteed, or discounted access to progressive

levels of health care services to an individual as necessary,

[described by Subsection (a)] to enable [an individual in the

individual's residence or otherwise enabling] the individual to

remain in the individual's residence.

SECTION 3. Section 246.004, Health and Safety Code, is

amended to read as follows:

Sec. 246.004. RIGHTS OF RESIDENTS. (a) A resident

receiving care in a portion of a facility licensed to provide

nursing home care[, personal care,] or assisted living services

[custodial care] is entitled to all statutory rights provided to a

resident of a nursing home[, personal care,] or an assisted living

facility, as applicable [custodial care resident].

(b) A continuing care contract or reservation agreement may

not prohibit residents from assembling.

(c) A facility shall provide to a resident, prospective

resident, or designated agent of a resident or prospective

resident, on request, an electronic or hard copy of the most recent

revised disclosure statement filed by the provider under Section

246.054.

SECTION 4. Subchapter B, Chapter 246, Health and Safety

Code, is amended by adding Section 246.0215 to read as follows:

Sec. 246.0215. APPLICABILITY. This chapter does not apply

to an admission or residence agreement offered by a residential

community that charges an entrance fee if:

(1) residents of the residential community pay for

available assisted living services and nursing home care on a

fee-for-service basis;

(2) fees for available assisted living services and

nursing home care are the same for a prospective resident as a

current resident of the living unit; and

(3) the admission or residence agreement includes the

following statement or a substantially equivalent statement in type

that is boldfaced, capitalized, underlined, or otherwise set out

from the surrounding written material so as to be conspicuous:

"A continuing care contract provides priority,

guaranteed, or discounted access to progressive levels of health

care services. ____________ (Name of community or facility) is not

a licensed continuing care facility and does not hold a certificate

of authority from the Texas Department of Insurance. This

agreement is not a continuing care contract and is exempt from the

requirements of Chapter 246, Health and Safety Code."

SECTION 5. Section 246.022, Health and Safety Code, is

amended by amending Subsection (c) and adding Subsection (c-1) to

read as follows:

(c) Except as provided by Subsection (c-1), the [The]

commissioner shall grant an application for a certificate of

authority if the commissioner finds that:

(1) the applicant or the facility is financially

sound;

(2) the competence, experience, and integrity of the

applicant, its board of directors, its officers, or its management

make it in the public interest to issue the certificate; and

(3) the applicant is capable of complying with this

chapter.

(c-1) The commissioner may reject an application for a

certificate of authority under Subsection (c) if the applicant does

not own the real property on which the facility is located or

proposed to be located.

SECTION 6. Section 246.055, Health and Safety Code, is

amended to read as follows:

Sec. 246.055. ADVERTISEMENT IN CONFLICT WITH DISCLOSURES.

(a) A provider may not engage in any type of advertisement for a

continuing care contract or facility if the advertisement contains

a statement or representation in conflict with the disclosures

required under this subchapter.

(b) A person may not use the title "continuing care

facility" or "continuing care retirement community" in advertising

materials unless the person holds a certificate of authority issued

under this chapter.

SECTION 7. Sections 246.056(c) and (d), Health and Safety

Code, are amended to read as follows:

(c) If a continuing care contract is rescinded under this

section, the entrance fee [any money or property transferred to the

provider, other than periodic charges specified in the contract and

applicable only to the period a living unit was actually occupied by

the resident,] shall be refunded not later than the 30th day after

the date of rescission.

(d) Each continuing care contract must include the

following statement or a substantially equivalent statement in type

that is boldfaced, capitalized, underlined, or otherwise set out

from the surrounding written material so as to be conspicuous:

"You may cancel this contract at any time prior to midnight of

the seventh day, or a later day if specified in the contract, after

the date on which you sign this contract or you receive the

facility's disclosure statement, whichever occurs later. If you

elect to cancel the contract, you must do so by written notice and

you will be entitled to receive a refund of the entrance fee [all

assets transferred other than periodic charges applicable to your

occupancy of a living unit]."

SECTION 8. Section 246.057(b), Health and Safety Code, is

amended to read as follows:

(b) If a continuing care contract is canceled under this

section, the resident or the resident's legal representative is

entitled to a refund of all money or property transferred to the

provider, minus:

(1) any nonstandard costs specifically incurred by the

provider or facility at the request of the resident that are

described in the contract or in an addendum to the contract signed

by the resident; [and]

(2) a reasonable service charge, if set out in the

contract, that may not exceed the greater of $1,000 or two percent

of the entrance fee; and

(3) any money transferred to the provider for optional

modifications to the resident's or prospective resident's living

unit under an agreement that is separate from the continuing care

contract.

SECTION 9. Section 246.071(a), Health and Safety Code, is

amended to read as follows:

(a) If a [Before a] provider accepts [may accept] the

payment of a deposit made under a reservation agreement or any

portion of an entrance fee before the date the prospective resident

may occupy a living unit, the provider must establish an entrance

fee escrow account with a bank or trust company, as escrow agent,

that is located in this state.

SECTION 10. Section 246.072, Health and Safety Code, is

amended to read as follows:

Sec. 246.072. RETURN OF DEPOSITS; RELEASE OR RETURN OF

ENTRANCE FEE. (a) On a written request from or on behalf of the

provider or a prospective resident, the escrow agent shall return

the amount on deposit to the person who paid the deposit if the

reservation agreement is terminated before the prospective

resident occupies the living unit [or shall maintain the deposit as

an entrance fee in the entrance fee escrow account].

(b) Unless the escrow agent receives a written request from

or on behalf of a provider or a resident for the return of an

entrance fee under Subsection (a) [Section 246.056], the agent

shall, at the provider's discretion, release the fee to the

provider or place the fee in a loan reserve fund escrow.

SECTION 11. The heading to Section 246.073, Health and

Safety Code, is amended to read as follows:

Sec. 246.073. RELEASE TO [THE] PROVIDER FOR NEW FACILITY OR

EXPANSION.

SECTION 12. Section 246.073, Health and Safety Code, is

amended by amending Subsection (a) and adding Subsection (a-1) to

read as follows:

(a) This section applies only to:

(1) a newly constructed facility; or

(2) an expansion of an existing facility in which the

number of existing living units is increased by 50 percent or more.

(a-1) Except as provided by Subsection (b), an escrow agent

shall release an entrance fee to the provider if:

(1) a minimum of 50 percent of the number of living

units in the facility have been reserved for residents, as

evidenced by:

(A) uncanceled executed continuing care

contracts or reservation agreements with those residents; and

(B) the receipt by the agent of entrance fee

deposits of at least 10 percent of the entrance fee designated for

each reserved living unit [in each continuing care contract];

(2) the total amount of aggregate entrance fees

received or receivable by the provider under binding continuing

care contracts or reservation agreements, the anticipated proceeds

of any first mortgage loan or other long-term financing commitment

described under Subdivision (3), and funds from other sources in

the actual possession of the provider are equal to or more than the

total amount of:

(A) 90 percent of the aggregate cost of

constructing or purchasing, equipping, and furnishing the

facility;

(B) 90 percent of the funds estimated, in the

statement of anticipated source and application of funds included

in the disclosure statement, to be necessary to cover initial

losses of the facility; and

(C) 90 percent of the amount of any loan reserve

fund escrow required to be maintained by the provider under Section

246.077; and

(3) a commitment has been received by the provider for

any permanent mortgage loan or other long-term financing described

in the statement of anticipated source and application of funds

included in the current disclosure statement and any conditions of

the commitment before disbursement of funds have been substantially

satisfied, other than completion of the construction or closing on

the purchase of the facility,[;] and[:

[(A)] if construction of the facility has not

been [substantially] completed:

(A) [(i)] all necessary government permits or

approvals have been obtained;

(B) [(ii)] the provider and the general

contractor responsible for construction of the facility have

entered into a maximum price contract;

(C) [(iii)] a recognized surety authorized to do

business in this state has executed in favor of the provider a bond

covering faithful performance of the construction contract by the

general contractor and the payment of all obligations under the

contract;

(D) [(iv)] the provider has entered a loan

agreement for an interim construction loan in an amount that, when

combined with the amount of entrance fees in escrow plus the amount

of funds from other sources in the actual possession of the

provider, equals or exceeds the estimated cost of constructing,

equipping, and furnishing the facility;

(E) [(v)] the lender has disbursed not less than

10 percent of the amount of the construction loan for physical

construction or completed site preparation work;

(F) [and

[(vi)] the provider has placed orders at

firm prices for not less than 50 percent of the value of items

necessary for equipping and furnishing the facility in accordance

with the description in the disclosure statement, including any

installation charges;

(G) [or

[(B) if construction or purchase of the facility

has been substantially completed:

[(i)] an occupancy permit covering the

living unit has been issued by the local government that has

authority to issue the permit; and

(H) [(ii) if the entrance fee applies to a living

unit that has been previously occupied,] the living unit is

available for occupancy by the new resident.

SECTION 13. Section 246.0736, Health and Safety Code, is

amended by amending Subsection (a) and adding Subsection (d) to

read as follows:

(a) After the initial release of an entrance fee by an

escrow agent for a specific facility subject to Section 246.073,

and before construction of the facility is completed, the

commissioner shall authorize an escrow agent to continue to release

escrowed entrance fees for that facility to the provider without

further proof of satisfying the requirements of Section 246.073 if:

(1) the provider provides a monthly report to the

department on marketing activities for living units of the

facility; and

(2) the provider immediately informs the department of

any problems, issues, or irregularities encountered in its

marketing activities for the facility.

(d) After construction on a facility described by Section

246.073(a) is completed, all necessary occupancy permits for the

facility have been issued by the local government that has

authority to issue permits, and all living units in the facility are

available for occupancy, the release of escrowed entrance fees for

the facility is governed by Section 246.072.

SECTION 14. Section 246.074, Health and Safety Code, is

amended to read as follows:

Sec. 246.074. RETURN OF ENTRANCE FEE. The escrow agent

shall return an entrance fee to the person who paid it if the fee is

not released to the provider or placed in the loan reserve fund

escrow required under Section 246.077 [within]:

(1) not later than 36 months after the date on which

any portion of the entrance fee is received by the provider; [or]

(2) within the time period [a longer time] specified

by the provider in the disclosure statement delivered with the

continuing care contract under which the fee was paid, if the

specified time period is longer than the time period under

Subdivision (1); or

(3) if any of the following events occur, as soon as

practicable after the date the event occurs:

(A) the prospective resident dies before

occupying a unit;

(B) construction on a facility not yet in

operation is stopped indefinitely before the facility is completed;

or

(C) a continuing care contract is rescinded under

Section 246.056.

SECTION 15. Section 246.075, Health and Safety Code, is

amended to read as follows:

Sec. 246.075. ESCROW OF CERTAIN FEES [APPLICATION FEE] NOT

REQUIRED. This subchapter does not require the escrow of a waitlist

fee or a similar fee of $1,000 or less, or of any nonrefundable

portion of a deposit or entrance fee that:

(1) does not exceed an amount equal to two percent of

the entrance fee; and

(2) is clearly designated as nonrefundable in the

continuing care contract or reservation agreement.

SECTION 16. Section 246.077(b), Health and Safety Code, is

amended to read as follows:

(b) At the option of the facility, the loan reserve fund

escrow amount may exclude the portion of principal and interest

payments applicable to that portion of the facility that is a

licensed nursing facility or licensed assisted living facility

[home].

SECTION 17. Sections 246.114(b) and (d), Health and Safety

Code, are amended to read as follows:

(b) A facility subject to this section [that initially filed

with the commissioner an actuarial review performed on or after

September 1, 1982, and before September 1, 1987,] shall file with

the commissioner [subsequent] actuarial reviews at least once every

five years [five-year intervals from the date of completion of the

initial actuarial review].

(d) The commissioner may require an actuarial review of a

facility more often than once every five years [before the end of

the five-year interval in which the facility would otherwise be

required to file an actuarial review] if:

(1) the facility leases from a third party any portion

of the grounds on which the facility is located or buildings in

which the facility operates; or

(2) [,] in the opinion of the commissioner, the

facility exhibits conditions of financial instability warranting

an earlier review.

SECTION 18. Section 246.114(c), Health and Safety Code, is

repealed.

SECTION 19. Section 246.0025, Health and Safety Code, as

amended by this Act, applies only to a provider that is issued a

certificate of authority under Subchapter B, Chapter 246, Health

and Safety Code, on or after January 1, 2026. A provider that is

issued a certificate of authority before that date is governed by

the law in effect immediately before January 1, 2026, and the former

law is continued in effect for that purpose.

SECTION 20. This Act takes effect January 1, 2026.

______________________________
______________________________

President of the Senate
Speaker of the House

I hereby certify that S.B. No. 1522 passed the Senate on

April 16, 2025, by the following vote: Yeas 31, Nays 0; and that

the Senate concurred in House amendment on May 30, 2025, by the

following vote: Yeas 31, Nays 0.

______________________________

Secretary of the Senate

I hereby certify that S.B. No. 1522 passed the House, with

amendment, on May 28, 2025, by the following vote: Yeas 141,

Nays 0, one present not voting.

______________________________

Chief Clerk of the House

Approved:

______________________________

Date

______________________________

Governor