The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise.

1. (1) Act--The Texas Continuing Care Facility Disclosure and Rehabilitation Act, Health and Safety Code, Chapter 246.
2. (2) Actuarial funded status--The ratio of actuarial assets plus net accounting assets to actuarial liabilities plus actuarial refund liabilities.

3. (3) Actuarial review--An analysis which is performed by a qualified actuary in accordance with generally accepted accounting principles (GAAP) and which addresses the current actuarial balance of the financial condition of a facility. An actuarial review should include, but not be limited to, the following:

   1. (A) actuarial report;
   2. (B) statement of actuarial opinion;
   3. (C) actuarial balance sheet;
   4. (D) cash flow projection; and
   5. (E) actuarial methodology, formulae, and assumptions.
4. (4) Affiliate--A person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, the person specified.
5. (5) Audited financial statements--Statements prepared by an independent Certified Public Accountant, which includes an audit opinion from the CPA concerning the financial statements.
6. (6) Commissioner--The Commissioner of Insurance of the Texas Department of Insurance.
7. (7) Continuing care--The furnishing of a living unit, together with personal care services, nursing services, medical services, or other health-related services, to an individual who is not related by consanguinity or affinity to the provider of the care under a continuing care contract, regardless of whether the services and the living unit are provided at the same location.

8. (8) Continuing care contract--An agreement that requires the payment of an entrance fee by or on behalf of an individual in exchange for the furnishing of continuing care by a provider and that is effective for:

   1. (A) the life of the individual; or
   2. (B) more than one year.
9. (9) Control--The possession, direct or indirect, of the power to direct or cause the direction of management and policies of a person, whether through the ownership of voting securities, by contract other than a commercial contract for goods or non-management services, or otherwise, unless the power is the result of an official position with or corporate office held by the person. This definition also includes the terms "controlling," "controlled by," and "under common control with." Control shall be presumed to exist if any person, directly or indirectly, owns, controls, or holds with the power to vote, or holds irrevocable proxies representing, 10% or more of the voting securities or authority of any other person. This presumption may be rebutted to show that control does not in fact exist.
10. (10) Debt service coverage ratio--Total excess (deficit) of revenues and gains in excess of expenses and losses plus interest expense plus depreciation expense plus amortization expense minus amortization of deferred revenues from entry fees plus net proceeds from entry fees, divided by annual debt service (annual principal and interest payment or maximum annual debt service).
11. (11) Department--The Texas Department of Insurance.
12. (12) Entrance fee--An initial or deferred transfer of money, or other property valued at an amount in excess of three months' rent, made or promised to be made as full or partial consideration for acceptance by a provider of a specified individual as a resident in a facility. The term does not include a deposit made under a reservation agreement.
13. (13) Facility--Each separate place in which a person undertakes to provide continuing care. A place is an establishment, complex, or campus at which a provider engages in the business of providing continuing care. If two or more establishments or complexes are located on the premises, they shall be treated as separate facilities if their operations are administratively independent of each other.
14. (14) Fund balance--Assets as shown on the balance sheet minus liabilities shown on the balance sheet.
15. (15) Living unit--A room, apartment, cottage, or other area within a facility that is set aside for the exclusive use or control of one or more specified individuals.
16. (16) Long-term nursing care--Nursing care provided for a period longer than 365 consecutive days.
17. (17) Person--An individual, corporation, association, or partnership, including a fraternal or benevolent order or society.
18. (18) Provider--A person who undertakes to provide continuing care in a facility.
19. (19) Qualified actuary--A member of the American Academy of Actuaries or the Society of Actuaries or a person recognized by the commissioner as having comparable training or experience.
20. (20) Reservation Agreement--An agreement that requires the payment of a deposit to reserve a living unit for a prospective resident. A deposit made under a reservation agreement is not considered an entrance fee.
21. (21) Reservation Agreement Deposit--A deposit paid under a reservation agreement.
22. (22) Resident--An individual entitled to receive continuing care in a facility.

Source Note:The provisions of this §33.2 adopted to be effective March 9, 1989, 14 TexReg 986; amended to be effective March 1, 1990, 15 TexReg 879; amended to be effective March 14, 1996, 21 TexReg 1765.