Current through 2023 Legislative Session
Section 11-49-105 - Reserve requirements(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.Amended by 2019 Ch. 66, §1, eff. 8/2/2019.Renumbered from C.R.S. § 12-13-107 and amended by 2017 Ch. 159, §1, eff. 8/9/2017.L. 2017: Entire article added with relocations, (SB 17-226), ch. 159, p. 571, § 1, effective August 9.
This section is similar to former § 12-13-107 as it existed prior to 2017.