TESTING FINANCIAL STABILITY OF CONTINUING CARE RETIREMENT COMMUNITIES

This paper introduces continuing care retirement communities (CCRCs) to the Transactions. It outlines the major recent developments in financing procedures and regulatory requirements aimed at keeping these entities solvent. In particular, it describes the Actuarially Based Financial Management System (ABFM) created in 1990 by the American Academy of Actuaries and the Statement of Position 90-8 promulgated by the American Institute of Certified Public Accountants (AICPA). The paper aims to guide the actuary in making sound judgments of the differing results that arise from these professional requirements and naturally stresses the merits of a comprehensive actuarial approach.