WHAT IS THE PURPOSE OF THE LIFE CARE PROGRAM?

In response to growing national concerns regarding the financial stability of facilities offering residency and health care to the elderly, the Illinois General Assembly enacted The Illinois Life Care Facilities Act, 210 ILCS 40/1 et. Seq., in 1982.

Due to the length of time covered by some continuing care contracts, as well as the substantial payments made by residents, the act authorizes the Illinois Department of Public Health to regulate residency agreements that are commonly referred to as “life care contracts”. These contracts require an entrance fee and include the provision of personal, nursing, or medical care in addition to the basic residency agreement.

Life care providers must meet certain financial and disclosure requirements to obtain a life care permit. The Department’s Life Care Program is responsible for monitoring life care facilities to ensure compliance with the act and the Illinois Life Care Facilities Contract Code (77 Adm. Code 396).

WHAT IS A LIFE CARE FACILITY?

A life care facility is a place or places in which a life care permit grantee provides a resident with maintenance services in addition to nursing, personal care, or medical services. Some life care facilities are located on a campus or in a village setting, while others are single structures.

If the life care facility has not previously existed and construction is not yet complete, the permit allows the provider to collect deposits, also known as “entrance fees” from potential residents and place them in an escrow account. Escrow funds are released to the provider as certain conditions are satisfied.

WHAT IS A LIFE CARE CONTRACT OR RESIDENCY AGREEMENT?

A life care contract is an agreement between a person (typically 60 years or older, but there is no minimum age requirement in Illinois) and a life care provider. The contract includes a promise to provide a range of services at a life care facility for a period longer than one year in exchange for the payment of an entrance fee or resident deposit in addition to or in lieu of the payment of regular periodic charges.

WHAT IS A LIFE CARE PERMIT AND WHO MUST APPLY?

The act requires that a valid permit to offer and enter into life care contracts be obtained from the Department by any provider in Illinois who wishes to enter into life care contracts with residents. The permit, issued by the Department to an applicant provider, is a written authorization to enter into life care contracts.

Permits are issued to a specific provider for a specific number of living units at a specific facility and are not transferable. Existing permits may be revoked or suspended for violation of any provisions of the act.

It is important to note that the issuance of an Illinois Department of Public Health permit to offer and to enter into life care contracts does not constitute approval, recommendation, or endorsement by the Department or Director of any contract, facility or provider, nor does it evidence the accuracy or completeness of the information furnished to the Department regarding the permit.

ARE THERE ANNUAL REPORTING REQUIREMENTS FOR LIFE CARE PERMIT HOLDERS?

The Life Care Program at the Department makes the following information requests annually of all life care permit holders:

• Provide an annual audited financial statement to the Department within 120 days of the close of their fiscal year.
• Comply with Section 7 of the Life Care Facilities Act; either by maintaining an escrow account or letter of credit in an amount equal to or exceeding the aggregate principal and interest payments due during the next six months on account of any first mortgage or other long-term financing of the facility. Facilities with bond financing must maintain an equivalent amount of debt service reserves in a manner acceptable to the Department.
• Comply with the Alzheimer’s Special Care Discharge Act by providing a copy of the facility’s disclosure document or attesting that the facility is not obligated under the Act.
• Comply with the vaccination requirements set forth in Section 10 of the Life Care Facilities Act (effective 7/25/2003).

As a condition of the permit, the grantee must provide written notification to the Department within 30 days if there is any change to the information upon which the issuance of the permit is based. The following is a brief list of some, but not necessarily all, examples of information changes that require notification:

• alterations to the text of the residency agreement
• changes in the text or amount of an escrow agreement or letter of credit
• increases or reductions to the long-term financing of the facility
• changes in the name of the applicant or grantee or the chief executive officer of the grantee
• a change in the name or address of the facility and/or any facilities with which it maintains transfer agreements