Continuing Care Actuaries will gather information regarding the residence and care contracts, entrance and monthly fee schedules, and financial data about the operation of your communities. We will develop population and economic assumptions that reflect your communities mission statement, management style and anticipated resident demographic characteristics.
The actuarial assumptions required to evaluate the long-term financial status of a continuing care retirement community are separated into four categories:
- decrement assumptions;
- new entrant assumptions;
- operating assumptions; and
- economic assumptions.
Decrement Assumptions are used to estimate the survival of residents, as well as their future living status over time. Decrement assumptions include mortality rates, morbidity rates (i.e. rates of health care utilization), transfer rates between different apartment units and withdrawal rates.
New Entrant Assumptions are used to estimate the characteristics of future residents at your community. They include the distribution of entry ages, the probability that specific units will be occupied by a single resident versus two or more residents, and the gender of single and paired residents.
Operating Assumptions are drawn from the Residency and Care Agreement and from anticipated management policies and practices including the amount of health care promised, the criteria for transfer, the financial implications of transfers and the personnel costs of providing services to residents.
Economic Assumptions are used to estimate the community's future expenses and revenues, including rates of inflation, debt service costs and interest earnings on any invested funds.
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