# ASC 440-954-05: Commitments — Health Care Entities — 05 Overview and Background Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/440/954/#05-overview-and-background) Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective. Tables and mathematical or amendment markup are retained as HTML where Markdown would lose structure. Source downloaded (UTC): 2026-09-10T00:26:26.976Z to 2026-09-10T00:26:26.976Z Record version: sha256:cfd927955f563ea6cc462e1982491f58ccd7007e630051809dfc732ad986ac20 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 440-954-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/440/954/#05-overview-and-background) SEC content: no ##### [440-954-05-1](https://asc.understandingaccounting.org/asc/440/954/#440-954-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:26.976Z to 2026-09-10T00:26:26.976Z Record version: sha256:b1a269bb2ffa94362c14a8ab8f3b3c3001daa05fd50c6a229f264c47ae1eaf99 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides guidance on commitments for health care entities within the scope of this Topic. #### Continuing Care Retirement Community ##### [440-954-05-2](https://asc.understandingaccounting.org/asc/440/954/#440-954-05-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:26.976Z to 2026-09-10T00:26:26.976Z Record version: sha256:00df7036be5af2d0d688d73a7da946e707b985f919246f0b04deaa399f6cb9b7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A continuing care retirement community expects to provide services and the use of facilities to individuals over their remaining lives under continuing-care contract agreements. The nature and extent of such services depend on such variables as the individual's age, health, sex, and economic status upon entering the continuing care retirement community. ##### [440-954-05-3](https://asc.understandingaccounting.org/asc/440/954/#440-954-05-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:26.976Z to 2026-09-10T00:26:26.976Z Record version: sha256:4fdaebb3621de54684764d351a54786970aa362ae28812d352fef2235fced0e2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Continuing care retirement community facilities may be independent or they may be affiliated with other health care facilities. They usually provide less intensive care than do hospitals. They generally supply required continuous nursing service or appropriate assistance to residents who have a wide range of medical conditions and needs. ##### [440-954-05-4](https://asc.understandingaccounting.org/asc/440/954/#440-954-05-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:26.976Z to 2026-09-10T00:26:26.976Z Record version: sha256:31140c5956ea1d53747e8fded629a41749e97f0246238d04b40c58bf047bd720 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Continuing care retirement communities use the following three basic types of contracts: 1. a An all-inclusive continuing-care contract includes residential facilities, meals, and other amenities. It also provides long-term nursing care for little or no increase in periodic fees, except to cover normal operating costs and inflation. 2. b A modified continuing-care contract also includes residential facilities, meals, and other amenities. However, only a specified amount of long-term nursing care is provided for little or no increase in periodic fees, except to cover normal operating costs and inflation. After the specified amount of nursing care is used, residents pay either a discounted rate or the full per diem rates for required nursing care. 3. c A fee-for-service continuing-care contract includes residential facilities, meals, and other amenities as well as emergency and infirmary nursing care. Access to long-term nursing care is guaranteed, but it may be required at full per diem rates. ##### [440-954-05-5](https://asc.understandingaccounting.org/asc/440/954/#440-954-05-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:26.976Z to 2026-09-10T00:26:26.976Z Record version: sha256:dbbe6f94725a65c6a16177b149f999df1fe873ca8cdd623cf2f692982d998705 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Many continuing-care contracts are similar to annuity contracts. Under those contracts, the continuing care retirement community assumes the risks associated with both of the following: 1. a Estimating the amount of the advance fee and other fees to be paid by a resident 2. b Determining whether such fees will be sufficient to cover the cost of providing a resident's required services and the use of facilities. For some contracts, residents may share the future costs without limit. The continuing care retirement community has an obligation to provide future services for the length of the contract or the life of the resident. In certain circumstances, this obligation continues regardless of whether advance fees or periodic fees are sufficient to meet the costs of providing services to a resident. ##### [440-954-05-6](https://asc.understandingaccounting.org/asc/440/954/#440-954-05-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:26.976Z to 2026-09-10T00:26:26.976Z Record version: sha256:0c3c14ae7851d25938199759d226421ad39433119b97abd8f9dfd2e89521090f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A continuing care retirement community may require several different payment methods for services and the use of facilities. The following are the three most prevalent methods: 1. a Advance fee only. Under this method, a resident pays an advance fee in return for future services and the use of facilities. Such services generally include continuing care retirement community housing-related services (for example, meals, laundry, housekeeping, and social services) and health care. These services usually are provided to the resident for the remainder of his or her life or until the contract is terminated. Additional periodic fees are not paid, regardless of how long a resident lives or if the resident requires more services than anticipated. Generally, the resident receives no ownership interest in the facility. 2. b Advance fee with periodic fees. Under this method, a resident pays an advance fee and periodic fees for services and the use of facilities. Such periodic fees may be fixed, or they may be subject to adjustment for increases in operating costs or inflation or for other economic reasons. 3. c Periodic fees only. Under this method, a resident pays a fee at periodic intervals for services and the use of the facilities provided by the continuing care retirement community. Such fees may be either fixed or adjustable. ##### [440-954-05-7](https://asc.understandingaccounting.org/asc/440/954/#440-954-05-7) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:26.976Z to 2026-09-10T00:26:26.976Z Record version: sha256:31187338dac38bdc614969e8dff8d52bf6d52d8d22fa44c676083ac3f683a6d5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An advance fee may be met by transferring a resident's personal assets (which may include rights to future income) or by paying a lump sum of cash to the continuing care retirement community. Advance fees received for future services may be refunded at the occurrence of some future event, such as death, withdrawal from the continuing care retirement community, termination of the contract, or reoccupancy of a residential unit. The amount of the refund generally is based on contractual provisions or statutory requirements. ##### [440-954-05-8](https://asc.understandingaccounting.org/asc/440/954/#440-954-05-8) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:26.976Z to 2026-09-10T00:26:26.976Z Record version: sha256:f7ceb24a4b58f958b21d490925a584bcc9cb1ef3c2fe97ee90d23c279eea1a74 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Payment of an advance fee generally is required before a resident acquires a right to reside in an apartment or residential unit for life. A portion of advance fees may be refundable by rescission within a legally set time period or if a certain future event occurs, such as the death or withdrawal of a resident or termination of the contract. Some refunds are paid only if a residential unit is reoccupied. ##### [440-954-05-9](https://asc.understandingaccounting.org/asc/440/954/#440-954-05-9) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:26.976Z to 2026-09-10T00:26:26.976Z Record version: sha256:5dd23b7fcb46b1a0fc1335b799d0abd649eb4d55dabd0d35a7c70b7f0d24bef1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Continuing care retirement community refund policies vary either by region or according to statutory requirements, but generally the amount of the refund is based on provisions specified in a contract. For example, some contracts require a refund of the advance fee, less a reasonable processing fee. Amounts refunded may be based on a fixed amount or percentage, an amount that declines to a fixed amount over time, an amount that declines to zero, or an amount based on the resale amount. Refunds may be contingent on vacating the unit, resale of the unit, or passage of a fixed period of time if the unit is not resold. ##### [440-954-05-10](https://asc.understandingaccounting.org/asc/440/954/#440-954-05-10) Pending content: no Source downloaded (UTC): 2026-09-10T00:26:26.976Z to 2026-09-10T00:26:26.976Z Record version: sha256:8aee1a03a36d97784c7c495ff000f63f2582af87830c0a0f22b6a7255d8090f7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Some contracts between a continuing care retirement community and a resident stipulate that all or a portion of the advance fee may be refundable if the contract holder's unit is reoccupied by another person. The source of money for the payment is from the proceeds of the advance fees collected by the continuing care retirement community from the next resident of the reoccupied unit. The terms governing how the proceeds from the next resident are to be paid to the previous resident vary from contract to contract.