From Les Sparks:

The first question I will ask is “What agreement are they under – new or old?”. If they are under an old agreement, the new rules have no impact on the client as they are “stuck” with the old distribution calculations.

Under the new rules, the client begins taking distributions on January 1. They continue taking an estimate for the next 6 months. At June 30, they need to calculate surplus cash to determine if too much cash was taken. If the calculation is zero or more, then they did not take too much and nothing further needs to be done. If they are negative they have 30 days to repay without it being a finding.

Now which one are you under?

From client:

My client has a new agreement, so as long as the June 30, 2015 and December 31, 2015 surplus cash calculations are positive, they have not taken too much surplus cash and there is no finding?
How is this handled in REAC, as that seem to look at the 12/31/14 and 6/30/15 calculations and compare that to the total surplus cash taken during 2015, which doesn’t seem to be relevant under the new agreements.

From Les:

That is correct. As far as REAC is concerned, you have to tell them what you want them to know. First and foremost you must tell them you are assisted living under the new agreement. I also believe a footnote is very beneficial – just not required.

From client:

They are under the new agreement. My problem is that the excess distributions were in the second half of the year, so does the same rules apply to the December surplus cash calculation?

From Les:

The rules are the same no matter the period. Each 6-month calculation is always looking back at the last 6 months of distributions. AS LONG AS THEY ARE UNDER THE NEW AGREEMENT.

Old agreements remain under the old method of calculating the amount available in the next 6 months.