Medical Portion of CCRC Fees

I am modeling costs for joining a "continuing care retirement community" (CCRC). The contract we are looking at covers all housing, some meals, and medical care for life (from Independent Living through and including Assisted Living, Nursing Home andMemory Unit care), but at a price, of course. We basically would sell our home ("First Change of Home"), and use the proceeds to cover the entrance fee, then treat the monthly fees as if they were rent, since those fees would cover housing and 2 meals/day (as well as medical care).

The entrance fee is $564,443, with continuing monthly fees after that of $7,225. The IRS allows part of the entrance and monthly fees to be tax deductible on Schedule A as "pre-paid medical costs." So, for the entrance fee in tax year 2017, $164,125 was considered a medical expense under Schedule A. Similarly, $2,546 of the monthly fee (= $30,552 per year) is considered a medical expense on Schedule A.

This medical deduction helps to allow the numbers to "work" for my wife and I.

My question is, how do I enter that in ESPlanner Plus? I think I enter the entrance fee as a Special Expenditure (full amount: $564,443), then enter the medical portion of that as a separate Special Expenditure as a Medical Deduction ($164,125, choosing the "Medical" radio button), both on the year of entry into the CCRC contract. But, I am not sure that is not double-counting some of the expenditure. However, I don't think I can just subtract out the medical portion from the entrance fee ($564,443 - $164,125 = $400,318), and only include that result as the Special Expenditure entrance fee, since the medical deduction I would be allowed to take is only that portion that exceeds a certain percentage of my AGI.

Similarly, how to deal with the medical deductible portion of the monthly fee? I am treating the monthly fee ($7,225/ month = $86,700/year) as if it were rent for my home, under the "first Change of Home" tab in the Primary Home section of the application. I am thinking that I would then add the medical portion of the monthly fee ($30,552/year) as a Special Expenditure for every year after paying the CCRC entrance fee, selecting the Medical radio button before applying that to the Special Expenditures grid.

I could sure use your advice on how to model this within ESPlanner Plus. Thanks for any wisdom you can share on this topic!


dan royer's picture

I guess I'm not sure. What you describe above sounds right to me, and I know you can see the AGI in your PDF as the last report listed. But because of chicken and egg puzzles, it seems that some of this has to be an estimate. I'll ask Mike to take a look at this question.

I think you should enter $164,125 as a medical special expense and $400,318 as a not tax related special expense. ESPlanner's tax routines properly account for AGI thresholds on medical deductions. Entering both at full value is double counting.

Your suggestion for the monthly fee is also double counting.
The rent should be $4,661 per month and the $2,546 is a medical special expense.

Thank you! That's what I needed to know!

Thanks so much for asking this question because we are in the same situation. The solution has worked for me and with ESPlanner it has become clear what the difference in cost is between the CCRC we are considering versus "aging in place".

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