When moving into a Continuing Care Retirement Community (CCRC) like Buena Vida Estates, residents typically pay an entry fee in addition to ongoing monthly service fees. These fees secure access to a continuum of care (independent living, assisted living, skilled nursing, and memory care) all within one campus. While these upfront costs may seem substantial, they come with unique financial advantages that are often overlooked, like potentially being tax-deductible.

The Tax-Deductibility of Type A Entry Fees

Residents of CCRCs with Type A contracts may be eligible to deduct a portion of their entry fee and monthly fees as prepaid medical expenses. This is because a Type A contract guarantees future health care services, and the IRS considers this prepayment for medical care. Essentially, you’re investing in lifelong healthcare today, and the tax code recognizes the value of that investment.

Each year, Buena Vida Estates calculates the portion of fees that qualify as medical expenses. This amount is then communicated to residents, who can share it with their tax advisors to determine if they are eligible for a deduction.

How Much Could Be Tax-Deductible?

The percentage of fees that may be tax-deductible changes annually and is based on how much of the community’s total expenses go toward healthcare services. This can represent a significant deduction (potentially thousands of dollars) depending on the community’s allocation and a resident’s overall tax situation.

According to financial experts, even though the entry fee may not be directly linked to specific care needs at the time of move-in, the IRS often allows the deduction due to the long-term health care guarantee built into Type A contracts.

Who Should You Talk To?

Because tax laws are complex and each person’s situation is different, residents should always consult with a qualified tax professional. A CPA or eldercare financial planner can provide specific advice on the best way to apply these deductions based on your income, medical expenses, and filing status.

The Buena Vida Advantage: Lifecare with Peace of Mind

At Buena Vida Estates, our Type A Lifecare contract doesn’t just provide lifelong healthcare coverage – it also offers peace of mind at tax time. Residents benefit from predictable costs, high-quality care, and the potential to recoup a portion of their investment through tax savings.

Thinking about your financial future? Choosing a Type A community like Buena Vida could be a smarter choice than you think. Schedule a tour today to learn how our Lifecare community model supports both your long-term care and your financial goals.