Tax Advantages
Among other benefits, residents at life plan communities like Bishop Spencer Place may take advantage of considerable tax savings.
Current IRS regulations provide for deductions of medical expenses – both accrued and pre-paid in that tax year. This means independent living residents at Bishop Spencer Place who pay an entry fee can deduct a portion of that fee as a pre-paid medical expense, since the entry fee provides a health care benefit plus priority access to lifetime care at the community.
View examples of possible tax deductions. For easy printing, view our info sheet below:
Financial benefits
Health care benefit
Bishop Spencer Place offers residents a health care benefit that provides a discount on future assisted living and skilled nursing care based on the resident’s age when he/she moves into the community. This unique benefit is similar to a long-term care insurance policy for our residents if their care needs change and they move to a higher level of care.
This benefit is available along with the refundable portion of the entry fee, so if a resident moves to assisted living or skilled nursing at Bishop Spencer Place, he/she immediately will be able to draw funds from the refundable portion of his/her entry fee and also will be able to draw from the health care benefit (divided into equal monthly portions throughout a five-year period).
Health care benefit value (per person)
Standardized for all ages: $60,000
$1,000 per month for five years
Tax advantages
Current IRS regulations provide for deductions of medical expenses – both accrued and pre-paid in that tax year. This means that independent living residents at Bishop Spencer Place who pay an entry fee may be eligible to deduct a portion of that fee as a pre-paid medical expense since the entry fee provides a health care benefit plus priority access to lifetime care at the community.
In addition, if residents move to the assisted living or skilled nursing areas of a life plan community, they also receive tax savings on their monthly service fee, as typically they can take a medical expense deduction for the entire amount paid to the community – even if portions of that fee related to the cost of meals and lodging.
Medical expense tax deduction
- Based on the $60,000 Health Care Benefit
- Males = $16,000 | Females = $44,000
The medical deduction is the lesser of the amount listed above or the “non-refundable portion” of the entry fee. The non-refundable portion of the entry fee is defined as 10 percent of the Lifetime 90 percent Refundable Entry Fee or 100 percent of the 50-Month Refundable Entry Fee.
In addition, residents in the assisted living and skilled nursing areas of a life plan community also receive tax savings on their monthly service fee, as they can typically take a medical expense deduction for the entire amount paid to the community – even if portions of that fee relate to the cost of meals and lodging.
We provide residents with a summary of their applicable deductions which they can provide to their tax professional. Please note that IRS regulations are subject to varied interpretations, so we encourage you to consult your tax advisor regarding your specific tax circumstances.
