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Emerald Heights

Tax Benefits

How Emerald Heights
may offer you a tax benefit

Along with the many other benefits of living at Emerald Heights, there is a potential income tax benefit for residents who itemize their tax deductions. The Internal Revenue Service (IRS) recognizes the income tax deductibility of a portion of payments made to Life Care retirement communities as medical expenses under certain conditions.

The principle is that a portion of both the entrance fee (EF) and the monthly service fee (MSF) provides for possible future expenses in our health care facility (The Corwin Center) and the MSF is not increased for this increased level of care. In general, the IRS permits a current-year deduction for the purchase of future medical care when such care is purchased in connection with obtaining lifetime care, such as provided by Emerald Heights. The IRS Publication 502, Medical and Dental Expenses, addresses the lifetime care aspects of this tax deduction and can be accessed on the IRS website: www.irs.gov. While we do not provide tax advice, we offer the following information so you and your tax advisor can plan for this medical care deduction.

Medical Care Cost Allocation
Each January, Emerald Heights calculates a medical care cost allocation for the prior year, based on the ratio of Emerald Heights’ medical costs to its total costs. This percentage is utilized in calculating the portion of fees that are potentially deductible. As a reference, over the past several years, this ratio has been between 32% and 38%. The IRS has not specifically directed how this allocation percentage should be applied. See the information below to assist you in discussing this with your tax advisor or preparer.

Entrance Fee Deduction Calculation
Choosing a retirement community with the security of Life Care is a good first step toward your goal. You can protect yourself from catastrophic long-term health care costs. Plus, you can build a budget with predictable monthly expenses. Emerald Heights also offers two refundable contract options which allow a portion of your entrance fee to be returned to your estate. While the Traditional Plan requires the lowest initial cost for residency, the 50% and 90% Refundable Plans may appeal to you, as they help ensure that funds will return to your estate.

Monthly Service Fee Deduction Calculation
Monthly service fees for a single person are calculated based on the size of the residence occupied. There is a flat fee charged for an additional person (as in a couple), regardless of floor plan size. Monthly service fees are reviewed annually and are subject to cost-of-living increases.

Special Consideration for Corwin Center Residents
Emerald Heights is designed as a residential/independent community, and the Assisted Living apartments and Skilled Nursing beds at The Corwin Center are maintained to serve existing residents.

You can learn more about taking advantage of the tax benefits of CCRC’s here.

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