CCRC fees paid with tIRA Assets

[lem1955]

I had been planning to use HSA savings to pay at least the first year's fees for moving to a CCRC. But I've recently learned that 30 - 40% of the fees is a deductible expense if paid from a tIRA. I have a lot more in that account than I do in my HSA. So it seems I should use the HSA funds for eligible medical expenses instead. Anybody have experience with this? Do I have the strategy right?

 

[cathy63]

Only part of your CCRC fees is attributable to medical expenses. You can either deduct part of that amount on Schedule A (the part that exceeds 7.5% of income) or you can reimburse yourself for the entire amount from your HSA tax free.

If you take the room and board expenses from the HSA, that's a taxable distribution and you have to add it to your income. (Unless you have saved medical receipts from prior years and are actually reimbursing yourself for those expenses.)

We can't tell you what's the best option without knowing how much other income you have and how that's taxed, and how much the CCRC medical fees are. You can do your return both ways and then choose. Or this might be a good year to consult with a tax professional.

 

[Sunset]

How much are the fees for moving into the CCRC for the first year ?

I would tend to want to use my IRA funds, as the HSA will get to be used for various medical expense reimbursement.
I'm guessing that fees for medicare and a supplemental insurance plus expenses all apply, plus a portion of the yearly CCRC fee every year.

 

[MichaelB]

I had been planning to use HSA savings to pay at least the first year's fees for moving to a CCRC. But I've recently learned that 30 - 40% of the fees is a deductible expense if paid from a tIRA. I have a lot more in that account than I do in my HSA. So it seems I should use the HSA funds for eligible medical expenses instead. Anybody have experience with this? Do I have the strategy right?

Do you have eligible unreimbursed medical expenses from the past that could be used to make tax free withdrawals from the HSA? If you can use all the funds in the HSA without including the CCRC, it would make sense to use the CCRC deduction to offset tIRA income.

 

[lem1955]

Do you have eligible unreimbursed medical expenses from the past that could be used to make tax free withdrawals from the HSA? If you can use all the funds in the HSA without including the CCRC, it would make sense to use the CCRC deduction to offset tIRA income.

Thanks to all for your replies. This is the response that best matches my situation. I have ~$2M in my tIRA and $45K in my HSA. 1st yr entry fee will be upwards of $600K + $80K specific to continuing care (in 2025 or 2026). I was told approx 30-40% of monthly fees after the first year will be designated medically deductible.We don't have a lot of medical expenditures now and can't itemize deductions. So my thought is to use the HSA for the medical expenses we do have for the next few years and reinvest the money in taxable savings if I don't really need it. (Taxable investments are less than I would like.)