ORANJ

An Addendum to “ORANJ Finance Committee – Report on Income Tax Deduction Survey”

2008 -- SURVEY QUESTIONNAIRE Concerning Tax DeductionsWith Typical Responses and Notes

October 15, 2008

This survey, sponsored by the ORANJ Finance Committee, is in response to concerns expressed by CCRC residents regarding tax deductions that may be available to them in preparing their personal income tax returns. We need your in depth input on this subject. The objective is to obtain substantive information, some of which may require meetings with your CCRC’s management team.

Please return your response to each question in this questionnaire by May 16, 2008 – either to Harry Mann, (*) or Ed House (*).

If you have any questions about the survey or regarding any of the survey questions, please contact Harry Mann (*) or Ed House (*). The information obtained from this survey will be summarized in a report intended to be distributed to all ORANJ CCRCs later this year. Specific practices at individual CCRCs will not be identified in the report, only the approaches taken by ORANJ CCRCs in general – together with publically available reference information.

Regarding the Payment of Real Estate Taxes:

1. Did your CCRC pay real estate taxes in 2007?
· If the answer is “Yes”, which property and facilities at your CCRC are involved – and which, if any, are exempt?
· If the answer is "No", go to question No. 2.
A. Typical answer – Yes, except exempt licensed facilities (Assisted Living & Skilled Nursing).
B. All 19 CCRCs reported paying taxes; four indicate no exempt facilities; for three CCRCs no indication regarding any exempt facilities.

2. Since your CCRC did not pay real estate taxes in 2007, Please explain. Was it:
· Because none were assessed by your municipality?
· Because an alternative (such as “Payment in Lieu of Taxes”) was arranged between your CCRC and your municipality. If so, how long has this arrangement been in effect?
· If for some other reason, please explain.
(Not applicable per 1. above).

3. If your CCRC paid real estate taxes, how is the amount allocated to each individual residence determined?
A. Typical answer - based on residence square footage as a percentage of total taxable square footage.
B. For 2 CCRCs, based on entry fee amount as a percentage of total amount of entry fees.

4. How are real estate tax payments made by residents? Are they:
· Included as part of a resident’s monthly service fee?
· Billed separately on a resident’s monthly statement?
· Paid in some other manner; if so, please explain?
A. Typical answer – included in monthly service fees.
B. For 4 CCRCs, billed separately on monthly statements.

5. How were residents informed about the amount they might list as a real estate tax deduction on their income tax returns for 2007?
A. Typical answer – year-end letter or memo from CCRC to residents indicating the amount of tax attributable to an individual residence.
B. For 2 CCRCs, the letter/memo specifically indicates that residents may apply for NJ tax rebate but not take a real estate tax deduction.
Regarding the Payment of Medical Expenses:

6. How were residents informed as to the amount of medical expense they might list as a tax deduction when preparing their income tax returns for 2007?
A. Typical answer – year-end letter or memo from CCRC to residents indicating the amount that went toward paying medical expenses for each resident.
· For 12 CCRCs, this was expressed as a specific amount for each resident.
· For 4 CCRCs, this was expressed as a percentage of the monthly fees that may be considered as a deduction.
B. For 3 CCRCs, which have fee-for-service contracts, letter indicates that none of the monthly service fees went to pay medical expenses

7. Does your CCRC indicate that a portion of your entry fee may be considered as a medical expense tax deduction? If the answer is yes, how your CCRC determine the amount involved?
A. Answer – “YES” for 11 CCRCs, “NO” for 8 CCRCs.
B. For the 11 CCRCs answering YES:
· 4 CCRCs indicate the amount was determined on an actuarial basis.
· 3 CCRCs apply the same percentage to the non-refundable portion of the entry fee - as that used in determining the percentage of monthly fees that may be considered as a deduction.
· For 4 CCRCs, the specific methodology used in calculating the amount was not described.

8. Please describe how your CCRC determined what portion of a resident’s monthly service fees might be listed as a medical expense deduction on his/her 2007 income tax returns.
A. Typical answer – The calculated net expenses related to health care during the year divided by the number of residents.
· For 12 CCRCs the calculated amount is the same for each resident.
· For the other 4 CCRCs (other than the fee-for-service CCRCs) the calculation was based on the Medicare Cost Report, the cost of the residence, a percentage of a resident’s monthly service fee or the contract type.
B. For 4 CCRCs, calculations were performed by an outside accounting firm or actuary.

9. Which types of medical expenses are included in a resident's monthly service fee, and which, if any, are billed separately – such as for medical supplies or durable medical equipment?
A. Typical answer – basic costs for primary care – room and board and basic care costs when located in Assisted Living and Skilled Nursing facilities.
B. There is a wide variation of responses among CCRCs – from costs for all medical services, including physician services and RxDrug costs, to only for a temporary stay in Assisted Living.
C. For 3 fee-for-service CCRCs, none; all services are billed separately.
D. The question was apparently not understood in a few cases.

10. Which medical services available on-site for residents are provided under a contract with your CCRC – such as physicians or therapy? When those services are used by an individual resident, how are they billed and how are they paid for?
A. Typical answer – physician and therapy services, which bill directly to Medicare/3rd party insurance, then to the resident.
B. Any other services available on-site likewise bill directly to Medicare/3rd party insurance or to residents if not covered by Medicare

11. To what extent does your CCRC assist residents with billing and claim processing for Medicare and other medical insurance? What about payments for medical services provided by off-site specialists to whom a resident was referred by your CCRC’s Medical Director?
A. Typical answer – As requested on a case basis for Medicare/3rd party insurance.
B. There was a wide variation of responses among CCRCs – from none to processing all claims.

(*) Address and/or phone number included in survey has been omitted.

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