CCRC entrance fees typically run from about $100,000 to well over $1 million, with a national average near $400,000. That one-time payment buys you a spot at a continuing care retirement community, a campus that offers independent living, assisted living, and skilled nursing under one roof so you don’t have to move as your health changes. What you actually get for the money, how much comes back to you or your estate, and how the IRS treats the payment all depend on the contract you sign.
What Drives the Price
Location is the biggest variable. A community in New York or San Francisco charges far more than a comparable campus in a smaller city. Unit size and style matter next: a studio costs a fraction of a two-bedroom cottage with a garage. Most communities also add a second-person fee when two people share the unit.
The entrance fee is not the end of it. Monthly service charges continue for as long as you live there. At the independent living level, average monthly fees at entrance-fee communities were roughly $4,166 at the end of 2024. Those fees cover meals, maintenance, and amenities, with the exact package tied to your contract type.
Getting on a waitlist usually costs $1,000 to $7,500, most of it refundable, and many communities credit part of that deposit toward the eventual entrance fee. Some also charge a separate nonrefundable application fee.
How Contract Type Shapes the Fee
Three standard contract types exist, and the one you pick determines both what you pay upfront and what future healthcare will cost you.
Type A: Life Care
Type A carries the highest entrance fee because it includes the most healthcare. You get access to assisted living, memory care, and skilled nursing with little or no jump in your monthly bill when your needs change. You’re effectively prepaying future care at today’s prices. If you end up needing years of nursing care, Type A can save a substantial amount. If you stay healthy, you paid more than you needed to.
Type B: Modified
Type B costs less upfront but caps included healthcare. You might get a set number of days per year in assisted living or skilled nursing at no extra monthly charge, or a fixed dollar amount of care. Once you exhaust the covered benefit, you pay the community’s going rate. Covered days and per-diem rates vary by contract.
Type C: Fee-for-Service
Type C has the lowest entrance fee because it prepays no healthcare at all. You pay market rates for whatever assisted living or nursing care you eventually need. This preserves more of your capital upfront but exposes you to the full cost of long-term care later.
Refund Structures
How much of your entrance fee comes back to you or your estate depends entirely on which refund model your contract uses. The gap between options at the same community can run into hundreds of thousands of dollars, so this deserves careful attention.
Declining Balance
The most common structure reduces the refundable amount over time, usually reaching zero within two to five years. A typical example: the community keeps 2% of the entrance fee per month, so nothing remains after 50 months. Some contracts use annual reductions like 25% per year over four years. Either way, the longer you stay, the less comes back.
Guaranteed Refund
Many communities offer plans that guarantee a refund of 50%, 75%, or 90% of the entrance fee regardless of how long you live there. The trade-off is a much higher upfront fee. A 90% refundable contract at the same community can cost 30% to 50% more than a declining-balance contract for an identical unit. Residents who want to preserve wealth for heirs often accept the higher price for that reason.
What Gets Deducted
Even with a guaranteed refund, the community subtracts certain costs before writing the check. Unpaid monthly fees, any charitable assistance the community extended during your stay, and unit restoration charges are all common. Contract language matters here. Some communities read “restore to original condition” broadly enough to absorb a meaningful chunk of the refund.
When the Money Actually Arrives
Most contracts don’t trigger the refund until a new resident moves into your unit and pays their own entrance fee. Depending on demand for that unit type, the wait can stretch from a few months to well over a year. Some states now require payment within a fixed period regardless of resale. Ask before signing whether the contract sets a payment deadline and whether the refund earns interest while you wait.
Tax Treatment
The tax angles on an entrance fee are more complex than most people expect. Handled well, the deductions are large. Ignored, the treatment of a refundable deposit can produce an unwelcome tax bill every year.
Medical Expense Deduction on the Entrance Fee
Part of the entrance fee qualifies as a deductible medical expense. The IRS allows you to include the portion of a life-care fee or founder’s fee properly allocable to medical care, whether paid as a lump sum or monthly.1Internal Revenue Service. Publication 502 (2025), Medical and Dental Expenses This applies even if you’re currently healthy and living independently.
The community calculates the medical percentage, usually by dividing the cost of running its assisted living and nursing departments by total operating costs. Percentages of 25% to 40% are common, so a $400,000 entrance fee might produce $100,000 to $160,000 in deductible medical expense. The community issues an annual statement showing the applicable percentage, and IRS rules require that statement to rest on either the community’s own prior experience or data from a comparable facility.1Internal Revenue Service. Publication 502 (2025), Medical and Dental Expenses
The catch: medical expenses are only deductible above 7.5% of your adjusted gross income, and only if you itemize.2Office of the Law Revision Counsel. 26 USC 213 – Allowance of Deduction for Expenses Paid for Medical Care Because the entrance fee creates such a large expense in a single year, most residents clear that floor easily in the year they move in.
Monthly Fee Deductions
The same medical percentage applies to your monthly service charges each year, and the community issues an updated figure annually. If you move into a nursing unit primarily for medical reasons, the entire cost, including meals and lodging, may qualify as a medical deduction.3Internal Revenue Service. Medical, Nursing Home, Special Care Expenses If you’re in a care unit for non-medical reasons, only the medical-care portion qualifies.
Imputed Interest on Refundable Fees
Here is where residents get caught off guard. If your refundable entrance fee is structured as an interest-free loan to the community, the IRS may treat you as earning imputed interest, and you may owe income tax on phantom interest each year. You may even receive a Form 1099-INT for money you never received.
Federal law exempts loans to qualified continuing care facilities from the imputed interest rules, but only up to a base threshold of $90,000, set in 1986 and adjusted annually for inflation.4Office of the Law Revision Counsel. 26 USC 7872 – Treatment of Loans with Below-Market Interest Rates Because entrance fees routinely run into the hundreds of thousands, most refundable deposits blow past the exemption. The amount above the threshold can generate taxable imputed interest every year you live there. Ask the community’s finance office and your tax advisor how the refundable portion is classified before you sign.
Vetting the Community’s Finances
You’re handing a six-figure sum to an organization you’re betting will stay solvent for the rest of your life. A few hours of financial due diligence beforehand can prevent a catastrophic loss later. Most states require CCRCs to disclose audited financial statements on request. A handful of numbers will tell you most of what you need to know:
- Occupancy rates. Independent living occupancy consistently below 90% is a warning sign. Healthy communities ran around 92% in 2024. Assisted living and skilled nursing naturally run lower, but sharp year-over-year drops signal trouble.
- Days cash on hand. This is how many days the community could cover operating expenses from reserves. Lenders and accreditors generally want to see at least 180. The 2024 median for accredited single-site communities was over 400.
- Debt service coverage ratio. Below 1.0 means the community isn’t generating enough cash to cover debt payments. Healthy communities run above 2.0.
- Net operating margin. Above 5% is considered healthy. Persistent negative margins or a declining trend point to expense or revenue problems.
CARF International accredits CCRCs and publishes annual financial benchmarks based on accredited communities. Accreditation means an independent group has reviewed the community’s finances and service quality. It is not a solvency guarantee, but it is a meaningful signal.
States also add a layer of protection. Common requirements include mandatory financial disclosure before you sign, escrow of entrance fees collected before a unit is ready, and minimum reserve funds. Escrow rules matter especially for new construction: in states with strong protections, the community cannot touch your fee until construction is substantially complete, an occupancy permit issues, and financing is in place to finish the project. If those conditions aren’t met within a set timeframe, the money comes back. Not every state requires escrow for existing units, and some states barely regulate CCRCs at all. An elder law attorney in your state can review the contract and flag provisions that fall short of the protections you’re entitled to.
If the Community Files for Bankruptcy
Residents with refundable entrance fees are generally treated as unsecured creditors in a CCRC bankruptcy. The Bankruptcy Code gives entrance fee deposits no special priority, and the limited consumer deposit protection in federal law covers only a small fraction of a typical entrance fee. A $300,000 refundable deposit sits in the same creditor class as the community’s other unsecured debts.
Outcomes have varied. Some bankruptcy courts have let residents recover most of their entrance fees, prioritizing elderly residents over bondholders. In other cases, particularly liquidations, residents have recovered as little as 24% to 40% of what they were owed. The residency agreement itself is an executory contract that the community can assume or reject during proceedings. If the community keeps operating, these contracts are almost always assumed because the residents are the business. If it liquidates, all bets are off.
That risk is why the financial vetting matters so much. A community with strong cash reserves, low debt, and high occupancy is far less likely to end up in bankruptcy court in the first place. Nonprofit communities backed by large, well-funded parent organizations add a layer of stability, though nonprofit status by itself guarantees nothing.