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this amount by the total costs, excluding total depreciation and
interest expense, of Village West. Mr. Dalton calculated that
17.78 percent of the total monthly service fees paid by residents
living in ILUs were allocable to medical care. Applying slightly
different residency and monthly service fee figures than those
contained in the Health Facility Information report, Mr. Dalton
concluded that the portion of monthly service fees for ILU
residents that was allocable to medical care was $374 per
residence per month.
2. Calculation of 1998 Medical Expenses
In 1998, AFVW switched to an actuarial method to determine
the deductible portion of monthly service fees.8 However, Mr.
Dalton still prepared a calculation for that year using the
percentage method so that AFVW residents joining the community
prior to January 1, 1998, would have information comparable to
prior years for tax return preparation. Using the same
methodology as in 1997, Mr. Dalton calculated that 19.01 percent
of the total monthly service fees paid by residents living in
ILUs were allocable to medical care. Applying slightly different
residency and monthly service fee figures than those contained in
the Health Facility Information report, Mr. Dalton concluded that
8The evidence in the record does not contain calculations by
AFVW or Mr. Dalton using the actuarial method to determine the
deductible portion of monthly service fees paid in 1998.
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