Yes, the fee is refunded if death occurs too soon. IRS does not ask what portion of entrance fee is for medical expense. It is assumed that eventually medical expense will be needed. The letter their office issues as to what (minuscule) part of the monthly charges are for medical reasons are not always accurate in my mind: Another of my clients has been demented for years, she could not survive a minute on her own. According to IRS instructions the entire monthly charge should be deductible, whereas the Kendal letter takes a most conservative approach, these letters appear identical, form letters.