ElderLaw News-The Estate Planning & Elder Law Firm, P.C. — MD, VA, DC
ElderLaw News
ElderLaw News is a weekly e-newsletter that brings you reports of legal developments and other trends of vital interest to seniors and their advocates. This newsletter is brought to you by The Estate Planning & Elder Law Firm, P.C., William S. Fralin, Esq., President., William S. Fralin, Esq., President.

Spotlight on Income Taxes: Medical Deduction for Assisted Living

Many seniors find that the costs of their medical care increase as they age.

In addition to the myriad number of illnesses, accidents, drugs and diseases that can seem to multiply like wildfire, seniors may also face the cost of paying for assisted living or nursing home care. We are frequently asked whether and to what extent any of these costs may be deducted for income tax purposes. Since many of our clients are busy gathering information and receipts to prepare their income tax returns now, this seemed like an appropriate time to address this topic.

As a general rule, medical expenses in excess of ten percent (10%) of a person’s adjusted gross income are deductible on Schedule A of the 1040. For seniors born before January 2, 1951, the threshold is lower – 7.5% through 2016. Medical expenses typically include out-of-pocket payments for things like prescriptions, doctor visits, durable medical equipment, long-term care insurance premiums, medical insurance premiums, hospital visits and transportation. Maintenance or personal care services (so-called “qualified long-term care expenses”), the primary purpose of which are to provide an individual with needed assistance with his or her disabilities (including protection from threats to health and safety due to severe cognitive impairment) are not deductible unless the individual is “chronically ill”.

To be considered “chronically ill”, a doctor must certify that the individual cannot perform at least two activities of daily living (continence, toileting, eating, bathing, dressing and transferring) without substantial assistance for at least 90 days or requires supervision due to a cognitive impairment (dementia or Alzheimer’s disease). Further, the doctor (or other licensed health care provider) must prescribe a plan of care which outlines the specific daily services that the individual requires. The certification and plan of care must be obtained annually.

How much of the cost of assisted living can you deduct if you qualify as chronically ill? Typically you cannot deduct the costs of room and board unless the room and board may be considered part of the medical care. For instance, for someone in assisted living as a result of a diagnosis of dementia who needs supervision due to cognitive impairment, room and board are deductible, because they are a necessary part of the medical treatment of the disease. What if you are receiving qualified long-term care services at home? If you qualify as chronically ill, the costs of those in-home services can also be deducted; however, in this case, there will be no deduction for room and board. Keep in mind, however, that if any of these costs are being reimbursed to you through long-term care insurance or some other program, you can only count the unreimbursed amounts towards your deduction.

What if you are not chronically ill? You can still deduct a portion of your assisted living fee attributable to medical care. Your facility should provide you with information each year as to the portion of the fees you have paid that are attributable to medical care.

What if your parent receives substantial financial assistance from you in paying medical bills or the costs of their assisted living facility? Can you claim your parent as a dependent or otherwise deduct your parent’s medical expenses on your income tax return? To claim your parent as a dependent, your parent must be a US citizen or national or a resident of the US, Canada or Mexico and you must have provided over 50% of his support for the year. In addition, your parent cannot file a joint return and his income must be less than $4,000 (exclusive of social security). If your meet all the conditions except that your parent’s income is in excess of $4,000, you can include the medical expenses you paid on his behalf with your medical expenses for the year.


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The Estate Planning & Elder Law Firm, P.C.

The Estate Planning & Elder Law Firm, P.C. is an elder law firm. We represent older persons, disabled persons, their families, and their advocates. The practice of elder law includes estate planning, estate and trust administration, powers of attorney, advance medical directives, titling of assets and designations of beneficiaries, guardianships, conservatorships, and public entitlements such as Medicaid, Medicare, Social Security, and SSI, disability planning, income tax planning and preparation, care management, and fiduciary services. For more information about The Estate Planning & Elder Law Firm, P.C., please visit our website at http://www.chroniccareadvocacy.com.

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This newsletter is not intended as a substitute for legal counsel. While every precaution has been taken to make this newsletter accurate, we assume no responsibility for errors, omissions, or damages resulting from the use of the information in this newsletter. The Estate Planning & Elder Law Firm, P.C. thanks the law firm of Hook Law Center for their input to this newsletter.

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