Given the difficult economic times we are in, it’s important that you’re aware of the potential tax deductions for assisted living care. While The Inn at Belden Village cannot offer tax consultation or legal advice, we do want to inform residents and their family members that their assisted living costs may be deductible from their gross income as an itemized medical deduction.
IRS Publication 502 (2008) discusses long-term care and states, “You can include in medical expenses amounts paid for qualified long-term care services…” It goes on to further define “qualified long-term care services as “necessary diagnostic, preventive, therapeutic, curing, treating, mitigating, rehabilitative services and maintenance and personal care services
Assisted living would generally fall under maintenance and personal care services.
Maintenance and personal care services are defined as “care which has as its primary purpose the providing of a chronically ill individual with needed assistance with his or her disabilities (including protection from threats to health and safety due to severe cognitive impairment).”
In order to qualify, the services must be provided to a chronically ill individual “pursuant to a plan of care prescribed by a licensed health care practitioner”. An individual is considered “chronically ill” if within the previous 12 months, they have been certified by a licensed health care practitioner as “unable to perform at least 2 activities of daily living without substantial assistance from another individual for at least 90 days, due to a loss of functional capacity or requires substantial supervision to be protected from threats to health and safety due to severe cognitive impairment”.
Based on these definitions, many assisted living residents may be able to deduct the entire cost of their assisted living care. Simply stated, if a resident has been diagnosed with the needs above and their care and maintenance is a part of a plan of care prescribed by a licensed health professional, likely all their assisted living costs can be deducted.
In addition to assisted living costs potentially being deductible for the individual receiving the services, a family member may be able to deduct their family members assisted living costs on their tax return. A family member who provides over half of the total support, for an individual residing in assisted living for a calendar year, should consult their tax advisor for details.
Go to http://www.irs.gov/pub/irs-pdf/p502.pdf to review this information.