Spotlight on Income Taxes: Medical Deduction for Assisted Living?
by Elizabeth Q. Boehmcke, Esq.
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 that $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.
The attorneys at the Hook Law Center are well-versed in the income tax treatment of paying for long-term care services, and we specifically address these concerns in our planning. If you need help with your long-term care planning, make an appointment to come meet with us.
Ask Kit Kat – Overweight Cats
Hook Law Center: Kit Kat, how can an owner prevent his/her cat from being overweight?
Kit Kat: Well, this is a sensitive subject. Cat owners love their felines immensely, and they sometimes confuse affection and feeding. However, a pet owner is not doing his/her pet any favors by allowing his cat to become overweight. For example, Maya, a cat from Eatontown, NJ, used to weigh 24.9 lbs! Now that’s a lot of weight for a female cat. I myself, a male, weigh a little over 13 pounds, and I am not considered skinny by my vet. Anyway, Maya’s weight was getting to the crisis point, so to her owners’ credit, they decided to do something about it. They actually put Maya on a diet, and it worked! After 16 months on a restricted diet, she has lost 10 lbs., 6 oz. She’s still go a few more pounds to go, but her owners report she is more alert, and can jump up on their bed again.
One of the biggest barriers to cat owners restricting their cat’s food intake is apparently fear of rejection and fear of losing their cat’s affection. It’s a big problem—Dr. Martha Cline, a vet in Tinton Falls, NJ who treats Maya, reports that ‘My friends in general practice now say they are surprised when a cat comes in with an ideal body weight.’ However, a new study published recently in The Journal of Veterinary Behavior can put those fears to rest. 3/4 of the cats lost weight. The 48 cats in the study were put on one of 3 different diets, though all had the same caloric value. As part of the study, the owners were also questioned about their cat’s behavior, before and after feeding. Even though their diet was restricted, the cat participants did not show a reduction in affection with their owners. In fact, the owners reported that their cats were actually MORE affectionate! According to Dr. Emily D. Levine, the study’s lead author and a veterinary behaviorist, “one reason cats gain too much weight is that owners ‘misread’ their pet’s behavior, unwittingly reinforcing it with treats.” Rubbing against their owners ankles or legs does not mean FEED ME, but is just a way of interacting and showing affection.
So limit those treats and follow recommended guidelines on the bags/cans for the amount of dry/wet food your cat ingests. He/she will have a longer, healthier, and more active life!
(Jan Hoffman, “Fat Cats on a Diet: Will They Still Love you?” The New York Times (Well Pets section), Feb. 16, 2016)
Distribution of This Newsletter
Hook Law Center encourages you to share this newsletter with anyone who is interested in issues pertaining to the elderly, the disabled and their advocates. The information in this newsletter may be copied and distributed, without charge and without permission, but with appropriate citation to Hook Law Center, P.C. If you are interested in a free subscription to the Hook Law Center News, then please telephone us at 757-399-7506, e-mail us at firstname.lastname@example.org or fax us at 757-397-1267.