Mom has been in Memory Care since early this year. After a stroke in 2022, her mental and physical states have significantly deteriorated. She has had to transition from our home to Assisted Living, and now to Memory Care. Unfortunately she does not have Long-Term Care Insurance, so she is paying everything out-of-pocket. Since Medicare (and supplemental insurance) does not pay for non-medical components of Memory Care living, I am looking closely at the tax rules on medical deductions in IRS publications, specifically Publication 502 which outlines allowable medical expenses. It states, "You can include in medical expenses the cost of medical care in a nursing home, home for the aged, or similar institution, for yourself, your spouse, or your dependents. This includes the cost of meals and lodging in the home if a principal reason for being there is to get medical care. Don't include the cost of meals and lodging if the reason for being in the home is personal.” Another section of that same publication discusses long-term care services for chronically ill individuals and describes them as such: “if, within the previous 12 months, a licensed health care practitioner has certified that the individual meets either of the following descriptions: 1) The individual is unable to perform at least two activities of daily living without substantial assistance from another individual for at least 90 days, due to a loss of functional capacity. Activities of daily living are eating, toileting, transferring, bathing, dressing, and continence. 2) The individual requires substantial supervision to be protected from threats to health and safety due to severe cognitive impairment.”. Both of these descriptions fit Mom. Based on this wording, I strongly believe that Mom should qualify for the full cost of Memory Care based on substantial assistance for ADL and substantial supervision needed. Am I wrong? Is anyone else in this network in the same situation? If so, was there a specific form you needed from the "licensed health care practitioner" to justify this and did you run into issues with the IRS, such as an audit? Of course, we want to be perfectly legal,
I know that Medicaid might be an end option if she exhausts her resources, but we are hoping to avoid getting to that point, and it seems that the medical tax deduction would help tremendously. Any advice or insights would be appreciated!!
Assisted Living is different, in that part of the bill is for room and board and part is for services. As tax preparers, we've found that most AL places will provide residents with an itemized statement showing how much of their bill is for room and board and how much is for services; we will include only the services portion as a medical deduction (if the person is itemizing).
My mom is in these facilities because she has a mental condition that causes her to not be able to take care of herself or be left alone...Dementia. So yes, her residing there is a medical expense.
Also, if you meet the above criteria, you must itemize in order to get the benefit. Almost no one itemizes any more, unless you have extraordinary expenses in one of the itemized categories.
See this article: https://www.aplaceformom.com/caregiver-resources/articles/tax-deduction-for-memory-care-facility#
Why don't you have her pay a CPA to answer this question accurately once and for all? H&R Block? Turbo Tax?
You know, when my brother was in care for his Lewy's this question came up.
The CPA who had for life handled his taxes said "When your brother moves from ALF to MC you come to me with everything. I will let you know. This is all about percentages that go for this and percentages that go for that, and meeting a level where it reaches my ability to make anything tax deductible; and the truth is you want not to meet that level, because it is high".
He kind of smiled at thinking he could possibly explain to me how it all worked. He tried a bit, but as with a doctor knowing that the removal of your appendix is quite complicated and inexplicable, you kind of hire the expert, give him all the stats and let him go.
Wishing you good luck on that hard day. But for legal stuff you need, when you need expert advice, not a Forum, not a good book, but an attorney. For Financial it is the CPA just as for medical it is the MD. You really need an expert.
That being said you should consult a knowledgeable cpa cfp in your area to get specifics.
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