Is Alzheimer’s care a tax deductible expense?
Over the years I have been asked countless times by families “Are the costs associated with the care they receive at Dodge Park tax deductible?” While much of the tax code is subject to varied interpretations, and each individual should seek competent advice from their own professionals, to my opinion, and this is only my opinion, it appears that the answer to this question is “likely.” As tax season approaching fast, please plan a visit to your accountant, attorney or planner and discuss this subject with them in details.
Section #213 of the publication Selected Federal Taxation Statutes and Regulations 2000 Edition states “There shall be allowed as a deduction the expenses paid during the taxable year not compensated for by insurance or otherwise for medical care of the taxpayer, his spouse or a dependent to the extent where that expense exceed 7.5 percent of adjusted gross income.” The exact definition of medical care has been further explained in Section 1016 “If an individual in a nursing home or a home for the aged because of his physical condition and the availability of medical care is a principal reason for his presence there, the entire cost of maintenance, including meals and lodging is deductible.”
The key distinction is the purpose of living in a facility
If it is for personal or family reasons, then only the portion of the cost attributable to medical or nursing cost is deductible. The reason that the deductibility becomes cloudy is that service fees in facility like Dodge Park is different than assisted living facilities, where they bundle the medical care component with room and board, making it difficult to determine or justify what portion of the rent covers the care of the resident. Further, most assisted living facilities go out of their way to advertise that they are not a medical care facility.
Publication 502 by the Department of the Treasury, Internal Revenue Service entitled Medical and Dental Expenses helps to clarify the question. “You can include in medical expenses the cost of medical care in a nursing home or home for the aged for yourself, your spouse, or your dependents. This includes the cost of meals and lodging in the home if the main reason for being there is to get medical care. Do not include the cost of meals and lodging if the reason for being in the home is personal. You can however, include in medical expenses the part of the cost that is for medical or nursing care.” This means that in an assisted living facility, unless the purpose of the stay is to receive medical care, the cost of lodging and meals may not be deductible.
If the individual is chronically ill
However, if the individual is chronically ill, as defined under the section entitled Qualified long-term care services all costs associated with the care and supervision of the individual may be tax deductible subject to the 7.5 percent adjustment. Chronically ill is defined in Publication 502: “A chronically ill individual is one who has been certified by a licensed health care practitioner within the previous 12 months as: 1) Being unable for at least 90 days, to perform at least two activities of daily living without substantial assistance from another individual, due to the loss of functional capacity. Activities of daily living are eating, toileting, transferring, bathing, dressing, and continence or 2) Requiring substantial supervision to be protected from threats to health and safety due to severe cognitive impairment.” With the enactment of the Kennedy-Kassebaum bill, the law is now clear. Congress stated clearly that the tax code should provide equal consideration for persons with Alzheimer’s disease or other irreversible dementia. The only cloudy area remaining is the fee structure of the facility in which they reside.
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Dodge Park Rest Home
Facilities, like Dodge Park Rest Home, which are dedicated to caring for people with Alzheimer’s disease and related dementia rendering substantial supervision to protect residents from threats to health and safety due to severe cognitive impairment, meet the test.
What does all this mean? Well, depending upon your personal income, the deductibility of your monthly fees in a home properly qualified can result in an annual after tax savings of between 15 and 20 percent. So it might be more than worth your while to check this out with your accountant or financial advisor prior to making your decision on where to place your loved one.
For more than 4 decades, Dodge Park Rest Home Living has made it possible for those with Alzheimer’s disease or dementia-related illnesses to enjoy the benefits of full-time professional care in a comfortable residential setting. To learn more about Memory Care Living at Dodge Park Rest Home call us at 508-853-8180 to arrange a private tour.
